Sosa v. DIRECTV, Inc.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ROD SOSA; GARY WHITTAKER; 

RODNEY BYLSMA,

Plaintiffs-Appellants,

v.

DIRECTV, INC.; HUGHES

ELECTRONICS CORPORATION;

GENERAL MOTORS CORPORATION; No. 04-55036

YARMUTH WILSDON CALFO, PLLC;

GREER, HERZ & ADAMS, LLP;  D.C. No.

CV-03-05972-AHM

STUMP, STOREY, CALLAHAN &

OPINION

DIETRICH, PA; DIRECTV END

USER DEVELOPMENT GROUP;

DIRECTV END USER RECOVERY

PROJECT, LLC; SECURE SIGNALS

INTERNATIONAL; MCGINNIS GROUP

INTERNATIONAL, LLC,

Defendants-Appellees.



Appeal from the United States District Court

for the Central District of California

A. Howard Matz, District Judge, Presiding

Argued and Submitted

November 14, 2005—Pasadena, California

Filed February 15, 2006

Before: Ferdinand F. Fernandez and Marsha S. Berzon,

Circuit Judges, and Owen Panner,* District Judge.

*The Honorable Owen Panner, Senior United States District Judge for

the District of Oregon, sitting by designation.

1669

1670 SOSA v. DIRECTV, INC.

Opinion by Judge Berzon;

Concurrence by Judge Panner

SOSA v. DIRECTV, INC. 1673

COUNSEL

Jeffrey Willens, Esq., Yorba Linda, California, for the

plaintiffs-appellants.

Dale H. Oliver, Los Angeles, California, argued the case for

the defendants-appellees. Michael E. Williams and A. Eric

Bjorgum, Los Angeles, California, were on the briefs.

1674 SOSA v. DIRECTV, INC.

OPINION

BERZON, Circuit Judge:

DIRECTV, Inc., et al. (“DIRECTV”) sent tens of thousands

of demand letters alleging that the recipients had accessed

DIRECTV’s satellite television signal illegally and would be

sued if they did not quickly settle DIRECTV’s claims against

them under the Federal Communications Act. Plaintiffs Rod

Sosa, et al. (“Sosa”) filed this class action lawsuit on behalf

of themselves and a putative class of recipients of the letters

who reached settlements with DIRECTV, claiming that

DIRECTV violated the Racketeer Influenced and Corrupt

Organizations Act (“RICO”), 18 U.S.C. §§ 1961-1968, by

mailing the presuit demand letters. The central question

before us is whether DIRECTV is immune from liability

under RICO, as interpreted in light of the Noerr-Pennington

doctrine deriving from the Petition Clause of the First

Amendment.

I.

DIRECTV broadcasts television signals via satellite to mil-

lions of consumers throughout the United States. The signals

broadcast from the satellites are electronically scrambled. To

receive the signals in an intelligible manner, the consumer

needs to purchase special electronic equipment from third-

party vendors, and also needs an access card, or “smart card,”

supplied by DIRECTV. By using specialized smart card pro-

gramming equipment, an individual can gain unauthorized

access to DIRECTV’s signal, in violation of the Federal Com-

munications Act of 1934, 47 U.S.C. § 605. Such equipment

has a number of lawful applications as well, such as imple-

menting secure access to computer networks or controlling

physical access to buildings or rooms.

In the past several years, DIRECTV, suspicious that the

problem of signal theft had become widespread, initiated liti-

SOSA v. DIRECTV, INC. 1675

gation against several companies selling smart card program-

ming technology. In the course of this litigation, DIRECTV

obtained lists of the names and addresses of numerous indi-

viduals who had purchased such equipment. DIRECTV

obtained no information on the uses to which these individu-

als were putting this equipment, nor does its satellite technol-

ogy permit it to determine whether any particular individual

is receiving its signal. Using these lists, DIRECTV sent letters

to over 100,000 individual purchasers of smart card program-

ming equipment, asserting that DIRECTV had records show-

ing that the recipient had used the equipment to steal its

signal, accusing the recipient of violating a federal criminal

statute, and threatening civil legal action unless the recipient

forfeited the equipment to DIRECTV and paid DIRECTV an

unspecified sum to settle its claim.1 When a number of recipi-

1

A typical letter reads:

Business records recently obtained by this office show that you

purchased illegal signal theft equipment to gain unauthorized

access to DIRECTV’s programming. . . . [Y]our purchase and

use, or attempted use . . . violates federal and state laws. . . .

Your purchase, possession and use of signal theft equipment to

gain unauthorized access to DIRECTV’s satellite television pro-

gramming subjects you to statutory damages of up to $10,000 per

violation. . . . Moreover, your involvement in modifying devices

to illegally gain access to DIRECTV’s programming increases

potential statutory damages to $100,000.

DIRECTV is prepared to release its claims in return for your

agreement to: (1) surrender all illegally modified Access Cards or

other satellite signal theft devices in your possession, custody or

control; (2) execute a written statement to the effect that you will

not purchase or use illegal signal theft devices to obtain satellite

programming in the future, nor will you have any involvement in

the unauthorized reception and use of DIRECTV’s satellite tele-

vision programming; and (3) pay a monetary sum to DIRECTV

for your past wrongful conduct and the damages thereby incurred

by the company.

If you should choose to reject DIRECTV’s settlement offer, or

should you fail to respond, please be advised that DIRECTV will

1676 SOSA v. DIRECTV, INC.

ents contacted DIRECTV by telephone to protest their inno-

cence of the alleged conduct, DIRECTV repeated its

accusations and threats to sue. Rather than incur the expense

of engaging an attorney to respond, some allegedly innocent

recipients, including the three named plaintiffs here, paid

DIRECTV thousands of dollars to settle the claims.

Subsequently, a number of recipients, including all the

plaintiffs in this action, initiated litigation against DIRECTV

in California Superior Court in an action styled Blanchard v.

DIRECTV, Inc., No. BC 284166 (Cal Super. Ct., Oct. 28,

2002), asserting, inter alia, that the letters constituted extor-

tion and violated California’s unfair business practices statute,

Cal. Bus. & Prof. Code §§ 17200-17210. DIRECTV opposed

the litigation by filing a motion to strike under California’s

anti-SLAPP2 statute, Cal. Civ. Proc. Code § 425.16. The state

court granted the anti-SLAPP motion, and Sosa appealed.

Subsequently, Sosa filed the present action in the U.S. Dis-

trict Court for the Central District of California, asserting vio-

lations of RICO and alleging, inter alia, extortion and mail

and wire fraud as predicate acts. DIRECTV filed a motion to

initiate legal proceedings in Federal District Court seeking the

award of damages and other relief . . . .

Copies of the letters received by the named plaintiffs were lodged with

the district court prior to the hearing on DIRECTV’s motion to dismiss.

Although the letter constitutes extrinsic evidence, the district court’s con-

sideration of it did not convert DIRECTV’s 12(b)(6) motion into a motion

for summary judgement, as the letter’s authenticity was not contested and

the letter was crucial to Sosa’s claims. See Parrino v. FHP, Inc., 146 F.3d

699, 706 (9th Cir. 1998).

2

“SLAPP is an acronym for ‘strategic lawsuit against public participa-

tion.’ ” Jarrow Formulas, Inc. v. LaMarche, 31 Cal.4th 728, 732 n.1

(2003). The anti-SLAPP statute permits summary dismissal of actions

“arising from any act of [the defendant] in furtherance of the person’s

right of petition or free speech” unless the plaintiff can show a probability

of success on the claim. Cal. Civ. Proc. Code § 425.16(b)(1).

SOSA v. DIRECTV, INC. 1677

dismiss under Fed. Rule Civ. P. 12(b)(6), asserting that Sosa

had failed to state a claim under RICO and that Sosa’s claims

were barred by various abstention doctrines and the Noerr-

Pennington doctrine. The district court granted the motion,

basing its ruling solely on the Noerr-Pennington doctrine.

