The opinion
FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
RELEVANT GROUP, LLC, a No. 23-55574
Delaware limited liability company;
1541 WILCOX HOTEL, LLC, a D.C. No.
Delaware limited liability company; 2:19-cv-05019-
6516 TOMMIE HOTEL, LLC, a PSG-KS
Delaware limited liability company;
6421 SELMA WILCOX HOTEL,
LLC, a California limited liability OPINION
company,
Plaintiffs-Appellants,
v.
STEPHEN NOURMAND, AKA
Saeed Nourmand an individual;
SUNSET LANDMARK
INVESTMENT, LLC, a California
limited liability company;
NOURMAND AND ASSOCIATES, a
California corporation; DOES, 1-10,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
Philip S. Gutierrez, District Judge, Presiding
2 RELEVANT GROUP, LLC V. NOURMAND
Argued and Submitted June 3, 2024
Pasadena, California
Filed September 5, 2024
Before: MILAN D. SMITH, JR. and BRIDGET S. BADE,
Circuit Judges, and SIDNEY A. FITZWATER, * District
Judge.
Opinion by Judge Milan D. Smith, Jr.
SUMMARY **
Noerr-Pennington Doctrine
The panel affirmed the district court’s summary
judgment in favor of Defendants, property developers who
operate the Hollywood Athletic Club, in an action in which
Plaintiffs, rival property developers who own three hotels,
alleged that Defendants abused the processes available under
the California Environmental Quality Act (CEQA) to extort
funds from Plaintiffs in violation of the Racketeer Influenced
and Corrupt Organizations Act.
The district court held that the Noerr-Pennington
doctrine—a rule that requires courts to construe statutes to
avoid burdening conduct that implicates the Petition Clause
*
The Honorable Sidney A. Fitzwater, United States District Judge for
the Northern District of Texas, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
RELEVANT GROUP, LLC V. NOURMAND 3
of the First Amendment—protected Defendants from
statutory liability for engaging in petitioning activity
challenging several of Plaintiffs’ proposed hotel projects
using the CEQA framework.
As a threshold matter, the panel held that District Judge
Gutierrez did not abuse his discretion in sua sponte
reconsidering the denial of summary judgment by District
Judge Wright, from whom the case was transferred before
trial, where Judge Gutierrez explained how Judge Wright’s
decision was clearly erroneous and how manifest injustice
would occur should the decision be allowed to stand.
The panel held that the district court did not err in
holding that Defendants’ petitioning activities were
protected under the Noerr-Pennington doctrine. In
determining whether the sham litigation exception to the
doctrine applies, the district court properly applied the
framework set forth in Pro. Real Est. Invs., Inc. v. Columbia
Pictures Indus., Inc., 508 U.S. 49 (1993) (PREI) (sham
litigation exception applies where a lawsuit is objectively
baseless and brought with an unlawful motive). In applying
the PREI framework, the district court did not err in
concluding that Defendants’ actions pursuant to CEQA were
not objectively baseless and therefore did not fall within the
sham litigation exception. The panel did not review
evidence suggesting that Defendants had an improper
purpose because courts may examine a litigant’s subjective
motivation only if the challenged litigation is objectively
baseless. And because the district court correctly held that
Defendants’ CEQA actions did not fall within the sham
litigation exception, the panel did not need to reach
Defendants’ other arguments in order to affirm the district
court.
4 RELEVANT GROUP, LLC V. NOURMAND
COUNSEL
Amit R. Vora (argued), Jennifer S. Recine, Donald J.
Reinhard, Kasowitz Benson Torres LLP, New York, New
York; Daniel Saunders, Kasowitz Benson Torres LLP, Los
Angeles, California; for Plaintiffs-Appellants.
Glenn A. Danas (argued) and Katelyn M. Leeviraphan,
Clarkson Law Firm PC, Malibu, California; Patrick M.
Maloney (argued), Gregory M. Smith, and Elizabeth T.
Schaus, Maloney Firm APC, El Segundo, California; for
Defendants-Appellees.
Laurence S. Zakson, Reich Adell & Cvitan, Glendale,
California; Aaron G. Lawrence, Reich Adell & Cvitan,
Glendale, California; Scott A. Kronland, Stacey M. Leyton,
and Corinne F. Johnson, Altshuler Berzon LLP, San
Francisco, California; for Amici Curiae The State Building
and Construction Trades Council, Sierra Club, Natural
Resources Defense Council, Communities for a Better
Environment, Planning and Conservation League, California
Communities Against Toxics, California State Council of
Laborers, and Coalition for Clean Air.
RELEVANT GROUP, LLC V. NOURMAND 5
OPINION
M. SMITH, Circuit Judge:
This case arises out of a dispute between two property
developers and their subsidiaries: Plaintiff-Appellant
Relevant Group, LLC, which owns the Wilcox, Tommie, and
Selma hotels (sometimes referred to as Plaintiffs herein), and
Defendant-Appellees Sunset Landmark Investment, LLC,
Stephen Nourmand, and Nourmand & Associates, which
operate the Hollywood Athletic Club. In their complaint,
Plaintiffs allege that Defendants abused the processes
available under the California Environmental Quality Act
(CEQA), Pub. Res. Code §§ 21000–21189.57, to extort
funds from Plaintiffs in violation of the Racketeer Influenced
and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961–
68. The district court granted summary judgment in favor of
Defendants, holding that the Noerr-Pennington doctrine
protected Defendants’ petitioning activity from statutory
liability under the First Amendment. We affirm the district
court’s order.
FACTUAL AND PROCEDURAL BACKGROUND
A. Overview
Relevant Group, LLC is an umbrella entity that manages
the three other LLC Plaintiffs—the 1541 Wilcox Hotel LLC,
the 6516 Tommie Hotel LLC, and the 6421 Selma Wilcox
Hotel LLC (collectively, Relevant). Relevant has spent the
last decade trying to develop hotels in the Hollywood
neighborhood of Los Angeles.
