Petition — Wilmorite, Inc. v. Eagan Real Estate, Inc.
Supreme Court brief1978
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upreme Court, U.
FILED.
SEP 27 1978
In The |_MICHA% RODAK, JR., CLERK
wan eee
Supreme Court of the United States
m™ FS=-595
WILMORITE, INC., FAYETTEVILLE PLAZA, INC. AND
JAMES P. WILMOT, d/b/a FAYETTEVILLE MALL,
Petitioners,
v.
EAGAN REAL ESTATE, INC., EAGAN REAL ESTATE
MANAGEMENT CORP., EAGAN REAL ESTATE, LEO T.
EAGAN, WILLIAM EAGAN, EDWARD EAGAN, KIM-
BROOK REALTY, KIMBROOK CORP., CFB DEVELOP-
MENT CORP., CAMPERLINO AND FATTI BUILDERS,
INC., FRANK FATTI, WILLIAM J. CAMPERLINO,
WILLIAM A. BARGABOS, PYRAMID DEVELOPMENT,
INC., PYRAMID BROKERAGE COMPANY, _INC.,
MICHAEL FALCONE, ALLIED STORES CORPORATION,
DEY BROTHERS AND CO., INC., WINMAR COMPANY,
INC., BARNEY DEASY, PAUL D. LONERGAN,
KATHERINE M. SHEA, JOHN MURPHY, EARL OOT,
ROGER SMITH, ARTHUR REED AND DAVID C.
MURRAY,
Respondents.
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
JAMES M. HARTMAN
Two State Street
Rochester, New York 14614
Telephone: (716) 232-4440
Counsel for Petitioners
HARRIS, BEACH, WILCOX,
RUBIN & LEVEY
Paul D. Meunier
Eric Stonehill
Sally True
Of Counsel.
Daily Record Corporation 4171) Spaulding Law Printing
Rochester, New York ( Syracuse, New York
SUBJECT INDEX
Page
a ae eS aan au e's oe a oe wa a
EES TERE ONES SE ee a a u
dR SD a 2
I oe eS ee 2
a a Kees iw bow ben 3
Statutes and Constitutional Provisions Involved....... 4
Ee 4
Reasons for Granting the Writ.................... 14
I. The Second Circuit’s decision misapplies Noerr and
California Motor Transport and directly conflicts with
this Cuurt’s decision in Otter Tail ................ 14
II. The questions presented by this petition are of
» fundamental constitutional importance and are in
need of prompt resolution by the Court............. 24
i 27
Appendix A — Judgment and Order of the United States
Court of Appeals for the Second Cireuit............ A-l
Appendix B — Memorandum-Decision and Order of the
OE A-3
Appendix C — Constitutional and Statutory Provisions . A-33
TABLE OF AUTHORITIES
Cases: Page
Adolph Coors Co. v. A. & S. Wholesalers, Inc., 561 F.2d
807 (10th Cir. 1977)... 1. cece cee eee eee e renee 25
Albright v. Town of Manlius, 34 A.D.2d 419, 312 N.Y.S.2d
Ee are eer o'er oe 8
Albright v. Town of Manlius, 28 N.Y.2d 108, 320 N.Y.S.2d
a Ue ee Chai be Ok «Rae es 8
Associated Radio Service Co. v. Page Airways, Inc., 414
F.Supp. 1068 (N.D.Tex. 1976)... ccc vcccsccvecs 25
Blue Chip Stamps v. Manor Drug Stores, 421 US. 723
(1975), rehearing denied, 423 U.S. 884... 6... eee 25
California Motor Transport Co. v. Trucking Unlimited,
EE RIE laos 0's SAG aw wane 5, 14, 18, 19, 20, 21
City of Impact v. Whitworth, 559 F.2d 378 (5th Cir. 1977),
cert. granted, vacated and remanded, US. , 98
Ns nd nat yea) sins, bo. Gana w8 24
City of Lafayette v. Louisiana Power & Light Co.,
US. e ie i 15, 17, 24
Cyborg Systems, Inc. v. Management Science America,
Inc., 1978-1 CCH Trade Cases 961,927 (N.D.IIl. 1978) . . 25
Dollar Rent-A-Car Systems, Inc. v. Hertz Corp., 434
gf Bo kee 4) rr 25
Eastern R.R. Presidents Conf. v. Noerr Motor Freight,
Inc. 365 US. 127 (1961) .... 6.6... 3, 14, 18, 19, 21, 22, 23, 24
First Delaware Valley Citizens Television Inc. vy. CBS,
Inc., 398 F.Supp. 917 (E.D.Penn. 1975)... .......56: 25
Franchise Realty Interstate Corp. v. San Francisco Local
Joint Executive Board of Culinary Workers, 542 F.2d
1076 (9th Cir. 1976), cert. denied, 480 U.S. 940 2.0... . 25
iw
Page
Group Life and Health Ins. Co. v. Royal Drug Co., 556
F.2d 1375 (5th Cir. 1977), cert. granted, US.
SR. POPUUM, BE APE Sic ccc thc ceeceen ees 24
Haber v. Board of Estimate, 33 A.D.2d 571, 305 N.Y.S.2d
I oe a trals ln a acon 39> 18
Israel v. Baxter Laboratories, Inc., 466 F.2d 272 (D.C.Cir.
Hee ER EE Ee EEO Oa ee eee 25
Loctite Corp. v. Fel-Pro Inc., 1978-2 CCH Trade Cases
SUTRA: Es a vos ks bes ocd ba be eecaws 25
Mountain Grove Cemetery v. Norwalk Vault Co., 428
Foam. 061 (D:Comn. 1977) nn. cee ccc 25
N.A.A.C.P. v. Button, 371 U.S. 415 (1968) .. 0.0.0.0... 26
National Broiler Marketing Ass'n vy. United States,
US. pW MM URETOR G ccvucecesccene 24
National Society of Professional Engineers vy. United
States, US. , 98 S.Ct. 1855 (1978) .......... 24
Ohralik v. Ohio State Bar Ass'n, ___U.S..___, 98 S.Ct.
Re ta ed ie a ing weal a ees 4 tw a « 26
Otter Tail Power Co. v. United States, 417 U.S. 901 (1974),
affg mem. 360 F.Supp. 451 (D.Minn. 1973), on remand
Poe RF ee ee 14, 21, 22
Parker v. Brown, 317 U.S. 341 (1943). ...........0005 15, 24
Pleasure Driveway and Park Dist. v. Kurek, 557 F.2d 580
(7th Cir. 1977), cert. granted, vacated and remanded,
US. pie RE, BOUREUOIDs bees cwtcestacss 24, 25
Poller v. Columbia Broadcasting System, Inc., 368 U.S.