Sosa then filed this appeal. After the federal action was dis-

missed but before the hearing on Sosa’s appeal, the California

Court of Appeal affirmed the anti-SLAPP ruling in the Blan-

chard case, and the California Supreme Court denied review.

We review de novo the district court’s dismissal for failure

to state a claim under Rule 12(b)(6). Madison v. Graham, 316

F.3d 867, 869 (9th Cir. 2002).

II.

On appeal, DIRECTV urges that we need not address the

merits of the district court’s decision because, under the doc-

trine of res judicata, the state court decision in the Blanchard

case precludes the case at bar. To determine the preclusive

effect of the state court judgment in Blanchard, we look to

state law. Manufactured Home Cmtys. Inc. v. City of San

Jose, 420 F.3d 1022, 1031 (9th Cir. 2005). In California,

“[r]es judicata, or claim preclusion, prevents relitigation of the

same cause of action in a second suit between the same par-

ties or parties in privity with them.” Mycogen Corp. v. Mon-

santo Co., 28 Cal. 4th 888, 896 (2002).

[1] Like the federal courts, California courts recognize the

rule that where parallel litigation is pending in different tribu-

nals, the first case to reach final judgment is accorded preclu-

sive effect, regardless of the order in which the cases were

filed. Compare Domestic & Foreign Petroleum Co. v. Long,

4 Cal. 2d 547, 562 (1935) (California rule), with Americana

Fabrics, Inc. v. L & L Textiles, Inc., 754 F.2d 1524, 1529 (9th

Cir. 1985) (federal rule). California and federal law differ,

however, with respect to when a judgment rendered by a trial

court becomes a “final judgment” for res judicata purposes.

1678 SOSA v. DIRECTV, INC.

“Under California law, . . . a judgment is not final for pur-

poses of res judicata during the pendency of and until the res-

olution of an appeal.” Eichman v. Fotomat Corp., 759 F.2d

1434, 1439 (9th Cir. 1985) (citing Agarwal v. Johnson, 25

Cal. 3d 932, 954 n.11 (1979), disapproved on other grounds

by White v. Ultramar, Inc., 21 Cal.4th 563, 571 (1999), and

Cal. Civ. Proc. Code § 1049). The judgment in the Blanchard

litigation is now final, because there has been a decision on

appeal as well as denial of review by the California Supreme

Court.

[2] In contrast, “[i]n federal courts, a district court judg-

ment is ‘final’ for purposes of res judicata.” Orion Tire Corp.

v. Goodyear Tire & Rubber Co., 268 F.3d 1133, 1135 n.2 (9th

Cir. 2001). This is so even during the pendency of an appeal.

Eichman, 759 F.2d at 1439. Moreover, “[a] federal [district

court] judgment is as final in California courts as it would be

in federal courts.” Calhoun v. Franchise Tax Bd., 20 Cal.3d

881, 887 (1978).

[3] Assuming, without deciding, that the Blanchard action

and the instant case involve the same cause of action and the

same parties, the judgment of the California Court of Appeal

cannot be given preclusive effect in the present litigation. The

Blanchard case was filed on October 28, 2002, and dismissed

by the Los Angeles County Superior Court on April 1, 2003,

several months before the federal litigation was filed. The dis-

trict court, however, reached the merits and entered judgment

before the Blanchard plaintiffs had exhausted their appeals.

So, because of the differing rules governing the finality of

state and federal judgments, the federal case was the first to

reach final judgment. Accordingly, “the [Blanchard judg-

ment] can scarcely constitute a bar to the instant action,

decided below on an earlier date.” Flood v. Harrington, 532

F.2d 1248, 1250 (9th Cir. 1976); see also Freeman United

Coal Mining Co. v. Office of Workers’ Comp. Program, 20

F.3d 289, 294 (7th Cir. 1994) (later rendered state industrial

commission finding not preclusive in appeal of earlier decided

SOSA v. DIRECTV, INC. 1679

federal disability claim). We therefore proceed to the merits

of the district court’s decision.3

III.

The district court dismissed Sosa’s suit on the basis that

DIRECTV’s sending of the demand letters was conduct

immunized from RICO liability under the Noerr-Pennington

doctrine. We review de novo the district court’s dismissal on

3

Because we conclude on the merits that the district court should be

affirmed, we have no occasion to consider the thorny issue that would

arise under Flood were we instead to reverse: Would reversing the district

court’s first-in-time final judgment raise the possibility on remand that the

still-valid California final judgment would become preclusive of the fed-

eral litigation?

The concurrence assumes the answer to this complicated question, and

argues that our decision on the merits is “advisory.” Flood held that in cir-

cumstances where, because of the posture of the case on appeal, res judi-

cata does not apply, the court must address the merits of the appeal. Flood,

532 F.2d at 1250. Principles of stare decisis require that we follow Flood

in this regard. See Baker v. Delta Air Lines, Inc., 6 F.3d 632, 637 (9th Cir.

1993) (“We are bound by decisions of prior panels unless an en banc deci-

sion, Supreme Court decision, or subsequent legislation undermines those

decisions.” (citations and internal quotation marks omitted).

Moreover, before we can determine whether the Flood rule or some

other rule would apply were we to reverse the district court, we must

address the merits of the district court’s decision. Because our decision on

the merits is necessary to the resolution of this case, it is not dictum on

any view of the nature of dictum. Compare Miller v. Gammie, 335 F.3d

889, 902 (9th Cir.2003) (en banc) (Tashima, J., concurring) (“dictum [i]s

a statement made during the course of delivering a judicial opinion, but

one that is unnecessary to the decision in the case and therefore not prece-

dential.” (citing Best Life Assurance Co. v. Comm’r, 281 F.3d 828, 834

(9th Cir.2002) (citations and internal quotation marks omitted)) with

Miranda B. v. Kitzhaber, 328 F.3d 1181, 1186 (9th Cir. 2003).(“[W]here

a panel confronts an issue germane to the eventual resolution of the case,

and resolves it after reasoned consideration in a published opinion, that

ruling becomes the law of the circuit, regardless of whether doing so is

necessary in some strict logical sense.” (quoting United States v. Johnson,

256 F.3d 895, 914 (9th Cir. 2001) (en banc)).

1680 SOSA v. DIRECTV, INC.

the ground of Noerr-Pennington immunity. Or. Natural Res.

Council v. Mohla, 944 F.2d 531, 533 (9th Cir. 1991).

A.

[4] The Noerr-Pennington doctrine derives from the First

Amendment’s guarantee of “the right of the people . . . to

petition the Government for a redress of grievances.” U.S.

Const. amend. I. Under the Noerr-Pennington doctrine, those

who petition any department of the government for redress

are generally immune from statutory liability for their peti-

tioning conduct. Empress LLC v. City & County of S.F., 419

F.3d 1052, 1056 (9th Cir. 2005) (citing Manistee Town Ctr.

v. City of Glendale, 227 F.3d 1090, 1092 (9th Cir. 2000)).

The Noerr-Pennington doctrine arose in the antitrust con-

text and initially reflected the Supreme Court’s effort to rec-

oncile the Sherman Act with the First Amendment Petition

Clause. In Eastern Railroad Presidents Conference v. Noerr

Motor Freight, Inc., 365 U.S. 127 (1961), trucking companies

brought suit against railroad companies alleging that efforts

by the railroads to influence legislation regulating trucking

violated the Sherman Act. Id. at 129. The Court held that “the

Sherman Act does not prohibit . . . persons from associating

. . . in an attempt to persuade the legislature or the executive

to take particular action with respect to a law that would pro-

duce a restraint or a monopoly.” Id. at 136-37. In reaching this

conclusion, the Court observed that construing the Sherman

Act to reach such conduct “would raise important constitu-

tional questions” respecting the right of petition, stating “we

cannot . . . lightly impute to Congress an intent to invade . . .

freedoms” protected by the Bill of Rights. Id. at 138.