The historic Hollywood Athletic Club, owned by Sunset
Landmark Investment LLC (Sunset) is located in the same
neighborhood as Relevant’s projects. Defendant Stephan
6 RELEVANT GROUP, LLC V. NOURMAND
“Saeed” Nourmand is Sunset’s principal. Saeed is also a
founder of Defendant Nourmand and Associates (N&A), a
residential real estate brokerage firm.
In 2015, Defendants began challenging Relevant’s
proposed hotel projects by, inter alia, opposing them during
the entitlements process with the City of Los Angeles (the
City) and by filing lawsuits against the City in California
Superior Court pursuant to the CEQA.
B. CEQA
CEQA “establishes a comprehensive scheme to provide
long-term protection to the environment.” Berkeley Hillside
Pres. v. City of Berkeley, 343 P.3d 834, 837 (Cal. 2015).
“Consistent with California’s strong environmental policy,
whenever the approval of a project is at issue, the statute and
regulations have established a three-tiered process to ensure
that public agencies inform their decisions with
environmental considerations.” San Lorenzo Valley Cmty.
Advocs. for Responsible Educ. v. San Lorenzo Valley Unified
Sch. Dist., 139 Cal. App. 4th 1356, 1372 (2006) (internal
quotation marks and citation omitted).
“The first tier requires an agency to conduct a
preliminary review to determine whether CEQA applies to a
proposed project.” Save Our Big Trees v. City of Santa Cruz,
241 Cal. App. 4th 694, 704 (2015). “If CEQA applies, the
agency must proceed to the second tier of the process by
conducting an initial study of the project.” Id.
At the second tier, the initial study is performed to
determine the impact of the project on the environment and
whether additional investigation must be undertaken. Id. at
704–05. If, per the initial study, there is “no substantial
RELEVANT GROUP, LLC V. NOURMAND 7
evidence 1 that the project or any of its aspects may cause a
significant effect on the environment,” the agency prepares
what is called a “negative declaration.” Id. at 705 (quoting
CEQA Guidelines, § 15063(b)(2)). Alternatively, if the
initial study identifies potential effects on the environment
that the agency nonetheless determines can be mitigated by
revisions to project plans to a point where clearly no
significant effect on the environment would occur, the
agency issues a “mitigated negative declaration” (MND). Id.
Only if “the initial study uncovers ‘substantial evidence
that any aspect of the project, either individually or
cumulatively, may cause a significant effect 2 on the
environment’” does the agency proceed to the third tier of
the review process, which involves preparing a full
environmental impact report (EIR). Id. (quoting CEQA
Guidelines, § 15063(b)(1)).
1
“In the CEQA context, substantial evidence ‘means enough relevant
information and reasonable inferences from this information that a fair
argument can be made to support a conclusion, even though other
conclusions might also be reached.’” Save Our Big Trees, 241 Cal. App.
4th at 705 (quoting CEQA Guidelines, § 15384 (a)).
2
“Significant effect on the environment means a substantial, or
potentially substantial, adverse change in any of the physical conditions
within the area affected by the project including land, air, water,
minerals, flora, fauna, ambient noise, and objects of historic or aesthetic
significance.” Keep Our Mountains Quiet v. County of Santa Clara, 236
Cal. App. 4th 714, 729 (2015) (quoting CEQA Guidelines, § 15382)
(internal quotation marks omitted). But “[t]here is no ‘ironclad
definition of what constitutes a significant effect.’” Id. (quoting CEQA
Guidelines, § 15064 (b)) (cleaned up).
8 RELEVANT GROUP, LLC V. NOURMAND
“When an agency issues a negative declaration or a
mitigated negative declaration, third parties with standing3
may seek judicial review of the adoption of the negative
declaration by filing a petition for writ of mandate in a
California court.” San Bernardino Valley Audubon Soc’y,
71 Cal. App. 4th at 385. A litigant who successfully
challenges an agency’s issuance of a negative declaration in
court may be entitled to attorneys’ fees. Friends of “B” St.
v. City of Hayward, 106 Cal. App. 3d 988, 994–95 (1980)
(citation omitted).
C. Relevant’s Hotel Projects
Sunset challenged several proposed Relevant projects
using the CEQA framework. Relevant alleges that Sunset
brought these challenges for the sole purpose of obstructing
Relevant’s work and extorting funds from Relevant.
i. The Thompson Project
In February 2015, the City issued a Notice of Public
Hearing for the Thompson Hotel project (Thompson
Project). A month later, the City published an initial MND
for the Thompson Project, meaning that “the initial study
identifie[d] potentially significant effects on the
environment” but that revisions to project plans could
mitigate those effects to where development would be
acceptable. Save Our Big Trees, 241 Cal. App. 4th at 705.
3
A party has standing to seek a writ of mandate in state court based on
alleged CEQA violations if she is “a property owner, taxpayer, or elector
who establishes a geographical nexus with the site of the challenged
project.” Citizens Ass’n for Sensible Dev. of Bishop Area v. County of
Inyo, 172 Cal. App. 3d 151, 158 (1985); see also San Bernardino Valley
Audubon Soc’y v. Metro. Water Dist., 71 Cal. App. 4th 382, 385–89
(1999).
RELEVANT GROUP, LLC V. NOURMAND 9
In July of that year, the City published a revised MND
for the Thompson Project, adding several new mitigation
measures to address noise impacts. Then, in September,
Sunset filed objections to the Thompson Project, raising, in
part, concerns about the hotel’s impact on traffic and noise.