EA Sn ee eae Lk aay 6 IR ace wa x @ bos 4
Primus, In re, US. , 98 S.Ct. 1893 (1978). ...... 26
w
Page
Rush-Hampton Industries, Inc. v. Home Ventilating
Institute, 419 F.Supp. 19(M.D.Fla. 1976). .......... 25
Semke v. Enid Automobile Dealers Ass'n, 456 F.2d 1361 -
Cr Ce, BOI a ees Sas cee eae ea eee 25
St. Paul Fire and Marine Insurance Co. v. Barry,
UB... SSR BI nn coc cknees ees 24
United Mine Workers v. Pennington, 381 U.S. 657 (1965).
Vendo Co. v. Lektro-Vend Co., 433 U.S. 623 (1977) .. 2... 24
Webb v. Utah Tour Brokers Ass'n, 568 F.2d $70 (10th Cir.
iy | a errr erie re tee 25
Woods Exploration & Producing Co. v. Aluminum Co. of
America, 438 F.2d 1286 (5th Cir. 1971), cert. denied, 404
Ua FOE occ s s.0n sé vivtnne bee eR ee 25
Constitutional Source:
US. Comet. Amome £ ..ccc cease 4, 14, 15, 17, 18, 19, 20, 23. 26
Statutory Sources:
United States:
Clayton Act §4, 38 Stat. 730 (1914), 15 U.S.C. §15 20...
Sherman Act §1, 26 Stat. 209 (1890), 15 U.S.C. §1 2... 4,1
Sherman Act §2, 26 Stat. 209 (1890), 15 U.S.C. §2 ..... 4,15
28 USC. G1SGGED osc lc vs ca Ss ae eee
PBU SL. GUS . ic dees odnc vies ca eu eee
Rules:
Federal Rules of Civil Procedure:
Fed. R. Civ. P. 12(b\6)
on re ee se eo © BP ee Bee 6 8 e
on oe eee ef er ee ee eo ee ee ee ee eee
Page
12
12
12
12
In The
Supreme Court of the United States
No.
WILMORITE, INC., FAYETTEVILLE PLAZA, INC. AND
JAMES P. WILMOT, d/bia FAYETTEVILLE MALL,
Petitioners.
v.
EAGAN REAL ESTATE, INC., EAGAN REAL ESTATE
MANAGEMENT CORP., EAGAN REAL ESTATE, LEO T.
EAGAN, WILLIAM EAGAN, EDWARD EAGAN, KIM-
BROOK REALTY, KIMBROOK CORP., CFB DEVELOP-
MENT CORP., CAMPERLINO AND FATTI BUILDERS,
INC., FRANK FATTI, WILLIAM J. CAMPERLINO,
WILLIAM A. BARGABOS, PYRAMID DEVELOPMENT,
INC., PYRAMID BROKERAGE COMPANY, INC.,
MICHAEL FALCONE, ALLIED STORES CORPORATION,
DEY BROTHERS AND CO., INC., WINMAR COMPANY,
INC., BARNEY DEASY, PAUL D. LONERGAN,
KATHERINE M. SHEA, JOHN MURPHY, EARL OOT,
ROGER SMITH, ARTHUR REED AND DAVID C.
MURRAY,
Respondents.
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
Wilmorite, Inc., Fayetteville Plaza, Inc., and James P.
Wilmot, d/b/a Fayetteville Mall (hereinafter “Petitioners”,
petition for a writ of certiorari to review the judgment and
decree of the United States Court of Appeals for the Second
Circuit entered in this action.
OPINIONS BELOW
The decision of the United States Court of Appeals for the
Second Circuit is reported at 578 F.2d 1372 (June 30, 1978). The
judgment and decree of the court is reproduced and annexed to
this petition as Appendix A. The court did not publish a written
opinion, but adopted the opinion of the District Court. The
opinion of the United States District Court for the Northern
District of New York (Appendix B) is not reported. References to
these opinions below will be made by Appendix page number.
JURISDICTION
The judgment and decree of the Court of Appeals (A-1) was
made and entered on June 30, 1978. No petition for rehearing or
rehearing en banc was filed. This Court has jurisdiction under 28
U.S.C. §1254(1). Subsequent to the filing of this action,
stipulations and orders of discontinuance were entered in favor
of respondents Pyramid Brokerage Company, Inc., and David C.
Murray.
QUESTIONS PRESENTED
Relying upon this Court’s decision in Eastern Railroad
Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127
(1961) (hereinafter, “Noerr’), the Court of Appeals held that
petitioners’ complaint and proposed amended complaint failed to
state a claim upon which relief could be granted because
“defendants’ conduct, under the facts and theory therein alleged,
was inimune from liability under antitrust laws.” (A-1.)
The questions presented by this action are:
1. Whether the Noerr-Pennington! exemption applies to
concerted activity among horizontal business competitors to
instigate for private anti-competitive gain multiple repetitive
zoning lawsuits in the names and interests of legitimate home-
owners, without themselves petitioning and having no
cognizable grievance to redress.
2. Whether the Noerr-Pennington Doctrine immunizes a
conspiracy among horizontal business competitors to delay and
prevent final adjudication of multiple repetitive lawsuits for the
purpose of utilizing their mere pendency to prevent a competitor
from obtaining the financing and tenant commitments
necessary to enter the market.
3. Whether the Noerr-Pennington Doctrine immunizes a sham
publicity campaign instigated after a zoning controversy is in
the courts, and undertaken not for the purpose of influencing the
courts or governmental agencies, but rather for the sole purpose
of interfering directly with the business relationships of com-
petitors.
4. Although it is not the primary focus of this request,
petitioners wish to raise their objection to the summary
treatment below of their complex antitrust claims, and the
lEustern R.R.. Presidents Conf. v. Noerr Motor F reight, Inc., 365 U.S. 127
(1961); United Mine Workers v. Pennington, 381 U.S. 657 (1965).
absolute denial of leave to replead, as conflicting with the
principles enunciated by this Court in Poller v. Columbia Broad-
casting System, Inc., 368 U.S. 464 (1962), should the writ be
granted.