United Mine Workers v. Pennington, 381 U.S. 657 (1965),

extended this antitrust immunity to those engaging in lobby-

ing activities directed toward executive branch officials,

regardless of any anticompetitive intent or purpose. Subse-

quently, in California Motor Transport Co. v. Trucking

SOSA v. DIRECTV, INC. 1681

Unlimited, 404 U.S. 508 (1972), the Court, recognizing that

“the right to petition extends to all departments of the govern-

ment” and that “[t]he right of access to the courts is . . . but

one aspect of the right of petition,” extended Noerr-

Pennington immunity to the use of “the channels and proce-

dures of state and federal . . . courts to advocate [groups’]

causes and points of view respecting resolution of their busi-

ness and economic interests vis-á-vis their competitors.” Id. at

510-11 (emphasis added).

Recognizing the constitutional foundation of the doctrine,

the Supreme Court has applied Noerr-Pennington principles

outside the antitrust field. In Bill Johnson’s Restaurants, Inc.

v. NLRB, 461 U.S. 731 (1983), the Supreme Court held that

the Petition Clause protects access to judicial processes in the

labor relations context, and that the labor laws must be inter-

preted, where possible, to avoid burdening such access. See

id. at 741-44. In Bill Johnson’s, a restauranteur filed a civil

suit seeking to enjoin employees from picketing his restaurant

as part of a unionization campaign. In response, the employ-

ees filed an unfair labor practice charge with the National

Labor Relations Board, alleging that the civil suit was retalia-

tory and violated section 8(a) of the of National Labor Rela-

tions Act (“NLRA”), 29 U.S.C. § 158(a)(1), (4). See Bill

Johnson’s, 461 U.S. at 734-35. The Court, citing California

Motor Transport, held that, in light of the protection afforded

to the right of access to the courts by the Petition Clause, a

construction of the NLRA permitting the Board to enjoin a

well-founded but retaliatory lawsuit was untenable. Id. at 743.

[5] In BE&K Construction Co. v. NLRB, 536 U.S. 516, 525

(2002), the Supreme Court expanded on its holding in Bill

Johnson’s, making clear that the principles of statutory con-

struction embodied in the Noerr-Pennington doctrine apply

with full force in other statutory contexts. In BE&K, the Court

considered whether the National Labor Relations Act, 29

U.S.C. §§ 151-169, permits the National Labor Relations

Board to impose liability on an employer for its unsuccessful

1682 SOSA v. DIRECTV, INC.

prosecution of lawsuits that, while not objectively baseless,

were brought for the purpose of retaliating against workers for

exercising the rights the NLRA protects. BE&K, 536 U.S. at

529-30. In concluding that it does not, the Court conducted a

three step analysis: The Court first identified the burden that

the threat of an adverse NLRA adjudication imposes on an

employer’s petitioning rights. Id. at 530. The Court then

examined the precise petitioning activity at issue, to deter-

mine whether the burden on that activity implicated the pro-

tection of the Petition Clause. Id. at 530-33. Finally, the Court

analyzed the NLRA to see whether it could be construed so

as to preclude such a burden on the protected petitioning

activity. Id. at 535-37.

The Court concluded that a finding that a lawsuit was ille-

gal “is a burden by itself,” because various legal conse-

quences flow from such a finding and because such a finding

“poses the threat of reputational harm that is different and

additional to any burden posed by other penalties.” Id. at 530.

At the second step of its analysis, the Court focused on

whether the burdened petitioning conduct — there, the filing

of reasonably based but unsuccessful lawsuits — fell within

the protection of the Petition Clause. Analogizing to the

speech context, the Court analyzed whether, giving the right

of petition “that breathing space essential to [its] fruitful exer-

cise,” id. at 531 (quoting Gertz v. Robert Welch, Inc., 418

U.S. 323, 342 (1974)) (internal quotation marks omitted),

such lawsuits fall within the protection of the Petition Clause.

Id. The Court found that because the lawsuits at issue were

not baseless, they did not fall within the established “sham lit-

igation” exception laid out in Professional Real Estate Inves-

tors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49

(1993) (“PRE II”), or within the analogous rule in the labor

law context established in Bill Johnson’s. Canvassing a num-

ber of reasons why the Petition Clause might require protec-

tion of “the class of reasonably based but unsuccessful

lawsuits,” the Court concluded that “whether this class of

suits falls outside the scope of the First Amendment’s Petition

SOSA v. DIRECTV, INC. 1683

Clause . . . presents a difficult constitutional question,”

BE&K, 536 U.S. at 531-32, even where such suits were

brought with a retaliatory motive, id. at 534-35.

[6] Proceeding to the final step of its analysis, the Court

construed the NLRA narrowly to avoid the constitutional

issue. The Court observed that “[i]n a prior labor law case, we

avoided a similarly difficult First Amendment issue by adopt-

ing a limiting construction of the relevant NLRA provision.”

Id. at 535 (citing Edward J. DeBartolo Corp. v. Fla. Gulf

Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 575

(1988)).4 Following DeBartolo, and consistent with the statu-

tory construction principles applied in the Noerr-Pennington

line of cases, the BE&K Court found the relevant section of

the NLRA, section 8(a)(1), 29 U.S.C. § 158(a)(1), susceptible

of both a broad construction that might reach the lawsuits at

issue, as well as a narrow construction that would not. BE&K,

536 U.S. at 536. The Court found “nothing in the statutory

text indicating that §158(a)(1) must be read to reach all rea-

sonably based but unsuccessful suits filed with a retaliatory

purpose,” and, to avoid implicating the Petition Clause,

adopted the narrower reading. Id.

[7] In light of BE&K’s application of Noerr-Pennington to

the NLRA, we conclude that the Noerr-Pennington doctrine

stands for a generic rule of statutory construction, applicable

to any statutory interpretation that could implicate the rights

protected by the Petition Clause. See White v. Lee, 227 F.3d

1214, 1231 (9th Cir. 2000) (holding, before BE&K, that

because it “is based on and implements the First Amendment

right to petition,” the Noerr-Pennington doctrine is not lim-

ited to the antitrust context, but “applies equally in all con-

4

The DeBartolo case involved a lawsuit to enjoin handbilling by a labor

union. Finding that neither the statute nor the legislative history indicated

the clear congressional intent to reach the handbilling at issue, the Court

declined to give the applicable NLRA provision a construction that would

raise serious First Amendment questions. DeBartolo, 485 U.S. at 578-88.

1684 SOSA v. DIRECTV, INC.

texts”). Under the Noerr-Pennington rule of statutory

construction, we must construe federal statutes so as to avoid

burdening conduct that implicates the protections afforded by

the Petition Clause unless the statute clearly provides other-

wise.5 We will not “lightly impute to Congress an intent to

invade . . . freedoms” protected by the Petition Clause. Noerr,

365 U.S. at 138.

In determining whether the burdened conduct falls under

the protection of the Petition Clause, we must give adequate

“breathing space” to the right of petition. BE&K, 536 U.S. at

531. On the other hand, neither the Petition Clause nor the

Noerr-Pennington doctrine protects sham petitions, and stat-

utes need not be construed to permit them. Where, however,

the burdened conduct could fairly fall within the scope of the

Petition Clause and a plausible construction of the applicable

statute is available that avoids the burden, we must give the

statute the reading that does not impinge on the right of petition.6

5

In this sense, Noerr-Pennington is a specific application of the rule of

statutory construction known as the canon of constitutional avoidance,

which requires a statute to be construed so as to avoid serious doubts as

to the constitutionality of an alternate construction. See, e.g., INS v. St.