Nonetheless, on October 19, 2015, the City adopted another
MND and approved the Thompson Project. Ultimately, the
City granted final approval for the Thompson Project in
February 2016. A few weeks later, Sunset filed its Petition
for Writ of Mandate against the City, to challenge the
Thompson Project’s MND and require the City to prepare a
full EIR. As discussed below, the parties eventually reached
a settlement regarding the Thompson Project.
ii. The Tommie Project
While the Thompson Project was underway, Relevant
also proposed the Tommie Hotel project (Tommie Project).
In December 2016, the City produced an MND for the
Tommie project. A month later, Sunset filed objections
regarding plans for the Tommie Project, and a month
thereafter, Sunset filed an appeal challenging the approval of
the Tommie Project. The City nonetheless approved the
Tommie Project on May 12, 2017. On June 9, 2017, Sunset
filed a Petition for Writ of Mandate, seeking a full EIR for
the Tommie Project.
While the state court appeal was pending, Relevant and
Thompson settled their disputes regarding the Thompson
Project and Tommie Project on August 24, 2017, and a
formal agreement was executed in January of the following
year.
10 RELEVANT GROUP, LLC V. NOURMAND
iii. Selma Project
Meanwhile, Relevant was working on the Selma Hotel
project (Selma Project). In December 2017, the City
published an MND for the Selma Project, and in March
2018, the City issued a Notice of Public Comment. That
month, Sunset submitted an objection letter. The City
approved the Selma Project, but Sunset promptly appealed.
During the pendency of this appeal, Sunset also sent a letter
to the Los Angeles County District Attorney’s Office, the
California Attorney’s Office, the California Attorney
General, and the U.S. Attorney for the Central District of
California, requesting that prosecutors open an investigation
into the City’s approvals of Relevant projects in Hollywood.
In March 2019, the City denied all appeals related to the
Selma Project. A month later, Sunset filed a Petition for
Writ of Mandate seeking a full EIR for the Selma Project. 4
On January 8, 2020, the state court issued an interlocutory
order on Sunset’s petition, the effects of which the parties
dispute. The Selma Project remains pending before the City.
iv. Schrader Project
Finally, the district court discussed the Schrader Hotel
project (Schrader Project). The parties dispute the extent of
Relevant’s interest in the Schrader Project. The hotel is
technically being developed by a third party (KoarGroup),
as opposed to Relevant, but Relevant allegedly had an
ownership interest in the Schrader Project because it was a
party to a purchase agreement and had made a $1 million
nonrefundable down payment towards the purchase price.
4
On April 4, 2019, an individual named Casey Maddren also filed a
Petition for Writ of Mandate against the Selma. There is a dispute about
the extent of Maddren’s ties to Defendants.
RELEVANT GROUP, LLC V. NOURMAND 11
As with the other proposed projects, Sunset submitted an
objection to the Schrader Project and appealed its approval,
but later withdrew its challenge. Relevant claims that
Defendants ended their opposition to the Schrader Project
after learning that Relevant had lost interest in the project.
In June 2019, Relevant filed a complaint in federal court
bringing three RICO claims under 18 U.S.C. §§ 1962(c) and
(d) against Defendants based on alleged extortion and
attempted extortion relating to Defendants’ petitioning
activity.
Relevant’s claims survived two motions to dismiss and a
motion for summary judgment. After summary judgment
and before trial, however, the case was transferred from
Judge Wright to Judge Gutierrez. Judge Gutierrez sua
sponte ordered supplemental briefing on the issues resolved
at summary judgment before Judge Wright, and in a new
order, reversed the prior determination and granted summary
judgment in favor of Defendants. Relevant timely appealed.
JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction pursuant to 28 U.S.C. § 1291. We
review de novo the district court’s summary judgment order.
2-Bar Ranch Ltd. P’ship v. U.S. Forest Serv., 996 F.3d 984,
990 (9th Cir. 2021).
ANALYSIS
I. The district court did not abuse its discretion in sua
sponte reconsidering the prior judge’s summary
judgment ruling.
As a threshold matter, Relevant argues that the law of the
case doctrine, “or, at a minimum, the principles underlying
the doctrine,” should have precluded the district court from
12 RELEVANT GROUP, LLC V. NOURMAND
sua sponte reconsidering its earlier decision denying
summary judgment.
Under the law of the case doctrine, “a court is generally
precluded from reconsidering an issue that has already been
decided by the same court . . . in the identical case.” Thomas
v. Bible, 983 F.2d 152, 154 (9th Cir. 1993). However, a
second district judge may review an interlocutory order by a
prior judge in the same case when “(1) the decision is clearly
erroneous and its enforcement would work a manifest
injustice, (2) intervening controlling authority makes
reconsideration appropriate, or (3) substantially different
evidence was adduced at a subsequent trial.” Zeyen v.
Bonneville Joint Dist., #93, --- F.4th ---, No. 23-35438, 2024
WL 3909574, at *5 (9th Cir. Aug. 23, 2024) (quoting Delta
Sav. Bank v. United States, 265 F.3d 1017, 1027 (9th Cir.
2001)). In the first scenario, where there has been no
intervening change in the law nor new evidence offered, the
district court judge must explain “(1) why the previous
decision is ‘clearly erroneous’; and (2) why enforcement of
the previous decision ‘would work a manifest injustice.’” Id.
(quoting Delta Sav. Bank, 265 F.3d at 1027). Moreover,
regardless of whether a judge has committed an abuse of
discretion by reviewing a prior judge’s ruling, “there is
nothing that insulates either judge’s conclusion from
appellate review.” Levald, Inc. v. City of Palm Desert, 998
F.2d 680, 687 (9th Cir. 1993); see also Delta Sav. Bank, 265
F.3d at 1027–28 (“[W]hether or not a district court judge
abuses his discretion by reversing an earlier judge’s ruling,
the Court of Appeals should review the merits of the
ruling.”).