STATUTES AND CONSTITUTIONAL
PROVISIONS INVOLVED
This case concerns the scope of federal antitrust laws,
specifically Sections 1 and 2 of the Sherman Act, 26 Stat. 209
(1890), as amended, 15 U.S.C. §§1, 2, and Section 4 of the Clayton
Act, 38 Stat. 730 (1914), as amended, 15 U.S.C. §15, in the light of
the First Amendment of the United States Constitution. These
constitutional and statutory provisions are set forth in Ap-
pendix C to this Petition.
STATEMENT OF THE CASE
This action was filed by petitioners on February 8, 1977, as
Wilmorite, Inc., et al. v. Eagan Real Estate, Inc., et al., Civil
Action No. 77-CV-47 (N.D.N.Y.), alleging violations of Sections 1
and 2 of the Sherman Act, 15 U.S.C. §§1, 2, based upon
respondents conspiracy to monopolize and unreasonably restrain
trade in the development and operation of commercial real
estate in general, and regional shopping centers in particular, in
and around Syracuse, Onondaga County, New York. The
complaint seeks compensatory damages of $72 million after
trebling, together with cost of suit including reasonable at-
torneys’ fees. Federal question jurisdiction was invoked pur-
suant to 28 U.S.C. §1391.
This petition arises from summary judgment granted upon
respondents’ motions to dismiss the complaint of petitioners and
from denial of petitioners’ motion to amend the judgment. to
permit leave to file a proposed amended complaint, all as af-
firmed and adopted by the Court of Appeals. The basis for the
District Court’s disposition was its conclusion that the complaint
and proposed amended complaint failed to state a claim by
virtue of the Noerr-Pennington Doctrine.
A. The Pleadings
Because the proceedings in the District Court consisted of
respondents’ motions to dismiss the complaint (although some
matters outside the pleading were considered by the Court) and
petitioners’ application for leave to file an amended complaint
(in the nature of a motion for leave to replead), the allegations of
petitioners’ pleadings are entitled to be accepted as established.
California Motor Transport Co. v. Trucking Unlimited, 404 U.S.
508, 515-16 (1972). Therefore, for purposes of this Petition, the
allegations of those pleadings will be treated as if established.
Regional shopping centers are those of sufficient size and
variety to provide in a single location retail stores that can
satisfy the shopping needs of substantial numbers of consumers
from a large geographic area. They are readily distinguishable
from smaller residential or neighborhood shopping centers,
which provide fewer stores and are “anchored” by food or drug,
rather than major department, stores.
Petitioners are engaged in the development and operation of
regional shopping centers in Onondaga County, New York. Most
of the respondents are likewise engaged in commercial real
estate development in Onondaga County and the principal group
of respondents, the Eagans, are the largest commercial real
estate and regional shopping center investors and developers in
Onondaga County.
The development of a regional shopping center is a massive yet
delicate effort to coordinate the timing of all prerequisites to
construction. Particularly vital is the attraction of major anchor
tenants, who typically will not commit to join a proposed
development until construction is ready to commence. Tenant
stores will not sign irrevocable lease commitments while the
zoning of a project is in litigation. Prolonged zoning litigation
forces prospective tenants to join other developments, since their
construction plans and budget are pre-determined in accordance
with regional economic conditions and national corporate policy.
Without tenant commitments, banks will not finance con-
struction.
In essence, petitioners charge that the respondents, in shifting
groups but always led by the Eagans, combined and conspired to
exclude the developments of petitioners and others for the
purpose of preventing competition with their own shopping
centers. The continuous obstruction engendered by this con-
spiracy spanned at least 1965 through the time of the complaint
(1977) and was instigated, directed, and financed by respondents
and their accomplices. The conspirators incited and financed —
but typically avoided commencing in their own names or right —
repetitive lawsuits and other proceedings to prevent or impede
zoning necessary for construction of competing centers. Each
such proceeding was instituted regardless of merit and for the
primary purpose of delay and direct interference with
petitioners’ ability to obtain financing and anchoring tenants for
the centers. The proceedings were eventually resolved against
the respondents, but after substantial and ruinous delay to
petitioners and others.
Fayetteville Mall
in 1965 petitioners decided to build a regional shopping center
named Fayetteville Mall in the Town of Manlius. The petitioners
sought a change in zoning to accommodate the proposed
development, and in January 1967 the Town Board amended its
zoning ordinance to permit the proposed mall.
Approximately two miles from the proposed site was a
regional shopping center named Shoppingtown, owned and
operated by the Eagans. One of the principal department stores
of Shoppingtown is operated by respondent Dey Brothers and
Co., Inc. (“Dey Brothers”), a subsidiary of respondent Allied
Stores Corporation (“Allied”). Fayetteville Mall, as then
proposed, would compete directly with Shoppingtown for tenants
and customers.
In an attempt to exclude or delay any competition from
Fayetteville Mall, the Eagans, Allied, Dey Brothers, and others
secretly conspired to obstruct the rezoning of the site from June
1965, when the first zoning petition was presented to the Town,
until 1971, when the site rezoning was finally upheld.
Respondents accomplished their objective by covertly instigating
and organizing opposition from local merchants and local home-
owners, by retaining and paying witnesses and lawyers to ap-
pear ostensibly on behalf of local homeowners at public hearings,
by instigating, organizing, and financing litigation by local
residents, and by manfacturing adverse publicity solely to
discourage tenant stores from signing up for the new mall.
In March 1967, after the rezoning was approved by the Town,
an action was commenced in the names of 148 area residential
property owners in New York State Supreme Court, entitled
Albright, et al. v. Town of Manlius, et al., for a judgment
declaring the rezoning invalid and void. The stated basis for the
relief sought was the purported standing of the homeowners to
prevent unwarranted destruction of their property values. In
reality, however, the lawsuit was covertly conceived and brought
by the Eagans, Allied, Dey Brothers, and other conspirators for
the secret purpose of forestalling the rezoning, thus killing the
development of Fayetteville Mall. In July 1967, another
ostensibly independent action in the name of an area resident
was commenced in New York State Supreme Court, entitled
Schaff v. Town of Manlius, et al., seeking similar relief. This
second, substantially identical, lawsuit was also covertly in-
stigated and organized by the Eagans, Allied, Dey brothers and
other horizontal shopping center developers in the area, in-
cluding respondent Earl Oot, again for the purpose of barring
final resolution of the zoning issues obstructing the new mall.2
The Albright and Schaff actions were eventually consolidated
at the request of petitioners herein, and both were ultimately
dismissed by the New York Court of Appeals in 1971. Albright v.