Cyr, 533 U.S. 289, 299-300 (2001) (“[I]f an otherwise acceptable con-

struction of a statute would raise serious constitutional problems, and

where an alternative interpretation of the statute is ‘fairly possible,’ we are

obligated to construe the statute to avoid such problems.”); Ashwander v.

Tenn. Valley Auth., 297 U.S. 288, 341 (1936) (Brandeis, J., concurring)

(same).

6

Even before BE&K clarified that the principal application of the Noerr-

Pennington doctrine is as a rule of statutory construction, the body of

Noerr-Pennington law in our circuit has so applied the doctrine in cases

falling outside of the antitrust context. For example, in White, the U.S.

Department of Housing and Urban Development (“HUD”) conducted an

eight-month investigation into whether plaintiffs’ advocacy activities and

state court lawsuit opposing the development of a multi-family housing

unit in their neighborhood violated the Federal Housing Act (“FHA”), and

as a result, HUD officials advised plaintiffs to cease their litigation activi-

ties. White, 227 F.3d at 1220. Plaintiffs challenged this investigation as a

violation of their rights of free speech and petition. Id. We declined to

SOSA v. DIRECTV, INC. 1685

B.

Applying these principles here, we must determine whether

Sosa’s RICO lawsuit burdens DIRECTV’s petitioning activi-

ties. If it does, we must examine the precise petitioning con-

duct DIRECTV engaged in to determine whether the burden

identified may be imposed consistently with the Constitution.

If there is a substantial question that it may not, we must

determine whether RICO or the RICO predicate acts Sosa

alleges clearly provide for liability for the conduct at issue. If

a reasonable construction of RICO or the predicate act stat-

utes exists that avoids the burden, we will adopt that construc-

tion. Only where the statutes clearly provide for the burden

posed by the lawsuit will we address whether the statute may

construe the FHA broadly to reach the constitutionally protected activities

at issue in the case. Id. at 1239. Following Noerr-Pennington, we held that

the FHA did not preclude the filing of a reasonable but unsuccessful law-

suit, and instead imported into the FHA context the narrow “sham litiga-

tion” exception of PRE II. Id. at 1232-33; see also id. at 1232 n.14

(observing without deciding that the Noerr-Pennington doctrine may “pro-

vide[ ] broader protection than the First Amendment”). We have similarly

applied Noerr-Pennington as a rule of construction in other statutory con-

texts. See Freeman v. Lasky, Haas & Cohler, 410 F.3d 1180, 1184 (9th

Cir. 2005) (Noerr-Pennington doctrine’s reach “extends only so far as

necessary to steer the Sherman Act clear of violating the First Amend-

ment.”); Manistee Town Center v. City of Glendale, 227 F.3d 1090, 1093

(9th Cir. 2000) (declining to interpret 42 U.S.C. § 1983 as subjecting gov-

ernmental entities or officials to liability for activity that would otherwise

be with the protection of the Noerr-Pennington doctrine).

Other circuits have similarly used Noerr-Pennington principles to guide

their interpretation of statutes, see, e.g., Tarpley v. Keistler, 188 F.3d 788,

794-95 (7th Cir. 1999) (refusing to construe 42 U.S.C. § 1983 as extend-

ing conspiracy liability to petitioning activity), as well as their application

of common law doctrines, see, e.g., Video Int’l Prod., Inc. v. Warner-

Amex Cable Commc’ns, Inc., 858 F.2d 1075, 1084 (5th Cir. 1988) (“There

is simply no reason that a common-law tort doctrine can any more permis-

sibly abridge or chill the constitutional right of petition than can a statu-

tory claim such as antitrust.”).

1686 SOSA v. DIRECTV, INC.

be applied to the petitioning conduct consistently with the

Constitution.

1.

[8] Sosa’s lawsuit seeks to impose RICO liability on

DIRECTV for sending the demand letters. A successful RICO

claim would quite plainly burden DIRECTV’s ability to settle

legal claims short of filing a lawsuit. Like the antitrust laws,

RICO provides for private enforcement and treble damages.

Compare 15 U.S.C. § 15(a) (Clayton Antitrust Act), with 18

U.S.C. § 1964(c) (RICO); see also BE&K, 536 U.S. at 528-29

(noting that treble damages provisions and private enforce-

ment demonstrate that antitrust suits may “pose a greater bur-

den on petitioning than the threat of an NLRA adjudication”).

Accordingly, Sosa’s RICO suit poses a burden on DIREC-

TV’s communication of the demand letters almost identical to

that posed by the Sherman Act claims on the petitioning con-

duct at issue in Noerr and its progeny.

2.

At the second step of the BE&K analysis, the question is

whether imposing these burdens on the sending of prelitiga-

tion demand letters runs afoul of the Petition Clause. In ana-

lyzing this question, we must consider whether the demand

letters constitute either protected petitioning activity or activ-

ity which must be protected to afford breathing space to the

right of petition guaranteed by the First Amendment.

[9] We have observed that only litigation activities which

constitute “communication[s] to the court” may be fairly

described as “petitions.” Freeman v. Lasky, Haas & Cohler,

410 F.3d 1180, 1184 (9th Cir. 2005). Such communications

include “[a] complaint, an answer, a counterclaim and other

assorted documents and pleadings, in which plaintiffs or

defendants make representations and present arguments to

support their request that the court do or not do something.”

SOSA v. DIRECTV, INC. 1687

Id. In contrast, the demand letters at issue in this case were

not communicated to the court, but were directed to private

parties prior to any petition being filed with the court.

[10] This conclusion is not the end of the inquiry, however.

Although the letters were not themselves petitions, the Peti-

tion Clause may nevertheless preclude burdening them so as

to preserve the breathing space required for the effective exer-

cise of the rights it protects. The notion of First Amendment

breathing space derives from cases in the Freedom of Speech

arena. In New York Times Co. v. Sullivan, 376 U.S. 254

(1964), the Supreme Court held that, to adequately safeguard

the freedom of speech, a defamation plaintiff who is a public

official must prove not only falsehood but also actual malice,

thereby providing protection to some false statements. Id. at

279-80. “Although the erroneous statement of fact is not wor-

thy of constitutional protection, . . . [t]he First Amendment

requires that we protect some falsehood in order to protect

speech that matters.” Gertz, 418 U.S. at 340-41. The protec-

tion is necessary “to assure to the freedoms of speech and

press that ‘breathing space’ essential to their fruitful exer-

cise.” Id. at 342.

Thus, under the breathing space principle, the First Amend-

ment protects two kinds of activities that do not come within

the protection of the speech clause in their own right: First,

certain classes of speech not meriting protection in themselves

— the false statements in New York Times, for example —

must nevertheless be protected in order fully to vindicate the

free speech rights guaranteed by the First Amendment. See,

e.g., New York Times, 376 U.S. at 279-80, 285 (holding that

false statements about public officials not made with actual

malice cannot give rise to damages for defamation). Second,

certain conduct, not in itself speech, is protected in order ade-

quately to protect the actor’s ability to exercise his free speech

rights. See, e.g., Buckley v. Valeo, 424 U.S. 1, 17 (1976) (per

curiam) (holding that conduct of giving or spending money in

political campaigns may not be regulated where conduct is

1688 SOSA v. DIRECTV, INC.

integrally intertwined with communication) (citing United

States v. O’Brien, 391 U.S. 367, 382 (1968)).

These principles are similarly applicable in the Petition

Clause context. PRE II recognized the applicability of the first

aspect of the breathing space principle when it defined the

Noerr-Pennington doctrine’s “sham litigation” exception as

requiring both objective baselessness and an improper motive.