As discussed above, this case was originally assigned to
Judge Wright, and then to Judge Gutierrez. By the time the
case reached Judge Gutierrez, Judge Wright had already
RELEVANT GROUP, LLC V. NOURMAND 13
denied Defendants’ two motions to dismiss and motion for
summary judgment. On January 20, 2023, Judge Gutierrez
vacated the trial date and ordered supplemental briefing on
the issues resolved by the prior summary judgment order. In
that order, Judge Gutierrez expressed doubt regarding Judge
Wright’s view of the Noerr-Pennington doctrine and noted
that “[t]he issues identified in this order are complex and
important and require a second look to ensure that the law is
correctly interpreted and applied. It is also in the interests of
justice that these issues are clarified for the parties, the
Court, and a jury should the case proceed to trial.”
The parties filed their supplemental briefs. On May 24,
2023, Judge Gutierrez granted summary judgment in favor
of Defendants. In his order, Judge Gutierrez acknowledged
Relevant’s objection to his sua sponte reconsideration of
summary judgment, noting that a judge generally should not
overrule a prior decision of another judge in the same case.
However, he was “firmly convinced that the prior order is
erroneous and, if upheld, would endanger core constitutional
rights.”
Judge Gutierrez did not abuse his discretion in
reconsidering Judge Wright’s denial of summary judgment.
Rather, Judge Gutierrez met the Delta Savings Bank
standard by explaining both how Judge Wright’s decision
was clearly erroneous (misapplication of the Noerr-
Pennington doctrine) and how manifest injustice would
occur should the prior decision be allowed to stand (“core
constitutional rights” were at issue).
Moreover, Relevant’s arguments that Judge Gutierrez
abused his discretion are not persuasive. It continuously
characterizes Judge Wright as having rejected defendants’
Noerr-Pennington defense “three separate times” prior to
14 RELEVANT GROUP, LLC V. NOURMAND
Judge Gutierrez’s reversal, thereby portraying
reconsideration as highly problematic. But the first two
times Judge Wright rejected defendants’ arguments were on
two separate motions to dismiss, filed by two separate
defendants. And as this court has said, “[p]retrial rulings,
often based on incomplete information, don’t bind district
judges for the remainder of the case.” Peralta, 744 F.3d at
1088. As to reconsideration of the final “time” Judge Wright
rejected the argument, our court has noted that “denial of
summary judgment often is reconsidered.” Id. (citing
Charles Alan Wright, Arthur R. Miller & Edward H. Cooper,
18B Fed. Prac. & Proc.: Juris. 2d § 4478.1 (2002)).
Regardless, any procedural error would be harmless. As
detailed below, Judge Gutierrez’s decision granting
summary judgment in favor of Defendants was correct.
II. The district court did not err in holding that
Defendants’ activities were protected under the
Noerr-Pennington Doctrine.
The Noerr-Pennington doctrine “is a rule of statutory
construction that requires courts to construe statutes to avoid
burdening conduct that implicates the protections of the
Petition Clause of the First Amendment.” United States v.
Koziol, 993 F.3d 1160, 1171 (9th Cir. 2021). That clause
protects “the right of the people . . . to petition the
government for a redress of grievances.” Id. (quoting U.S.
Const. amend. I). The doctrine originally arose in the
antitrust context but has since been applied “outside the
antitrust field.” Sosa v. DIRECTV, Inc., 437 F.3d 923, 930
(9th Cir. 2006).
“Under the Noerr-Pennington doctrine, those who
petition any department of the government for redress are
generally immune from statutory liability for their
RELEVANT GROUP, LLC V. NOURMAND 15
petitioning conduct.” Id. at 929. The classic example is
Noerr itself, where a group of truck operators sued a group
of railroad companies under the antitrust laws after the
railroads began a publicity campaign to obtain legislation
favoring their industry. E. R.R. Presidents Conf. v. Noerr
Motor Freight, Inc., 365 U.S. 127, 129 (1961). The Court
held that the publicity campaign was protected petitioning
activity, notwithstanding any underlying anticompetitive
motive on the railroads’ part. Id. at 136. We have since
extended Noerr protection to lawsuits, noting that the
doctrine “overprotects baseless petitions so as to ensure
citizens may enjoy the right of access to the courts without
fear of prosecution.” Sosa, 437 F.3d at 934.
However, “neither the Petition Clause nor the Noerr-
Pennington doctrine protects sham petitions, and statutes
need not be construed to permit them.” Id. at 932. Our court
has identified three circumstances in which the sham
litigation exception might apply: first, where the lawsuit is
objectively baseless and the defendant’s motive in bringing
it was unlawful, Pro. Real Est. Invs., Inc. v. Columbia
Pictures Indus., Inc., 508 U.S. 49, 54 (1993) (PREI); second,
where the conduct involves a series of lawsuits “brought
pursuant to a policy of starting legal proceedings without
regard to the merits” and for an unlawful purpose, USS–
POSCO Indus. v. Contra Costa Cnty Bldg. & Constr. Trades
Council, 31 F.3d 800, 810–11 (9th Cir. 1994) (POSCO); and
third, if the allegedly unlawful conduct “consists of making
intentional misrepresentations to the court, litigation can be
deemed a sham if ‘a party’s knowing fraud upon, or its
intentional misrepresentations to, the court deprive the
litigation of its legitimacy.’” Sosa, 437 F.3d at 938 (quoting
Kottle v. Nw. Kidney Ctrs., 146 F.3d 1056, 1060 (9th Cir.
1998)).
16 RELEVANT GROUP, LLC V. NOURMAND
A. The PREI framework rather than the POSCO
framework applies.
Relevant’s first argument is that the district court erred
by applying the test to determine whether litigation activity
is a “sham” under the framework in PREI as opposed to that
in POSCO (i.e., the first as opposed to the second of the three
circumstances set forth above). To understand that
argument, we need to consider each of these cases.