Town of Manlius, 28 N.Y.2d 108, 320 N.Y.S.2d 50 (1971).
The effect of respondents’ conduct was to delay Fayetteville
Mall for over 6 years, during which time enormous building costs
increases were incurred, substantial profits lost, prospective
anchor tenants permanently lost, and competition foreclosed.
The result was to further strengthen the market dominance
enjoyed by the Eagans and their affiliates and to restrict the
public’s economic freedom of choice, with consequent adverse
effect on the quality and price of the products offered by
respondents.
All of the above was set forth in the complaint and realleged in
the proposed amended complaint. In addition, the latter pleading
supplemented the allegations in the first complaint particularly
as to respondents’ intent, frequently in the conspirators’ own
words.
Annexed to the proposed amended complaint were transcripts
of telephone conversations and memoranda of the named
respondents and their accomplices, made by the conspirators
themselves contemporaneously with the events described in the
complaint. Although the issue was not raised by respondents
until this action was on appeal, petitioners assured the Court of
Appeals that the transcripts were not obtained illegally by
2The New York State Supreme Court originally declared the amendment void
and invalid for lack of a comprehensive plan and for lack of adequate public
notice to area homeowners concerning various conditions of use. The Ap-
pellate Division reversed on the comprehensive plan issue but affirmed on
che wel, of notice issue. Albright v. Town of Manlius, 34 A.D.2d 419, 312
N.Y.S.2d 13 (4th Dep't 1970). As stated in the text, the New York Court of
Appeals dismissed the actions in their entirety.
petitioners and that, in any event, such disputes should be
resolved at a more appropriate stage of this proceeding. The
accuracy and authenticity of the transcripts have never been
disputed by the parties having knowledge thereof.
These transcripts indicate that the Eagans and Allied worked
“behind the scenes” to manufacture apparent opposition to the
rezoning of the mall site and to misrepresent to the courts that
the opposition was that of neighboring homeowners. As just one
example, the Eagans secretly retained and agreed to pay
respondent Arthur Reed to testify as an expert witness sup-
posedly on behalf of the homeowners. Reed agreed to and did
testify even though he had no knowledge regarding Fayetteville
Mall or the proposed site. The trial court expressly relied on the
credibility of the testimony of Reed and other Eagan con-
spirators in finding that the named petitioners had the requisite
standing to bring the proceedings and that the proposed shop-
ping center would injure their home values. Reed’s status as a
paid witness of the Eagans was never revealed to the litigants or
the Court.
Another example of fraud on the courts was the instigation of
the Schaff action, a lawsuit conceived and executed by the
Eagans and their competitor, Earl Oot. In considering whether
to have respondent Oot bring this second action in his own name,
the Eagans secretly concluded that Oot’s status as a competing
developer would be “transparent” to the court. Hence, the
Eagans and Oot conspired to give the action apparent legitimacy
by finding another homeowner to lend her name to the suit.
The homeowners’ actions were actually those of the Eagans.
The relief purportedly sought therein was peripheral; delay was
the central purpose. As respondent Edward Eagan, himself a
lawyer, noted: “I’m talking time — how much time are we
stalling.” During 1966 through 1971, the Eagans, whose in-
volvement was completely unknown to the courts, paid counsel
over $100,000 to prolong these proceedings. In none of the
10
proceedings did respondents themselves ever petition the courts
for a redress of grievances.
By reason of the anti-competitive combination of the Eagans
and their accomplices, the validity of the rezoning was not
confirmed until 1971, six years after petitioners herein
petitioned for zoning relief. Fayetteville Mall was not completed
until several years later and long after the Eagans’ Shop-
pingtown had become entrenched as the market leader.
Great Northern Mall
In 1975, petitioner Wilmorite, Inc., developed plans to build
another major regional shopping center in Onondaga County.
Called “Great Northern Mall,” this center was proposed for a
110-acres site in the northern part of the Town of Clay. In
November of that year Wilmorite applied for the necessary
zoning change. After public hearings in January 1976, the Town
Board enacted the change requested.
Concurrently, the Eagans were developing Penn Can Mall ina
nearby area. To insulate Penn Can Mall from competition, the
Eagans and other area developers again conspired to delay or
kill petitioners’ development. On this occasion, respondent
Kimbrook Realty fronted as “petitioner” in the multiple sham
zoning litigation.
Kimbrook Realty owned a Planned Unit Development (“PUD”)
located in the Town of Clay several miles from the site of Great
Northern Mall. The project is operated by a Kimbrook affiliate,
respondent CFB Development, Inc. Kimbrook Realty, however,
is controlled by respondent Kimbrook Corp., an Eagan cor-
poration. Soon after the Town of Clay approved the rezoning for
Great Northern Mall in March 1976, Kimbrook commenced two
substantially identical actions in New York State Supreme
Court attacking the Great Northern Mall rezoning. Both
1]
proceedings were eventually dismissed with prejudice against
Kimbrook.
Both lawsuits were ordered, directed, financed, and controlled
by the Eagans and others in order to avoid or delay competition
with Penn Can Mall. Respondents’ conspiracy materially
delayed, if not killed altogether, the development of Great
Northern Mall, causing increased construction costs, lost profits
and lost tenant opportunities. As a result, competition was
eliminated and the number of retail outlets available to the
public was restricted.
Pyramid Mall East
The original complaint also alleged that the Eagans and other
respondents conspired to prevent or delay the development of
projects by persons other than petitioners. This was not par-
ticularized in the original complaint. The proposed amended
complaint, however amplified the initial pleading to set forth in
detail how respondents implemented their conspiracy against
shopping center developers other than petitioners, thereby
further solidifying their monopolist position. One such regional
development was Pyramid Mall East, which due to respondents’
covert efforts in 1972 and 1973 was eventually reduced to a
neighborhood center. Although the anti-Pyramid campaign
occurred in the political arena, it employed clearly illegal per se
violations of the antitrust laws, including an attempted boycott
by large retail advertisers organized by the Eagans to pressure
Syracuse newspapers into adversely reporting on the Pyramid
proposal.
This continuing pattern of anti-competitive conduct, spanning
at least 1965 to the present, thus stunted Fayetteville Mall,
crippled Pyramid Mall, and excluded Great Northern Mall.