PRE II, 508 U.S. at 60-61. This definition overprotects base-

less petitions so as to ensure citizens may enjoy the right of

access to the courts without fear of prosecution. BE&K made

this breathing room protection explicit. Recognizing that

under New York Times and Gertz, false statements are not

wholly unprotected by the First Amendment, the Court

observed that baseless litigation might also require protection

in some circumstances. BE&K, 536 U.S. at 531. Accordingly,

the Court noted, “we have never held that the entire class of

objectively baseless litigation may be enjoined or declared

unlawful even though such suits may advance no First

Amendment interests of their own.” Id.

The second aspect of the breathing space principle was rec-

ognized in Noerr itself, where the Court extended immunity

not only to the railroads’ direct communications with legisla-

tors but also to its public relations campaign, finding that the

latter’s aim was to influence the passage of favorable legisla-

tion. Noerr, 365 U.S. at 140-43. Building on this aspect of

Noerr, the Supreme Court, in Allied Tube & Conduit Corp. v.

Indian Head, Inc., held that “private action . . . cannot form

the basis for antitrust liability if it is ‘incidental’ to a valid

effort to influence governmental action.” 486 U.S. 492, 499

(1988) (quoting Noerr, 365 U.S. at 143). Similarly, in a series

of cases culminating in United Mine Workers of America v.

Illinois State Bar Ass’n, 389 U.S. 217 (1967), the Court held

that laws restricting the ability of unincorporated associations

to employ attorneys for their members, id. at 221-22, or to

advise their members to seek legal advice and to recommend

specific lawyers, Bhd. of R.R. Trainmen v. Virginia ex rel. Va.

SOSA v. DIRECTV, INC. 1689

State Bar, 377 U.S. 1, 8 (1964), violated the members’ rights

of association and petition, notwithstanding that such laws did

not directly restrict the members’ access to the courts or abil-

ity to obtain counsel independently. Ill. State Bar Ass’n, 398

U.S. at 222; Trainmen, 377 U.S. at 8; see also United Transp.

Union v. State Bar of Mich., 401 U.S. 576, 585-86 (1971);

NAACP v. Button, 371 U.S. 415, 433 (1963). This is so

because, to exercise its petitioning rights meaningfully, a

party may not be subjected to liability for conduct intimately

related to its petitioning activities. “The First Amendment

would . . . be a hollow promise if it left government free to

destroy or erode its guarantees by indirect restraints so long

as no law is passed that prohibits free speech, press, petition,

or assembly as such.” Ill. State Bar Ass’n, 389 U.S. at 222.

Consistent with the breathing space principle, we have rec-

ognized that, in the litigation context, not only petitions sent

directly to the court in the course of litigation, but also “con-

duct incidental to the prosecution of the suit” is protected by

the Noerr-Pennington doctrine. Columbia Pictures Indus.,

Inc. v. Prof’l Real Estate Investors, Inc., 944 F.2d 1525,

1528-29 (9th Cir. 1991) (“PRE I”), aff’d 508 U.S. 49 (1993);

see also Freeman, 410 F.3d at 1184.7 In PRE I, the defendant,

Professional Real Estate Investors (“PRE”), brought antitrust

counterclaims predicated in part on Columbia’s refusal to

enter into settlement negotiations with respect to Columbia’s

copyright infringement suit. We held that “[a] decision to

accept or reject an offer of settlement is conduct incidental to

the prosecution of the suit and not a separate and distinct

7

In Theofel v. Farey-Jones, 359 F.3d 1066, 1078-79 (9th Cir. 2004), we

stated in dicta that “[w]e are skeptical that Noerr-Pennington applies at all

to” a subpoena directed to a private party in private commercial litigation.

Nevertheless, we declined to reach the issue, finding that even if Noerr-

Pennington applied, the subpoena was objectively baseless and fell within

the doctrine’s sham exception. Id. at 1079. In Freeman, we answered the

question left open in Theofel, concluding that private litigation communi-

cations in commercial litigation sufficiently implicate the exercise of peti-

tioning rights to trigger Noerr-Pennington protection. 410 F.3d at 1184.

1690 SOSA v. DIRECTV, INC.

activity which might form the basis for antitrust liability.”

PRE I, 944 F.2d at 1528. We concluded that Noerr-

Pennington applied with equal force to such conduct. Id. at

1529. Thus, where the underlying litigation fell within the

protection of the Petition Clause, such incidental conduct

would also be protected. Id.

In Freeman, the plaintiff brought suit alleging that discov-

ery misconduct in related litigation constituted a violation of

the antitrust laws. 410 F.3d at 1183. The court held that dis-

covery communications, while not themselves petitions, con-

stitute “conduct incidental to a petition.” Id. at 1184 (internal

quotation marks omitted). Therefore, unless the underlying

petition itself fell outside the protection of the right of peti-

tion, these communications come within the Noerr-

Pennington doctrine. Id.

[11] Accordingly, the law of this circuit establishes that

communications between private parties are sufficiently

within the protection of the Petition Clause to trigger the

Noerr-Pennington doctrine, so long as they are sufficiently

related to petitioning activity.8

Here, the conduct alleged to enjoy Noerr-Pennington

immunity was DIRECTV’s communication of settlement

demands prior to initiating any actual litigation. Unlike the

situations in PRE I and Freeman, there was no suit ongoing,

and thus, no existing “petition” to which the settlement

demands were incidental.

Sosa contends that this distinction is decisive. He argues

8

We also reject Sosa’s argument that because the demand letters here

were sent from one private party to another to further DIRECTV’s com-

mercial interests, they do not implicate the Petition Clause. Indeed, in

nearly every instance in which Noerr-Pennington has been applied,

including Noerr itself, the petitioning conduct at issue was carried out to

further the petitioning party’s commercial interests.

SOSA v. DIRECTV, INC. 1691

that extending Petition Clause protection to conduct incident

to actual litigation is justified because any misconduct

engaged in during litigation is subject to control by the court

via contempt proceedings or sanctions under the Federal

Rules of Civil Procedure. In contrast, according to Sosa, a

party faced with an extortionate presuit demand has no

recourse to a court in an existing proceeding, and must incur

the expense of retaining counsel to respond to meritless

claims.

We are not persuaded that this distinction changes the anal-

ysis. It is a fact of our system of justice that parties are often

compelled to engage counsel and defend lawsuits that ulti-

mately prove to have little merit. While responding to

demands to settle unfounded claims is burdensome, it is likely

less burdensome than if the opposing party, fearing liability

in tort for demanding settlement of a possibly weak claim,

proceeded directly to litigation. Moreover, the established

sham exception to the Noerr-Pennington doctrine provides

adequate protection against baseless claims asserted in preliti-

gation settlement letters. See PRE II, 508 U.S. at 60-61; see

also Kottle v. Nw. Kidney Ctrs., 146 F.3d 1056, 1060 (9th Cir.

1998) (citing cases and describing three pronged sham litiga-

tion exception).

[12] We conclude that restrictions on presuit demand letters

may therefore raise substantial Petition Clause issues if, on

examination, such restrictions could impair the right of access

to the courts protected by the First Amendment. We conclude,

for several reasons, that the connection between presuit

demand letters and access to the courts is sufficiently close

that the Petition Clause issues raised by providing a treble-

damages remedy with regard to such letters are indeed sub-

stantial.

First, preceding the formal filing of litigation with an invi-

tation to engage in negotiations to settle legal claims is a com-

mon, if not universal, feature of modern litigation. Even if it

1692 SOSA v. DIRECTV, INC.

does not result in a final resolution of the dispute and vindica-

tion of the legal rights at issue, this practice permits parties to

frame their legal positions, often streamlining any subsequent

litigation, and thereby reducing legal costs and facilitating

access to the courts. Restricting such prelitigation conduct

when the same demands asserted in a petition to the court is

protected would render the entire litigation process more

onerous, imposing a substantial burden on a party’s ability to

seek redress from the courts.