PREI involved a dispute between a company that owned
copyrights in certain films (Columbia) and a hotel where
guests could rent those films to watch in their rooms (PRE).
508 U.S. at 51–53. When Columbia sued PRE for copyright
infringement, PRE counterclaimed, alleging that the
copyright suit was a sham brought with the motive of
monopolizing movie distribution. Id. at 53. The Supreme
Court affirmed the district court’s decision to deny discovery
into Columbia’s subjective motives for bringing the
copyright suit, explaining that PRE first had to show that (1)
the lawsuit was “objectively baseless,” and only then that (2)
the defendant had an improper motive in bringing the suit.
Id. The Court ultimately held that the suit was not
objectively baseless and thus immunized.
POSCO, unlike PREI, is not a Supreme Court case, but
as explained below, drew its reasoning from Supreme Court
precedent. In POSCO, a group of unions “began a campaign
to eliminate non-union construction” by allegedly bringing a
“series of overlapping, repetitive and sham lawsuits” against
a company named BE&K, which had been awarded a
construction contract but did not employ union workers.
POSCO, 31 F.3d at 804. BE&K filed suit against the unions
alleging various antitrust violations, and the unions asserted
RELEVANT GROUP, LLC V. NOURMAND 17
that their activities were protected by the Noerr-Pennington
doctrine. Id.
In opposing the unions’ invocation of Noerr-Pennington,
BE&K cited a Supreme Court case from 1972, California
Motor Transport Co. v. Trucking Unlimited, where the
Supreme Court held the allegations “that petitioners
‘instituted the proceedings and actions . . . with or without
probable cause, and regardless of the merits of the cases,’”
were “[o]n their face . . . within the ‘sham’ exception.” 404
U.S. 508, 512, 516 (1972). In response, the unions argued
that PREI, discussed above, effectively overruled California
Motor Transport and that the two-step analysis applied to all
invocations of the “sham” exception. POSCO, 31 F.3d at
810.
The POSCO panel was “not persuaded that Professional
Real Estate Investors effectively overrules California Motor
Transport.” Id. It reconciled 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.
This inquiry is essentially retrospective: If
the suit turns out to have objective merit, the
plaintiff can’t proceed to inquire into
subjective purposes, and the action is
perforce not a sham.
California Motor Transport deals with the
case where the defendant is accused of
bringing a whole series of legal
proceedings . . . [It] recognized that the filing
of a whole series of lawsuits and other legal
18 RELEVANT GROUP, LLC V. NOURMAND
actions without regard to the merits has far
more serious implications than filing a single
action, and can serve as a very effective
restraint on trade. When dealing with a series
of lawsuits, the question is not whether any
one of them has merit—some may turn out
to, just as a matter of chance—but whether
they are brought pursuant to a policy of
starting legal proceedings without regard to
the merits and for the purpose of injuring a
market rival. The inquiry in such cases is
prospective: Were the legal filings made, not
out of a genuine interest in redressing
grievances, but as part of a pattern or practice
of successive filings undertaken essentially
for purposes of harassment?
Id. at 810–11. Unfortunately, cases in our circuit since PREI
and POSCO have occasionally blurred the lines concerning
which test should apply and when. For example, while cases
originally referred to PREI as the test to apply when a
“single” suit is at issue, subsequent cases have described
PREI as the test to use when there is “a single sham lawsuit
(or a small number of such suits).” See, e.g., Freeman v.
Lasky, Haas & Cohler, 410 F.3d 1180, 1184 (9th Cir. 2005)
(emphasis added) (citing Kottle, 146 F.3d at 1060).
Similarly, we have never defined what number constitutes a
“series” of lawsuits in POSCO. See, e.g., Amarel v. Connell,
102 F.3d 1494, 1519 (9th Cir. 1996), as amended (Jan. 15,
1997) (“[W]e do not attempt to define here the number of
RELEVANT GROUP, LLC V. NOURMAND 19
legal proceedings needed to allege a ‘series’ or ‘pattern’ of
litigation as required in [POSCO].”). 5
The district court handled this dilemma by surveying the
case law applying PREI and POSCO and comparing it to the
facts here. It noted, for example, that we declined to apply
the POSCO exception in Amarel, 102 F.3d at 1519, because
plaintiffs had “cite[d] only two lawsuits, not a ‘series’ or a
‘pattern’ of them.” It also noted that POSCO itself involved
significantly more lawsuits: twenty-nine, to be exact. See
POSCO, 31 F.3d at 811. Noting that Defendants challenged
four of Relevant’s projects in CEQA proceedings, the
district court concluded: “Four is much closer to two than
twenty-nine, and so the PREI exception should apply.”
Relevant argues that the district court “erred in
presuming that [application of] the [POSCO] exception is a
mere counting exercise.” It asserts that the district court
instead should have conducted a “holistic” analysis of
Defendants’ conduct. It cites Clipper Exxpress v. Rocky
Mountain Motor Tariff Bureau, Inc., 690 F.2d 1240, 1256
(9th Cir. 1982) for the proposition that “it is not the number
of claims which is controlling, but whether the evidence
5
In some cases, it appears that it was easier for a panel to assume that
the POSCO test applied and to reach the merits of that test, rather than
determining which test applied at the outset. Cf. Kaiser Found. Health
Plan, Inc. v. Abbott Lab’ys, Inc., 552 F.3d 1033, 1046 (9th Cir. 2009)
(“We need not decide whether Kaiser has waived its argument that the
California Motor Transport test applies, for even under that test Kaiser
loses its sham litigation claim.”); B&G Foods N. Am., Inc. v. Embry, 29
F.4th 527, 539 (9th Cir. 2022), cert. denied, 143 S. Ct. 212 (2022)
(assuming that POSCO applied where plaintiff alleged that defendant
“filed or threatened to file dozens of cases,” but affirming dismissal of
complaint based on failure to plead success rate of lawsuits).