12
B. The District Court Proceedings
The Motions to Dismiss. All respondents moved to dismiss the
complaint pursuant to Fed.R.Civ.P. 12(b\6) for failure to state a
claim.3 Accepting the complaint’s material allegations as true,
the court below nevertheless considered limited material outside
the complaint and, accordingly, treated the motions as motions
for summary judgment. (A-32.) The Court found respondents’
conduct immune from antitrust prosecution by virtue of the
Noerr-Pennington Doctrine. (A-12.) The motions were granted
and judgment entered dismissing the complaint in all respects.
The dismissal expressly denied leave to replead. (A-31.)
The Motion to Alter or Amend the Judgment. Petitioners
subsequently moved for an order, pursuant to Fed.R.Civ.P. 59%),
altering and amending the judgment to permit filing of az
amended complaint. A proposed amended complaint was an-
nexed to the moving papers.
At the oral argument, petitioners’ motion was denied, the
District Court holding that the proposed amended complaint
stated no facts not assumed to be true in the dismissal of the
original complaint and that the conduct of respondents was
immunized by Noerr.
C. The Proceedings in the Court of Appeals
Respondents appealed to the United States Court of Appeals
for the Second Circuit both from the summary judgment
dismissing the original complaint and from the order denying
petitioners’ motion to alter the judgment to permit an amended
complaint pursuant to Rule 59). (In effect, this motion sought
leave to replead as provided in Rule 15(a)). If the original
3Additionally, respondents Pyramid Brokerage, Kimbrook Realty, CFB
Development, Inc., Camperlino and Fatti Builders, Inc, Frank Fatti,
William J. Camperlino, and William Bargabos moved for summary
judgment pursuant to Rule 56.
13
complaint were found sufficient, then the proposed amended
complaint and the question of whether it should have been
allowed need not have been reached.
The case was fully briefed and arguments were made to the
Court of Appeals on June 14, 1978. Two weeks later, on June 30
the Court of Appeals affirmed, in a one-page decree (A-1), the
judgment of the District Court on the original opinion below of
District Judge Edmund Port. (A-3.) The Court of Appeals further
held that “{tJhere was no abuse of discretion by the District
Court in denying leave to file an amended complaint because
defendants’ conduct, under the facts and theory therein alleged,
was immune from liability under the antitrust laws.” (A-1, A-2.)
The Court of Appeals thereby adopted both the conclusion and
reasoning of the District Court and the latter's opinion shall
hereinafter be treated as the opinion of the Court of Appeals.
14
REASONS FOR GRANTING THE WRIT
I.
The Second Circuit’s Decision Misapplies Noerr and
California Motor Transport and Directly Conflicts with this
Court's Decision in Otter Tail.
The questions before this Court focus on the failure of the
Court of Appeals to apply, or even reference, the heavy
presumption in favor of antitrust enforcement, and against
exemptions and immunities, repeatedly articulated by this
Court. This error stems from the Court of Appeals’ narrow
construction of California Motor Transport v. Trucking
Unlimited, 404 U.S. 508 (1972) (hereinafter, “California Motor
Transport’), and the sweeping breadth it accords the Noerr-
Pennington Doctrine. Moreover, on the facts of this case, its
construction flies in the face of United States v. Otter Tail Power
Co., 360 F.Supp. 451 (D.Minn. 1973), affd mem. 417 US. 901
(1974), and disregards the sham exception set forth in Noerr
itself. 365 U.S. at 144.
A. Respondents Did Not Engage in First Amendment .
Activity.
The Court of Appeals relies solely on the Noerr exception to
the antitrust laws as a basis for dismissing petitioners’ com-
plaint and proposed amended complaint. That petitioners
have otherwise stated a claim under the antitrust laws is not
even contested: Respondents are horizontal business competitors
and their agents, who combined to, and did, bar petitioners’ and
others’ entry into the market. They did so repeatedly and suc-
cessfully to the enormous injury of petitioners. Their activities
substantially lessened competition and injured the public.
Moreover, one group of respondents — the Eagans — enjoy a
pervasive and notorious control over commercial reai estate
development in Onondaga County, New York. That this is an
15
appropriate case for antitrust scrutiny under Sections 1 and 2 of
the Sherman Act is plain.
The court below begins its analysis with the First Amendment
and whether failure to dismiss petitioners’ complaint might
somehow “chill” use of First Amendment rights. (A-13.) This
Court has rejected such an analysis of antitrust exemptions.
In City of Lafayette v. Louisiana Power & Light Co., 98 S.Ct.
1123 (1978) (hereinafter, “City of Lafayette”), this Court (in a
portion of the plurality opinion of Mr. Justice Brennan con-
curred in by a majority of the Court) sets forth the proper mode
for analysis of the related “immunities” of Noerr-Pennington
and Parker v. Brown, 317 U.S. 341 (1943). Only where application
of the antitrust laws would “severely impinge” upon the values
reflected in the twin doctrines, is the presumption favoring
antitrust enforcement overcome. Because the policies of the
antitrust laws are “overarching and fundamental” and are
designed to safeguard the economic liberties of the people, a
heavy burden is placed upon those who would escape the
strictures of antitrust by resort to an “immunity.” The Court of
Appeals did not hold respondents to this burden.
At the outset, the Court of Appeals disregards the legion of
decisions deploring summary disposition of complex antitrust
claims and, further, improperly resolves fact questions against
petitioners. And it does so in the service of a vague, unspecific
and, more importantly, unproven notion of a “chilling effect”
that adjudication of petitioners’ claims would supposedly cause.
In relying on “chilling effect,” the court below does not take
the necessary first step of analysis: For respondents did not
engage in First Amendment petitioning and the right to petition
is therefore not at stake. The means used by respondents to
implement their anti-competitive conspiracy consisted not of
petitioning, but of contriving a scheme for others (with osten-
sibly legitimate interests) to bring multiple repetitive lawsuits
against petitioners. The proceedings were not brought in the
16
names of respondents and did not assert the genuine rights or
interests of respondents.! Rather, they were conceived, in-
stigated, financed, and directed by respondents covertly and for
the purpose of deceiving and misleading the agencies of
government as to the true parties and their real interests.
Thus, respondents expressly conspired to conceal from the
tribunals their economic (and, indeed, anti-competitive) interests
in the proceedings and to contrive a false appearance of in-
dependence and lack of connection, as illustrated by a con-
versation between respondent Leo T. Eagan and one of his at-
torneys:
“(ATTORNEY JAMES WILBER:] Remember, we were
trying to get as many in as possible. We now have the Oot
office with a plaintiff. I’ve been working with them on
their complaint too. We can expect that their lawsuit will
be brought in the near future. We hope that will gum
things upa little bit more.