Second, many states, including California, protect prelitiga-

tion communications under statutorily granted litigation privi-

leges. See, e.g., Rubin v. Green, 4 Cal. 4th 1187, 1193-94

(1993) (discussing Cal. Civ. Code § 47(b)); accord Kirsch-

stein v. Haynes, 788 P.2d 941, 947 (Okla. 1990) (adopting the

rule of Restatement (Second) of Torts § 586 that “communi-

cations preliminary to a proposed judicial proceeding” are

protected under the litigation privilege (quoting Restatement

(Second) of Torts § 586 (1977))). Such laws highlight the inti-

mate relationship between presuit settlement demands and the

actual litigation process. Moreover, such privileges indicate

that, unlike the lobbying of a private organization as in Allied

Tube, the demand letters at issue here are not “the type of

commercial activity that ha[ve] traditionally had [their] valid-

ity determined by” generally applicable regulatory statutes.

Allied Tube, 486 U.S. at 505. On the contrary, they are the

type of activity that typically arises only in the context of con-

templated petitioning activity.

Third, extending immunity to private presuit demand letters

protects the same interests the Supreme Court has identified

as implicated in the Petition Clause’s protection of private liti-

gation. See, e.g., Bill Johnson’s, 461 U.S. at 743. Thus, in Bill

Johnson’s, the Court observed that “[t]he first amendment

interests involved in private litigation” include “compensation

for violated rights and interests, the psychological benefits of

vindication, [and] public airing of disputed facts.” 461 U.S. at

743 (internal quotation marks omitted). Similarly, “the ability

SOSA v. DIRECTV, INC. 1693

to lawfully prosecute even unsuccessful suits adds legitimacy

to the court system as a designated alternative to force.”

BE&K, 536 U.S. at 532. These interests are equally served

when disputes are resolved outside the formal litigation pro-

cess through presuit settlement demands, backed up by the

possibility of resort to the courts.

Fourth, our conclusion is consistent with established

Supreme Court law rejecting burdens on the right to petition

the courts even where no actual litigation was pending. See

Ill. State Bar Ass’n, 389 U.S. at 222. It is also consistent with

our decision in Liberty Lake Investments, Inc. v. Magnuson,

12 F.3d 155 (9th Cir. 1993), in which we held that Noerr-

Pennington immunity extended to an individual who funded

anticompetitive litigation but was not himself a party to the

litigation and was therefore not himself petitioning the courts.

Id. at 157-59; accord Balt. Scrap Corp. v. David J. Joseph

Co., 237 F.3d 394, 397-99 (4th Cir. 2001) (holding secret

funding of a lawsuit brought against a potential competitor to

maintain a monopoly was protected under Noerr-Pennington,

even though the funding party was not a litigant).

Fifth, extending Noerr-Pennington immunity to litigation-

related activities preliminary to the formal filing of the litiga-

tion is consistent with the law of the majority of other circuits

that have considered the issue. See, e.g., Primetime 24 Joint

Venture v. Nat’l Broad. Co., 219 F.3d 92, 100 (2d Cir. 2000)

(holding presuit challenges to signal strength determinations

by satellite broadcasters within the protection of Noerr-

Pennington); Glass Equip. Dev., Inc. v. Besten, Inc., 174 F.3d

1337, 1343-44 (Fed. Cir. 1999) (holding that threat of patent

enforcement litigation could not subject patent holder to anti-

trust liability); McGuire Oil Co. v. Mapco, Inc., 958 F.2d

1552, 1560 (11th Cir. 1992) (holding that concerted threats of

litigation are protected under Noerr-Pennington); CVD, Inc.

v. Raytheon Co., 769 F.2d 842, 850-51 (1st Cir. 1985) (hold-

ing that threat of trade-secret litigation must be a sham to

expose maker to antitrust liability); Coastal States Mktg., Inc.

1694 SOSA v. DIRECTV, INC.

v. Hunt, 694 F.2d 1358, 1367-68 (5th Cir. 1983) (extending

petitioning immunity to generalized threats to litigate to pro-

tect claim to oil assets).

In arguing for a contrary result, Sosa relies entirely on a

Tenth Circuit case, Cardtoons, L.C. v. Major League Baseball

Players Ass’n, 208 F.3d 885 (10th Cir. 2000) (en banc). In

Cardtoons, the Tenth Circuit held that neither the Noerr-

Pennington doctrine nor the Petition Clause protected a pre-

suit cease-and-desist letter asserting trademark infringement.9

Id. at 886-88. Sosa attempts to distinguish the substantial

body of contrary law and argues that Cardtoons is the only

authority directly relevant to the issue before us.

As Sosa correctly observes, all of the appellate cases that

have extended immunity to presuit settlement demands have

done so in the context of antitrust suits. We do not see the rel-

evance of this observation. We recognize that Noerr and its

progeny were based in part on a construction of the antitrust

laws. As we have already observed, however, BE&K, decided

after Cardtoons, compels a similar construction of other laws

to the extent they impinge on the right of petition. Conse-

quently, we regard the Cardtoons decision as an outlier,

inconsistent with the weight of authority relevant to the First

Amendment status of presuit litigation-related conduct. More

importantly, we are doubtful that the majority’s opinion in

Cardtoons survives the Supreme Court’s decision in BE&K.

The reasoning of the Cardtoons dissenters, concluding that

prelitigation demand letters are within the scope of the Peti-

9

Cardtoons reasoned that a prelitigation letter directed from one private

party to another, rather than to the government, and sent to further the

business interests of the sender did not implicate the Petition Clause. 208

F.3d at 892-93. In dissent, Judge Lucero, joined by Judges Brorby and

Briscoe, argued that, “[b]ased on the interests served by the Petition

Clause and the requirement that First Amendment rights be given ‘breath-

ing space,’ the concept of petitioning activity must embrace [a presuit]

cease-and-desist letter.” Id. at 896 (Lucero, J., dissenting).

SOSA v. DIRECTV, INC. 1695

tion Clause, is, in our view, the more persuasive and the more

consistent with BE&K.

Finding that the protections of the Petition Clause extend to

prelitigation settlement demands as a class does not mean that

such demands are absolutely protected from liability. “The

Petition Clause . . . was inspired by the same ideals of liberty

and democracy that gave us the freedoms to speak, publish,

and assemble . . . , and there is no sound basis for granting

greater constitutional protection to statements made in a peti-

tion to the [government] than other First Amendment expres-

sions.” McDonald v. Smith, 472 U.S. 479, 485 (1985). In

general, “First Amendment rights are not immunized from

regulation when they are used as an integral part of conduct

which violates a valid statute.” Cal. Motor Trans., 404 U.S.

at 514. Accordingly, Noerr-Pennington immunity is not a

shield for petitioning conduct that, although “ostensibly

directed toward influencing governmental action, is a mere

sham to cover what is actually nothing more than an attempt

to interfere directly with the business relationships of a com-

petitor.” Noerr, 365 U.S. at 144.

In PRE II, the Supreme Court established a two-part defini-

tion of the “sham litigation” exception to Noerr-Pennington

in the antitrust context. 508 U.S. at 60-61. To establish that

a petition to the court is a sham, the party seeking to impose

liability must establish both that the legal claim is objectively

baseless and that the suit was brought for an anticompetitive

purpose. BE&K left open the question whether a similar two-

part test would apply in the labor relations context. 536 U.S.

at 536-37. The Court found that the evidence of an improper

purpose was insufficient to impose liability for a reasonably

based but unsuccessful suit, but declined to hold that such

suits are categorically immune.

In Kottle, we 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

1696 SOSA v. DIRECTV, INC.

it was unlawful, 146 F.3d at 1060; 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, id. (citing USS-POSCO Indus. v.