20 RELEVANT GROUP, LLC V. NOURMAND
shows that the claim or claims filed constitute an abuse of
process.” Id. at n.25.
But there are several problems with Relevant’s
argument. First, even setting aside the fact that Clipper was
decided before PREI and POSCO, that statement in Clipper
is taken out of context. The panel made the statement not to
suggest that one “action” can constitute numerous “actions”
under Noerr, but rather to rebut defendants’ assertion in that
case that Noerr-Pennington protection applies only where a
plaintiff has alleged more than one “sham.” Id. at 1256–57.
After reviewing Supreme Court case law, the Clipper court
explained: “there is no reason to believe that the [Supreme]
Court intended to extend the sham exception only to cases
involving repetitive claims.” Id. at 1256.
More to the point, Relevant’s proposed alternative
method of counting “proceedings” for purposes of the sham
exceptions is not supported by case law. Relevant contends
that the district court should have counted as separate
“proceedings” certain discrete actions Defendants took
while attempting to halt each of Relevant’s four projects,
such as “administrative objections and challenges.” In
particular, Relevant asserts that the district court should have
counted as “proceedings” various objections and appeals,
such as: “[an] Administrative appeal to the Planning and
Land Use Management [] Committee,” “Objections
submitted to the City Council”; “[a] Petition for writ of
mandamus filed in California Superior Court” and “[a]
Comment letter to Community Redevelopment Agency of
Los Angeles [] regarding proposed Owner Participation
Agreement.” When counting “proceedings” this way,
Relevant asserts that the total number of proceedings is
twenty, rather than four.
RELEVANT GROUP, LLC V. NOURMAND 21
Relevant argues that California Motor Transport
supports that we should count “comment letters,”
“objections” and “appeals” as discrete “proceedings”
because the Supreme Court there acknowledged that the
allegations “extended to rehearings and to reviews or appeals
from agency or court decisions.” 404 U.S. at 509. It also
cites to POSCO for the proposition that the sham exception
applies to “lawsuits and other legal actions,” POSCO, 31
F.3d at 811 (emphasis added), implying that comment letters
and objections would fall within the latter.
We are not persuaded. POSCO used the words
“lawsuits,” “actions” and “proceedings” interchangeably
throughout the opinion. Although the panel did not define
these terms, they are all words that refer to a larger concerted
effort toward a remedy, rather than to individual, discrete
actions taken within that effort, such as a letter sent to an
administrative body. See, e.g., Proceeding, Black’s Law
Dictionary (11th ed. 2019) (“The regular and orderly
progression of a lawsuit, including all acts and events
between the time of commencement and the entry of
judgment.” (emphasis added)); cf. Action at law, Black’s
Law Dictionary (11th ed. 2019) (“A civil suit stating a legal
cause of action and seeking only a legal remedy.”).
Moreover, California Motor Transport is vague
regarding whether it counted the above-quoted “rehearings
and . . . reviews or appeals from agency or court decisions”
as “proceedings” in the legal sense, or even what the
“proceedings” at issue constituted (e.g., objection letters,
comment letters, etc.). 404 U.S. at 509.6 Notably, there is
6
California Motor Transport was also an appeal from a motion to
dismiss, rather than from a motion for summary judgment and therefore
was subject to the laxer Fed. R. Civ. P. 12(b)(6) standard. Id.
22 RELEVANT GROUP, LLC V. NOURMAND
some suggestion in California Motor that petitioners “use[d]
administrative and judicial proceedings so as to deny
[respondents] ‘free and unlimited access’ to those tribunals,”
such that “the machinery of the agencies and the courts was
effectively closed to respondents.” Id. at 511. Those kinds
of allegations are not present here, where it appears that
Relevant was able to litigate each challenge brought by
Defendants in each applicable forum.
Ultimately, neither California Motor Transport nor
POSCO supports counting each discrete litigation activity as
a “proceeding” that together can constitute a “series of
proceedings” for purposes of the POSCO test. Indeed, to the
extent there is case law in our circuit defining what
constitutes a “proceeding” for purposes of the POSCO
exception, that case law is more harmful than helpful to
Relevant. In Manistee Town Center v. City of Glendale, 227
F.3d 1090, 1094 (9th Cir. 2000), we explained that “[t]he
sham exception is more easily applied to litigation, however,
than it is to lobbying before executive or legislative bodies.”
And in Kottle we stated that “for purposes of the sham
exception, executive entities are treated like judicial entities
only to the extent that their actions are guided by enforceable
standards subject to review.” 146 F.3d at 1062. Thus,
“[o]nly when administrative officials must follow rules is it
meaningful to ask whether” the sham exception applies. Id.
As N&A notes, there are several alleged “proceedings”
in this case that may not actually qualify as such for purposes
of the POSCO exception because many of the activities are
non-judicial. For example, N&A notes that “the permitting
process is non-judicial.” That fact removes a number of
discretionary decisions out of Relevant’s list of alleged
“proceedings” it seeks to count to have the court apply the
POSCO exception.
RELEVANT GROUP, LLC V. NOURMAND 23
Admittedly, the district court’s counting exercise might
seem elementary. But a review of our precedent shows that
it is not unreasonable. More importantly, Relevant’s
proposed counting method is both unsupported by case law
and would inevitably result in line-drawing problems. For
example, there is a reasonable argument that actions
Defendants had to take to exhaust their administrative
remedies should not be counted for purposes of the “sham”
exception. Similarly, we struggle to see how lower courts
hereafter would know whether to count a “letter” or
“motion” as a “proceeding,” or a dispositive motion as
opposed to discovery motion as a “proceeding,” just to name
a few examples.