“(RESPONDENT EAGAN: ] What is their lawsuit about?
“(ATTORNEY WILBER:] They're going to take another
party out there and bring a lawsuit similar to ours. The
trouble we've used just about every neighbor around
there, but we finally found one for them. Earl has an
interest — Earl Oot in the Oot office, and he’s also a
lawyer in that office. He has an interest because he has a
shopping area over in Freemont and he’s affected. So we'll
have his complete cooperation. We've been kind of
leading him by the hand. The more we get at this
clambake the better off we're going to be.
“[RESPONDENT EAGAN:| And the more they can show
that there is no connection together the better off it is.”
(Emphasis supplied.)
A further portion of this same conversation demonstrates that
respondents and their accomplices expressly conspired to
mislead the courts as to their real interests:
{Except for Kimbrook Realty, the pleadings describe no proceeding in which
any respondent appeared and identified himself or brought an action
against petitioners.
17
“(ATTORNEY WILBER:] We thought that maybe when
these other lawsuits get started, that would be a good key
for some more publicity — when we get these other
plaintiffs in here.
“(RESPONDENT EAGAN;] Oot's people?
“(ATTORNEY WILBER;] Yes.
“[RESPONDENT EAGAN;] Are Oot themselves going to
bring it?
“|[ATTORNEY WILBER;] Yes.
“(RESPONDENT EAGAN:] That's good. Here is a local,
fine family — I'm trying to think of the story now. Here
are brothers—
“(ATTORNEY WILBER:] No, they will not be the
plaintiff. It would be rather transparent for them to do it.
[RESPONDENT EAGAN] So the plaintiff is going to be
some neighbor, And Oot is going to be the lawyer?
“[ATTORNEY WILBER:] He'll have Jack Setright
probably try it.
“[RESPONDENT EAGAN] Right in his office?
“(ATTORNEY WILBER;] Yes.
“(RESPONDENT EAGAN:] So there is litigation on
litigation.” (Emphasis supplied.)
Far from petitioning the government for a redress of
grievances, respondents deliberately and assiduously avoided
petitioning the agencies and courts or informing them of their
interests and participation. As it is not the exercise of First
Amendment rights that petitioners attack, it is difficult to
discern how, much less the extent to which, First Amendment
rights are “chilled.” By refusing to apply the “severe im-
pingement” standard of City of Lafayette, supra, brought to the
attention of the Court of Appeals in petitioners’ reply brief
below, the judgment in this action misapplies the decisions of
this Court.
18
B. The Predatory Methods Used by Respondents to
Exclude Competitors from the Market Are Not
Protected by the Right to Petition Adjudicatory
Bodies.
The Noerr doctrine ultimately rests upon the right to petition
established by the First Amendment, 365 U.S, at 137-38, In
California Motor Transport, the Supreme Court held that
although the right to petition recognized in Noerr “extends to all
departments of the Government,” the exercise of that right must
accord with the administrative and judicial setting in which the
petitioning takes place. 404 U.S. at 510-16, Any inquiry as to the
proper application of the Noerr defense must therefore begin
with the question of whether the activities of the respondents
constituted a proper exercise of the constitutional right to
petition the particular governmental body involved, This inquiry
may be framed in terms of the basic applicability of Noerr itself
or in terms of whether the “sham exception” to Noerr controls,
The outcome should be the same under either approach,
Courts perform a vastly different function in our system of
government than do legislatures and political agencies. It is the
essence of judicial proceedings to determine the personal rights
of individuals appearing before the court, based upon the per-
sonal grievances of the parties. Courts ordinarily make deter-
minations upon a formal petition and after a formal hearing.
Such petitions must disclose the persons petitioning the tribunal
and the grievances upon which the petitions are based.°
Moreover, adjudication is optimally unbiased and free of
prejudice by unasserted or undisclosed private interests. Indeed,
‘It is especially important to note that New York state law requires
disclosure of a cognizable property interest in order to bring a zoning
action, Effects on competition do not confer standing to attack zoning, /y.,
Haber v. Board of Estimate, 33 A.D.2d 571, 305 N.Y.S.2d 520 (2d Dep't 1969)
(plaintiffs must allege specific pecuniary or property interest in zoning
dispute),
19
courts of justice are not representative bodies in the political
sense. To this end, ex parte approaches to a court are forbidden
except under special circumstances. Even a formal approach by a
non-party, such as by an amicus curiae brief, is not a matter of
constitutional right but may be made only by leave of court.
These requirements graphically illustrate the unique function of
courts in our system of separated powers. Whereas a legislature
is by its nature a representative body, courts are not established
for the purpose of representing the wishes of any group but,
rather, for adjudicating the personal grievances of identified
parties appearing before them.
It follows that misrepresentation of standing and interests to
the court is one of the most pernicious abuses of the judicial
system. Such conduct is “access barring” at its worst, for it
prevents the innocent victim from expeditiously exposing the
frivolousness of the litigation to which it has been subjected.
The single most pervasive distinction between political ac-
tivity and adjudication is the strict requirement of truthfulness
and good faith imposed upon litigants and their lawyers. It is
this fundamental requirement of ethical conduct in judicial
proceedings that lies at the heart of California Motor Transport.
There, this Court recognized that “the political campaign
operated by the railroads in Noerr to obtain legislation crippling
truckers employed deception and misrepresentation and
unethical tactics,” but that such conduct was nevertheless
protected political activity under the First Amendment, 404 U.S.
at 512. Of crucial significance, however, is that this Court in
California Motor Transport applies a more stringent standard to
the exercise of the right to petition administrative and judicial
bodies:
Yet unethical conduct in the setting of the adjudicatory
process often results in sanctions .... There are many
other forms of illegal and reprehensible practice which
may corrupt the administrative or judicial processes and
which may result in antitrust Violations.
20
Misrepresentations, condoned in the political arena, are
not immunized when used in the adyudicatory process.
404 U.S. at 512-13 (emphasis supplied). Insofar as administrative
or judicial processes are concerned, such unethical conduct does
not constitute legitimate petitioning and cannot take refuge in
the First Amendment.
Despite this paramount thesis of California Motor Transport,
the Court of Appeals failed to recognize the fundamental
distinction between political petitioning and _ judicial
petitioning. Whatever immunity might have been accorded
respondents had their tactics been employed in a purely political
setting, such conduct cannot be tolerated in the courts. Certainly
it cannot be viewed as conduct deserving of First Amendment
protection.