Contra Costa County Bldg. & Constr. Trades Council, 31

F.3d 800, 810-11 (9th Cir. 1994)); and third, if the allegedly

unlawful conduct “consists of making intentional misrepre-

sentations to the court, litigation can be deemed a sham if ‘a

party’s knowing fraud upon, or its intentional misrepresenta-

tions to, the court deprive the litigation of its legitimacy.’ ” Id.

(quoting Liberty Lake, 12 F.3d at 159).

We have applied this test in other litigation contexts as

well. See White, 227 F.3d at 1232-33. In addition, we have

observed that private discovery conduct, not itself a petition,

may fall within the sham exception where either the conduct

itself, Theofel, 359 F.3d at 1079, or the underlying petition,

Freeman, 410 F.3d at 1185, meets PRE II’s sham litigation

test. We need not decide precisely how PRE II’s or Kottle’s

definition of sham litigation applies to presuit demand letters

in the RICO context, however, because Sosa has declined to

argue that the letters fall within the sham exception.

[13] In sum, whether, to preserve the breathing space

essential to the fruitful exercise of the right of petition, the

First Amendment requires the extension of Noerr-Pennington

immunity to the making of reasonably based prelitigation set-

tlement demands “at the least presents a difficult constitu-

tional question.” BE&K, 536 U.S. at 532. Accordingly, we

proceed to the third step of the BE&K analysis and analyze

whether RICO may be fairly construed to avoid reaching the

constitutional issue.

3.

The question at this stage is whether, given the important

goals of RICO, the statute proscribes the sending of prelitiga-

tion demand letters asserting legal claims that may be weak

SOSA v. DIRECTV, INC. 1697

but do not rise to the level of shams. In answering this ques-

tion, we must bear in mind the principle that “if an otherwise

acceptable construction of a statute would raise serious consti-

tutional problems, and where an alternative interpretation of

the statute is ‘fairly possible,’ we are obligated to construe the

statute to avoid such problems.” INS v. St. Cyr, 533 U.S. 289,

299-300 (2001) (quoting Crowell v. Benson, 285 U.S. 22, 62

(1932)).

Leaving aside the other elements of a civil RICO claim,

RICO imposes civil and criminal liability on organizations

engaged in “racketeering activity.” 18 U.S.C. §§ 1962-1964.

Racketeering activity, in turn, is defined to include a number

of generically specified criminal acts as well as the commis-

sion of one of a number of listed predicate offenses. Id.

§ 1961(1). RICO’s general definition of racketeering activity

does not in terms clearly reach the conduct at issue here.

Accordingly, we turn to the particular RICO predicates

alleged here to determine whether they do so or whether,

instead, they are susceptible of a construction that avoids the

serious constitutional question of Petition Clause immunity.

In his complaint, Sosa alleged violations of the federal mail

and wire fraud statutes, id. §§ 1341, 1343, the Hobbs Act, id.

§ 1951, the interstate racketeering statute, id. § 1952, the fed-

eral money laundering statues, id. §§ 1956-1957, and the stat-

utes prohibiting movement of stolen property in interstate

commerce, id. §§ 2314-2315, as well as extortion under Cali-

fornia law, Cal. Penal Code §§ 518-520, 523. Only the mail

and wire fraud, Hobbs Act, and state extortion predicates can

even arguably be read to reach the conduct at issue here.

[14] The Hobbs Act defines “extortion” as “the obtaining

of property from another, with his consent, induced by wrong-

ful use of actual or threatened force, violence, or fear, or

under color of official right.” 18 U.S.C. § 1951(b)(2). While

on its face, this provision could be read broadly to reach the

class of suits at issue here, it need not be so read. It is cer-

1698 SOSA v. DIRECTV, INC.

tainly possible, perhaps even likely, that the threat of being

faced with a costly lawsuit induced “fear” in Sosa, but extor-

tion requires more than fear. See Rothman v. Vedder Park

Mgmt., 912 F.2d 315, 318 (9th Cir. 1990) (holding that induc-

ing fear of economic loss could not in itself constitute extor-

tion). The use of the fear must be “wrongful.” 18 U.S.C.

§ 1951(b)(2); see Rothman, 912 F.2d at 318. It is true that the

assertion of weak claims predicated on unsupportable factual

allegations may be said in some sense to be wrongful. Such

a broad reading of the term “wrongful” is not required, how-

ever. Applying the Noerr-Pennington statutory construction

presumption, we do not believe the Hobbs Act imposes liabil-

ity for threats of litigation where the asserted claims do not

rise to the level of a sham.10 California’s extortion statute like-

wise requires the “wrongful use of . . . fear,” see Cal. Penal

Code § 518, and is equally susceptible of our narrow reading.

See In re Nichols, 82 Cal. App. 73, 76 (1927) (holding extor-

tion predicated on threat to sue requires allegation that threat-

ened suit was objectively baseless).

[15] Similarly, the mail and wire fraud statutes do not

unambiguously reach demands to settle reasonably based

legal claims. Both statutes require a “scheme or artifice to

defraud, or for obtaining money or property by means of false

or fraudulent pretenses, representations, or promises.” 18

U.S.C. § 1341, see also id. § 1343. This language has been

given a broad interpretation, see United States v. Louderman,

576 F.2d 1383, 1388 (9th Cir. 1978), and may be read to

reach certain types of fraudulent settlement communications.

10

Other circuits have reached similar results, many refusing to impose

Hobbs Act liability even on baseless litigation. See, e.g., United States v.

Pendergraft, 297 F.3d 1198, 1208 (11th Cir. 2002) (holding threats to sue

a public entity cannot constitute Hobbs Act extortion, even where sup-

ported by false testimony and fabricated evidence); I.S. Joseph Co. v. J.

Lauritzen A/S, 751 F.2d 265, 267 (8th Cir. 1984) (holding threats of

groundless litigation cannot constitute extortion under the Hobbs Act); cf.

Vemco, Inc. v. Camardella, 23 F.3d 129, 134 (6th Cir. 1994) (holding

threats to enforce even a fraudulent contract not extortion under RICO).

SOSA v. DIRECTV, INC. 1699

Indeed, in Living Designs, Inc. v. E.I. DuPont de Nemours &

Co., 431 F.3d 353 (9th Cir. 2005), we permitted the plaintiffs

to maintain a RICO suit predicated on fraudulent discovery

conduct in prior litigation that induced the plaintiffs to settle

the suit for a lower amount than they would have in the

absence of the fraud. Id. at 365. The defendants had failed

during the prior litigation to disclose damaging evidence

which was solely in their possession and had falsely claimed

that the evidence did not exist. Id. at 356-58. We concluded

that such conduct could amount to mail fraud, notwithstand-

ing its connection to a legal proceeding. Id. at 364-65.

Although we did not explicitly discuss the Noerr-Pennington

doctrine, the conduct alleged quite clearly fell within the third

prong of Kottle’s sham litigation exception, in that it

amounted to a “knowing fraud upon . . . the court depriv[ing]

the litigation of its legitimacy,” Kottle, 146 F.3d at 1060 (cit-

ing Liberty Lake, 12 F.3d at 159), and was done for the pro-

hibited purpose of injuring plaintiffs’ business or property

interests. Living Designs, 431 F.3d at 363-64.

Here, Sosa has alleged that in its demand letters and in tele-

phone conversations with Sosa and the other plaintiffs,

DIRECTV made false representations of fact and law, and

that as a result Sosa settled DIRECTV’s claims. It is well

established, however, that misrepresentations of the law are

not actionable as fraud, including under the mail and wire

fraud statutes, because statements of the law are considered

merely opinions and may not be relied upon absent special

circumstances not present here. Miller v. Yokohama Tire

Corp., 358 F.3d 616, 621 (9th Cir. 2004).