In establishing its “series” framework, POSCO relied on
a fact pattern that involved twenty-nine lawsuits. POSCO,
31 F.3d at 810–11. Perhaps due to the rarity of that number,
its infrequent application in our case law is a feature rather
than a bug. Because this case only involves four actions
resembling “lawsuits” in the traditional sense, we apply the
PREI exception, rather than the POSCO exception to the
facts of this case.
B. Applying the PREI framework, the proceedings are
not shams.
Under the PREI exception, a proceeding is a “sham”
(1) “where the lawsuit is objectively baseless,” and
(2) where “the defendant’s motive in bringing it was
unlawful.” Sosa, 437 F.3d at 938. “Only if challenged
litigation is objectively meritless may a court examine the
litigant’s subjective motivation.” PREI, 508 U.S. at 50.
The district court found that Defendants’ actions were
not objectively baseless as a matter of law. Relevant argues
that the district court erred in reaching this conclusion
24 RELEVANT GROUP, LLC V. NOURMAND
because there were disputes of material fact regarding that
first prong of the PREI test. But “[w]here, as here, there is
no dispute over the predicate facts of the underlying legal
proceeding, a court may decide” objective baselessness “as
a matter of law.” Id. at 63; Clipper, 690 F.2d at 1254 (“These
allegations fall within the sham exception as a matter of
law.”). There are no factual (as opposed to legal) disputes
about the underlying proceedings here, which are made up
of “public legal filings and rulings,” the content of which the
parties do not dispute. Therefore, the district court did not
err by viewing the facts in the light most favorable to
Relevant, but still deciding objective baselessness as a
matter of law.
An action is objectively baseless when “no reasonable
litigant could realistically expect success on the merits.”
PREI, 508 U.S. at 60. As the PREI court explained,
objective reasonableness is measured by the existence of
“probable cause” as understood in traditional common law
actions. Id. at 62 (“The existence of probable cause to
institute legal proceedings precludes a finding that an
antitrust defendant has engaged in sham litigation.”). The
threshold for what constitutes probable cause is low: it
requires no more than a “reasonable belief” that there is
“some chance” “that [a] claim may be held valid upon
adjudication.” Id. at 62–63; 65; see also Theme Promotions,
Inc. v. News Am. Mktg. FSI, 546 F.3d 991, 1008 (9th Cir.
2008) (holding that suit was not objectively baseless where
it was “potentially meritorious”). While a winning lawsuit
“is by definition . . . not a sham,” the inverse is not true, and
“a court must resist the understandable temptation to engage
in post hoc reasoning by concluding” that an ultimately
unsuccessful “action must have been unreasonable or
RELEVANT GROUP, LLC V. NOURMAND 25
without foundation.” PREI, 508 U.S. at 61 n.5. (internal
quotation marks and citations omitted).
The district court concluded that the Thompson and
Tommie actions were not objective baseless because “[t]he
fact that Relevant settled both lawsuits is strong, if not
conclusive, evidence” of that fact. Relevant argues that the
district court’s reliance on the settlements as evidence of
probable cause was erroneous. It argues that when it comes
to settlement, “[a] victim facing ruin will pay anything to
avoid it—and where the threat of ruin comes from the
litigation process, that means settlement.” Id. at 60–61
(explaining that sham exception is concerned with the “use
[of] the governmental process—as opposed to the outcome
of that process—as an anticompetitive weapon”).
However, we have previously said that settlement
indicates a lawsuit is not objectively baseless. In Theme
Promotions, Inc. v. News America Marketing FSI, 546 F.3d
at 1008, the court analyzed whether pre-suit letters from one
party threatening litigation fell within the sham exception.
The court noted that “the letters can be interpreted as threats
to include the packaged goods companies in the ongoing
litigation between [the parties]” and that, to the extent that
interpretation was correct, “[t]he fact that this ongoing
litigation settled suggests that the original suit was not
objectively baseless.” Id.
Relevant fails to address Theme in its briefing. But even
if Relevant were correct that settlements are not indicative
of a lack of objective baselessness, that does not mean that
they are indicative of objective baselessness, either. A
survey of other cases in our circuit suggests that to the extent
settlements are relevant to the sham exception, they are only
relevant as to the second prong of the PREI exception, i.e.,
26 RELEVANT GROUP, LLC V. NOURMAND
whether the lawsuit was brought with an improper motive.
See, e.g., B&G, 29 F.4th at 541–42 (reversing district court’s
denial of leave to amend because new allegations could
“support the subjective element [of the PREI exception], as
they could support the inference that Defendants threatened
and filed suit because they wanted to improperly pressure
B&G into settling”); see also Rock River Commc’ns, Inc. v.
Universal Music Grp., Inc., 745 F.3d 343, 353 (9th Cir.
2014) (holding that allegations that a party hoped to enforce
its “rights through the threat of litigation rather than through
actual litigation” could “satisfy[ ] the second criterion for the
sham exception”); Koziol, 993 F.3d at 1172 n.12 (explaining
that government could prove “improper motive” even if
defendant filed threatened complaint because “the
incongruity between his settlement demands and the
complaint would be probative evidence of sham litigation”).
Moreover, as the district court noted, the terms of the
settlement here contained nonmonetary provisions that “a
CEQA litigant might want, including provisions for noise
reduction measures and a height reduction provision for the
Thompson hotel.” To the extent the Tommie/Thompson
settlements are relevant, it would suggest that the underlying
proceedings were not objectively baseless. Relevant
responds that the terms of the settlement also required it “to
forgo CEQA challenges to Defendants’ own future
developments, which is the antithesis of CEQA’s animating
purpose.” But as we said in Microsoft Corp. v. Motorola,
Inc., 795 F.3d 1024, 1048 (9th Cir. 2015), “a contractual
commitment [and enforcement of it] to refrain from
litigation does not violate the First Amendment; if it did,
every settlement of a lawsuit would be unenforceable as a
Noerr–Pennington violation.”