The words of the respondents set forth in the proposed
amended complaint conslusively demonstrate that the Eagans
manipulated virtually every aspect of the adjudicatory process:
the selection of the parties plaintiff; the selection of attorneys;
and, most importantly, the conduct of the proceedings them-
selves. These were conducted primarily to delay a determination
on the merits until petitioners’ development was “squashed.”
Even the most minute details — trial preferences, discovery,
witnesses, news coverage, security bond, timing of pleadings —
were manipulated by and for the benefit of the Eagans. The
record is replete with respondents’ misrepresentations to the
courts, usurped standing, and gross abuse of the judicial process.
Similarly, the Eagans and their accomplices conceived and
suborned the repetitive Kimbrook lawsuits against Great
Northern Mall, not for the avowed purpose of protecting
Kimbrook’s PUD, but rather to prevent competition to the
Eagan’s new Penn Can Mall. Key to the scheme, however, was
again concealing the true party in interest from the courts.
Nor is it responsive to conclude, as did the District Court (A-
27, A-28), that respondents’ lawsuits were not “baseless” since
some of them prevailed on some issues at lower court levels. The
21
crucial point missed by that analysis is that respondents would
not have prevailed at any level on any issue had the courts been
told that the zoning was being challenged by competitors rather
than neighboring property owners. The facts pleaded demon-
strate that under applicable New York law respondents’ actions
were utterly baseless and totally frivolous. They thus evidence a
pattern of repetitive and baseless abuse of the courts not con-
doned by Nverr’s extention to the judicial arena. The Court of
Appeals, by adopting the opinion of the District Court, thus
ignores the central teaching of California Motor Transport, and
a writ of certiorari should therefore issue.
C. The Decision of the Court of Appeals is in Direct
Conflict with this Court’s Decision in Otter Tail.
In Otter Tail Power Co. v. United States, 417 U.S. 901 (1974),
affg mem. 360 F.Supp. 451 (D.Minn. 1973), on remand from 410
U.S. 366 (1973) (hereinafter, “Otter Tail”), this Court found
defendant private electrical company liable under the antitrust
laws for its repetitive use of litigation “timed and designed
principally to prevent the establishment of municipal electrical
systems,” thereby preserving defendant’s monopoly. See F.Supp.
at 451.
In its first Otter Tail opinion, this Court, quoting the trial
court, identified the economic vice of such litigation, noting that
the “pendency of litigation has the effect of preventing the
marketing of the necessary bonds thus preventing the
establishment of a municipal [electrical] system” and that
“({mlost of the litigation sponsored by the defendant was carried
to the highest available appellate court” and, although un-
successful on the merits, “had the effect of halting, or ap
preciably slowing, efforts for municipal ownership.” 410 U.S. at
379.
In the instant case, petitioners pleaded the parallel de-
vastating effects of the pendency of zoning litigation in blocking
financing and tenant-acquisition for a proposed shoppping
center. Indeed, the Eagans, enjoying a dominant market
22
position, prolonged such litigation to achieve these very ob-
jectives. The advantages achieved by delay displaced any
genuine attempt to adjudicate the disputes. Such conduct ef:-
fectively bars petitioners from access to usable zoning relief and
interferes directly with vital business relationships. As such, it
falls squarely within Otter Tail and ought not be condoned. The
decision of the Court of Appeals directly conflicts with Otter Tail
and should be reviewed by this Court.
D. The Decision of the Court of Appeals Conflicts with the
Example of Sham Given in Noerr.
Even the Noery immunity was expressly qualified by this
Court when first enunciated. In what has come to be known as
the “sham exception,” the Court stated:
There may be situations in which a publicity campaign,
ostensibly directed toward influencing governmental
actions, is mere sham to cover what is actually nothing
more than an attempt to interfere directly with the
business relationships of a competitor and the application
of the Sherman Act would be justified.
365 U.S. 127, 144 (1961). Petitioners’ proposed amended com-
plaint and Exhibit H annexed thereto states a claim under this
very state of facts. Once again, the words of respondents clearly
evidence their intent to use a publicity campaign for the sole
purpose of discouraging their tenants from negotiating with
petitioners:
[RESPONDENT EAGAN:] All I can say to you now is
this — we want to proceed with full steam ahead to
litigate the heck out of them, to get all the publicity we
can for the express sole purpose now, at least — first of
all, we hope we can stop them dead; if not, we can delay
but in the meantime that we keep our tenants from being
wooed away over there on the strength that — we've got
everything — heck, they haven't got it. (Emphasis sup-
plied.)
23
One searches Exhibit H in vain for a description of the
grievances that are to be the basis for the planned lawsuits or
any consideration of their merits. There is not, however, a single
word about a genuine attempt to achieve a just or speedy
resolution of the legal disputes.
This same theme of interference is the subject of a later
conversation between respondent Eagan and attorney Wilber
several months after litigation was commenced. Again, to
respondent Eagan the merits of the lawsuits are purely
secondary:
[RESPONDENT EAGAN:] So there is litigation on
litigation. Where this is helpful is that it not only has its
effect upon Byron, but it also has effect on where he'll try
to get his financing, because the more publicity today I
find that elections and everything are settled by
publicity. I just went through that on the Chimes
Building and I found it didn’t matter what the heck the
merits to the case were, it was what the newspapers
decide to publish...
[ATTORNEY WILBER:] Of course, we've been saying,
strictly on the merits, that we’re right, and I think that
we are.
[RESPONDENT EAGAN:] I agree with you but I don’t
think that’s enough. I think you've got to have this
publicity right now.
The instant case is unique, among all of Noevr’s progeny, in
meeting — literally — the sham exception expressed therein. The
publicity campaign conceived by respondents was not First
Amendment petitioning; the legislative effort was finished and
litigation had commenced. Respondents’ publicity campaign
could not constitute a genuine attempt to influence the courts.
Rather, it was a “mere sham” designed “to interfere directly
with the business relationships” of petitioners. (365 U.S. at 144.)
What Noerr recognized as sham in the political arena, the Court
24
of Appeals ought to have condemned in the judicial sphere. Its
failure to do so is in conflict with dictum in Noerr itself.
The Questions Presented By This Petition Are of Fun-
damental Constitutional Importance and Are in Need of
Prompt Resolution By the Court.