[16] We would independently reach the same conclusion

here regarding the asserted misrepresentations of law in the

presuit demand letters, applying our understanding of the

Noerr Pennington doctrine. On that understanding, presuit let-

ters threatening legal action and making legal representations

in the course of doing so cannot come within a statutory

restriction unless the statute unavoidably so requires, absent

1700 SOSA v. DIRECTV, INC.

representations so baseless that the threatened litigation would

be a sham. The mail and wire fraud statutes do not unavoid-

ably so require. Rather, they can be, we conclude, construed

to avoid burdening the ability of potentially adverse parties to

make legal representations in demand letters and other presuit

communications sent in contemplation of possible litigation.

Nothing in the mail and wire fraud statutes addresses the issue

of legal representations directly. Nor need we impute to Con-

gress an intent to include within the statutory phrase “scheme

or artifice to defraud” erroneous representations of law made

in a presuit demand letter; legal representations made by

potential litigation adversaries are exceedingly unlikely to be

believed without investigation. Further, Sosa has declined to

invoke the sham exception, so that is off the table. DIREC-

TV’s assertions that Sosa’s conduct was unlawful, therefore,

cannot support the mail and wire fraud predicates, even if

DIRECTV intentionally misstated the law.

Whether the alleged misrepresentations of fact could, if

proven, constitute mail or wire fraud is less clear. In the crim-

inal context, presuit settlement demands containing false

statements of fact can under some circumstances constitute

mail fraud. E.g., United States v. Marbella, 73 F.3d 1508,

1511 (9th Cir. 1996) (affirming conviction for insurance fraud

based on settlement demand containing false medical claims).

Such letters cannot amount to mail fraud, however, where the

sender knows the recipient will not be deceived by the false-

hoods. See United States v. Pendergraft, 297 F.3d 1198, 1209

(11th Cir. 2002) (where the senders knew that the recipient

would not be deceived by falsehoods, “they could not have

had an intent to deceive” as required for mail and wire fraud

liability).

Here, Sosa argues that DIRECTV’s threat to sue “within 14

days” was false and constituted mail fraud. Sosa acknowl-

edges that many thousands of lawsuits were ultimately filed

against recipients who failed to settle DIRECTV’s claims, but

he contends that most of these suits were not filed within 14

SOSA v. DIRECTV, INC. 1701

days, and that DIRECTV never intended to sue all of those to

whom it sent the letter. We are dubious that this statement

would be actionable under any circumstances. We need not

reach this question here, however. “It is well settled that, to

maintain a civil RICO claim predicated on mail [or wire]

fraud, a plaintiff must show that the defendants’ alleged mis-

conduct proximately caused the injury.” Poulos v. Caesars

World, Inc., 379 F.3d 654, 664 (9th Cir. 2004) (citing Holmes

v. Sec. Investor Prot. Corp., 503 U.S. 258, 268 (1992)). Sosa

utterly fails to show how DIRECTV’s false threat to sue

within 14 days proximately caused him any injury.

Sosa further contends that DIRECTV’s assertion that it had

documents showing that he had “purchased . . . signal theft

equipment to gain unauthorized access to DIRECTV’s pro-

gramming” and its other allegations concerning Sosa’s unau-

thorized access to its signal were false and amounted to a

scheme or artifice to defraud. He argues that as a result of

these statements, he was induced to settle with DIRECTV. As

in Pendergraft, DIRECTV’s statements asserting that Sosa

had modified smart cards and used smart card programming

equipment to access its signal without paying for it cannot

constitute mail or wire fraud. Because these statements con-

cerned Sosa’s own conduct, DIRECTV could not have

intended that he would be deceived by them and was therefore

necessarily lacking in the intent requisite to have committed

mail or wire fraud. Pendergraft, 297 F.3d at 1209.

Sosa also alleges that, contrary to its assertion in the letter,

DIRECTV had no business records showing that Sosa had

actually used the equipment to access its signal. In fact, the

letter does not unambiguously assert that the records showed

the use to which Sosa put the equipment. It states that they

“show that you purchased . . . signal theft equipment to gain

unauthorized access to DIRECTV’s programming.” Sosa

readily admits that he purchased the equipment to which

DIRECTV refers. The phrase “to gain unauthorized access to

DIRECTV’s programming” is ambiguous: It is not clear

1702 SOSA v. DIRECTV, INC.

whether this statement means that the records themselves

indicated the use to which Sosa had put the equipment, or

rather that DIRECTV believed on the basis of the records that

Sosa had used it to access its signal.

This ambiguity may have been intentional, and may even

have been intended to suggest that DIRECTV’s evidence was

stronger than it in fact was. Sosa has not argued, and likely

could not argue, however, that this statement rendered

DIRECTV’s claim against him a sham. Given the Noerr-

Pennington presumption, we are not convinced that the mail

and wire fraud statutes reach this kind of carefully worded

statement, so characteristic of the posturing that occurs at the

start of any litigation and capable of being tested in any ensu-

ing suit. In addition, it should have been obvious that in any

such suit, the dispositive issue would not be what DIREC-

TV’s records showed about Sosa’s activities, but what those

activities actually were — a matter, once again, fully within

Sosa’s knowledge and capable of proof. In light of the burden

RICO liability would impose on DIRECTV’s right to petition

the courts, we decline to construe mail and wire fraud statutes

so broadly as to reach peripherally relevant, arguably ambigu-

ous statements such as this single representation in DIREC-

TV’s demand letters, absent a showing that the statement

meets the standard for the sham exception. See Kottle, 146

F.3d at 1060.

[17] Accordingly, we hold that RICO and the predicate

statutes at issue here do not permit the maintenance of a law-

suit for the sending of a prelitigation demand to settle legal

claims that do not amount to a sham. Because the demand let-

ters at issue here sought settlement of claims against Sosa

under the Federal Communications Act, and no sham is

claimed, they cannot form the basis of liability under RICO.

Because we affirm the district court’s ruling on the basis of

the Noerr-Pennington doctrine, we need not address the other

bases for dismissal asserted by appellees below and on appeal.

SOSA v. DIRECTV, INC. 1703

IV.

Our decision today makes clear that the Noerr-Pennington

doctrine requires that, to the extent possible, we construe fed-

eral statutes so as to avoid burdens on activity arguably falling

within the scope of the Petition Clause of the First Amend-

ment. Prelitigation communications demanding settlement of

legal claims must be afforded Noerr-Pennington protection

when we construe statutes asserted to regulate them. RICO

does not unambiguously include the presuit demand letters in

this case within the scope of conduct it enjoins, so we decline

to give it such a broad construction. Accordingly, we affirm

the judgment of the district court holding DIRECTV immune

from liability and dismissing Sosa’s complaint.

AFFIRMED.

PANNER, District Judge:

I respectfully concur in the result.

The majority opinion is essentially advisory. If we affirm

the decision of the district court, Sosa loses. If we reverse the

district court and reinstate this action, Sosa still loses because

the California state court judgment is now final and would bar

all of Sosa’s claims.1 I would file a short order stating that

1

In my view, Flood v. Harrington, 532 F.2d 1248 (9th Cir. 1976), does

not command otherwise. Flood had no occasion to consider what effect a

California court would give to the judgment, as we must do here. See 28

U.S.C. § 1738. The plaintiff in Flood did not lose in state court, and then

file essentially the same action in federal court, as Sosa did here. Rather,

the decision on appeal in Flood was entered first, and both decisions were

entered by a federal court. Furthermore, the two actions in Flood involved

different claims and parties. Lastly, Flood did not consider what would

transpire on remand had the panel found in favor of the plaintiff, and rein-

stated his action.

1704 SOSA v. DIRECTV, INC.

fact, and reserve the extensive discussion of Noerr-

Pennington and RICO for a case in which it is necessary to

decide those questions.