RELEVANT GROUP, LLC V. NOURMAND 27
The district court listed a few other reasons it thought the
Thompson/Tommie actions were not objectively baseless.
First, it noted that before trial was set to begin in the
Thompson suit, “the Judge issued a tentative order denying
the City’s motion to augment the administrative record,
which if granted ‘would [have] support[ed] the City’s
argument that it disclosed certain design changes in the
Project that are not found in the MND because they were
added by the Real Party to the Project after the public
comment period closed for the MND.’” Moreover, the
district court noted that “two other petitions were filed
against the project, which later settled.” “One of those other
petitioners was Lauren Farmer, who cited Sunset’s
objections and appeals to the City, and received a favorable
remand and injunction from state court.”
Relevant argues that neither of these facts is probative of
probable cause because “no court ever ordered an EIR.” But
we agree with the district court that Relevant’s framing of
what constitutes a “success” under CEQA is too narrow.
CEQA’s framework is unlike traditional litigation in that
it involves a multi-tiered and multi-layered review process,
rather than a win/loss binary. As described above, CEQA is
multi-tiered in that “success” may be found in the form of
something less than an EIR, such as an MND, which would
tentatively allow a project to proceed subject to certain
conditions. In addition, CEQA is multi-layered in the sense
that it involves broad participation by the public, and
requires the agency involved to review those comments.
Given that “[t]he overriding purpose of CEQA is to
ensure that agencies regulating activities that may affect the
quality of the environment give primary consideration to
preventing environmental damage,” Defendants’ actions
28 RELEVANT GROUP, LLC V. NOURMAND
cannot be said to be objectively baseless as they “succeeded”
in having the agency consider the environmental impacts of
Relevant’s projects. Save Our Big Trees, 241 Cal. App. 4th
at 704 (emphasis added) (citation omitted). As California
courts have noted, this suggests that CEQA creates a “low
threshold” for success. Georgetown Pres. Soc’y v. County
of El Dorado, 30 Cal. App. 5th 358, 371 (2018). But if
Relevant is concerned about the CEQA process being abused
(as many persons and entities have claimed has occurred
since its enactment), its recourse is to bring this to the
attention of the state legislature and the governor, not to try
to squash the process altogether in federal court.
For the same reason, the district court was correct to
conclude that the Selma litigation was not objectively
baseless. That conclusion is more obvious, as the state court
reviewing that petition explicitly found CEQA violations
and entered an order “for further proceedings and for the
City to make specific findings to clarify the Project’s
baseline and resolve the issue of the impact on air quality.”
Finally, the district court was correct to conclude that
objections to the Schrader Project were not objectively
baseless. The district court viewed the facts in the light most
favorable to Relevant, whose narrative is that Defendants
only halted their objections to the project once they found
out that Relevant was no longer involved. But even if that is
true, those facts are probative of improper motive, not
objective baselessness. See Koziol, 993 F.3d at 1171, 1180–
81 (noting that unlike the first prong, the second prong of
PREI test involves a subjective standard, and that “Koziol’s
failure to file the threatened lawsuit supports the second
prong of the sham exception (improper motive)”) (emphasis
added).
RELEVANT GROUP, LLC V. NOURMAND 29
In sum, the district court did not err in concluding that
Defendants’ actions pursuant to CEQA were not objectively
baseless. That is not surprising, given that we have
previously said that courts should not “lightly conclude in
any Noerr–Pennington case that the litigation in question is
objectively baseless, as doing so would leave that action
without the ordinary protections afforded by the First
Amendment, a result we would reach only with great
reluctance.” White v. Lee, 227 F.3d 1214, 1232 (9th Cir.
2000).
To be sure, Relevant raises several facts suggesting that
Defendants had an improper purpose in bringing their
actions. For example, Relevant asserts that when it met with
Nourmand regarding certain objections, Nourmand
responded, “you know the drill. It will take a check to make
this go away.” But we cannot review that evidence unless
we first find that Defendants’ actions were objectively
baseless. PREI, 508 U.S. at 50 (“Only if challenged
litigation is objectively meritless may a court examine the
litigant’s subjective motivation.”); White, 227 F.3d at 1232.
As the Supreme Court instructed, “[w]hether applying Noerr
as an antitrust doctrine or invoking it in other contexts, we
have repeatedly reaffirmed that evidence of anticompetitive
intent or purpose alone cannot transform otherwise
legitimate activity into a sham.” PREI, 508 U.S. at 59. That
conclusion makes sense in light of the doctrine’s ultimate
purpose, which is to “overprotect” potentially baseless
petitions to ensure that First Amendment rights are not
chilled. See Sosa, 437 F.3d at 934 (referring to Noerr-
Pennington protection as “breathing room protection”);
White, 227 F.3d at 1233 (“This court has held that when an
action involves the right to petition governmental bodies
under Noerr–Pennington, it is necessary to apply a
30 RELEVANT GROUP, LLC V. NOURMAND
heightened level of protection . . . to avoid ‘a chilling effect
on the exercise of this fundamental First Amendment right.”
(internal quotations omitted)).
Because the district court correctly held that Defendants’
CEQA actions did not fall within the sham exception, we
need not reach their other arguments to affirm the district
court. These arguments are that “‘litigation activity’ can
never be a ‘predicate act’ for purposes of civil RICO
liability,” and that Relevant has not alleged enough predicate
acts to sustain a cause of action under RICO. Both of these
questions involve unresolved issues of law, and we do not
address them here. See PDK Labs, Inc. v. U.S. D.E.A., 362
F.3d 786, 799 (D.C. Cir. 2004) (“[T]he cardinal principle of
judicial restraint—if it is not necessary to decide more, it is
necessary not to decide more—counsels us to go no
further.”) (Roberts, J., concurring in part and concurring in
the judgment).
CONCLUSION
For the foregoing reasons, we AFFIRM the order of the
district court.