Over the last two Terms, this Court has made enormous strides
in eliminating confusing and, in some cases, obsolete notions
surrounding the traditional antitrust exemptions. F.g., National
Broiler Marketing Ass'n. v. United States, 98 S.Ct. 2122 (1978)
(agricultural cooperatives); National Society of Pro essional
Engineers v. United States, 98 S.Ct. 1355 (1978) (“learned
professions”); St. Paul Fire & Marine Insurance Co. v. Barry, 98
S.Ct. 2923 (1978) (“boycott exception” to McCarran-Ferguson
Act); City of Lafayette v. Louisiana Power & Light Co., supra
(Parker v. Brown exemption). This process promises to continue
during this Term. E.y., Group Life and Health Ins. Co. v. Royal
Drug Co., 556 F.2d 1375 (5th Cir. 1977), cert. granted 98 S.Ct.
1448 (Feb. 27, 1978).
Moreover, many of the cases before this Court last Term
collaterally involved the Noerr-Pennington exemption. E.g., City
of Lafayette, supra, City of Impact v. Whitworth, 559 F.2d 378
(5th Cir. 1977), cert. granted, vacated and remanded 98 S.Ct. 1642
(1978); Pleasure Driveway and Park Dist. v. Kurek, 557 F.2d 580
(7th Cir. 1977), cert. granted, vacated and remanded 98 S.Ct. 1642
(1978). Indeed, Noerr-Pennington was crucial to the reasoning of
two opinions in Vendo Co. v. Lektro-Vend Co., 433 U.S. 623 (1977)
(concurring opinion of Mr. Justice Blackmun and dissenting
opinion of Mr. Justice Stevens).
Despite the concern exhibited by the Court in the scope and
treatment of antitrust exemptions, the Noerr exemption
25
remains in a state of confusion and disarray at the very time
such issues abound.
The case now before this Court is of special constitutional
importance. For it raises not only important questions con-
cerning the continued efficacy of the Sherman Act in an in-
creasingly regulated business environment, but it addresses as
well the proper scope of commercial speech and, more critically,
the proper role served by the judicial branch of government.
Jurists, lawyers, and lawmakers are voicing mounting concern
over the proliferating use and abuse of massive and repetitious
litigation and pre-trial procedures. See, e.g., Blue Chip Stamps v.
Manor Drug Stores, 421 U.S. 723 (1975). When called upon to do
6See, e.y., Woods Exploration & Producing Co. v. Aluminum Co. of America,
438 F.2d 1286 (5th Cir. 1971) (filing of false nomination forecasts with
regulatory comission); Semke v. Enid Automobile Dealers Ass'n, 456 F.2d
1361 (10th Cir. 1972) (petitioning state motor vehicle commission for per-
manent injunction against competitor); /srael v. Baxter Laboratories, Inc.,
466 F.2d 272 (D.C. Cir. 1972) (interference with F.D.A. drug application);
Franchise Realty Interstate Corp. v. San Francisco Local Joint Executive
Board of Culinary Workers, 542 F.2d 1076 (9th Cir. 1976) (opposition before
municipal board granting permits for restaurant operation); Kurek ».
Pleasure Driveway and Park Dist., 557 F.2d 580 (7th Cir. 1977) (coercion
through economically unrealistic sham bid proposal); Webb v. Utah Tour
Brokers Ass'n, 568 F.2d 670 (10th Cir. 1977) (opposition before LC.C. to
issuance of tour broker certificate); Adolph Coors Co. v. A. & S. Wholesalers,
Inc., 561 F.2d 807 (10th Cir. 1977) (lawsuit seeking cessation of interstate
transportation and sale of beer); Associated Radio Service Co. v. Page
Airways, Inc., 414 F.Supp. 1088 (N.D.Tex. 1976) (lawsuits instigated against
competitor); First Delaware Valley Citizens Television Inc. v. CBS, Inc., 398
F.Supp. 917 (E.D.Penn. 1975) (inducement by network of affiliate to in-
tervene in F.C.C. proceedings); Rush-Hampton Industries, Inc. v. Home
Ventilating Institute, 419 F.Supp. 19 (M.D. Fla. 1976) (lobbying before Code
organizations for certain favorable specifications); Mountain Grove
Cemetery v. Norwalk Vault Co., 428 F.Supp. 951 (D.Conn. 1977) (baseless
lawsuit); Dollar Rent-A-Car Systems, Ine. v. Hertz Corp., 434 F.Supp. 513
(N.D.Calif. 1977) (petitioning for private airport concessions); Cybory
Systems, Inc. v. Management Science America, Inc., 1978-1 Trade Cases
961,927 (N.D. Ill. 1978) (trade secrets litigation); Loctite Corp. v. Fel-Pro Inc.,
1978-2 Trade Cases $62,204 (N.D. Ill. 1978) (patent infringement litigation).
26
so, this Court has readily distinguished the proper utilization of
the judicial processes from pernicious and vexatious practices.
Compare In re Primus, 98 S.Ct. 1893 (1978) with Ohralik v. Ohio
State Bar Ass'n, 98 S.Ct. 1912 (1978). In these champerty cases,
the fundamental distinction recognized in N.A.A.C.P. v. Button,
371 U.S. 415, 443 (1963) is reaffirmed:
Resort to the courts to seek vindication of con-
stitutional rights is a different matter from the op-
pressive, malicious, or avaricious use of the legal process
for purely private gain.
Where the private gain exhibits the additional evil of restraint
of trade, it can surely be condemned without “chilling” fun-
damental First Amendment values. Thus, the Primus/Ohralik
distinction strikes at the very heart of the decisions below.
This Petition represents a special opportunity for this Court
to make it abundantly clear that the First Amendment will not
constitute a safe harbor for those that would misuse the courts
for collateral, anti-competitive ends. As governmental
regulation and scrutiny of business planning and practices
increase, the temptation to subvert the adjudicatory processes to
serve private unlawful objectives will surely grow. A timely
pronouncement by this Court rejecting such conduct would be
highly salutary.
Granting a writ herein would serve at once the twin values of
economic liberty and fair, impartial and speedy justice. The
decision of the Court of Appeals as it now stands does neither.
CONCLUSION
For the foregoing reasons, the Petition for Writ of Certiorari
should be granted.
Dated: September 27, 1978
Rochester, New York.
Respectfully submitted,
JAMES M. HARTMAN
Two State Street
Rochester, New York 14614
Telephone: (716) 232-4440
Counsel for Petitioners
BY: /s/ James M. Hartman
JAMES M. HARTMAN
HARRIS, BEACH, WILCOX,
RUBIN & LEVEY
Paul D. Meunier
Eric Stonehill
Sally True
Of Counsel.
Appendices
A ar oe a ——
A-l
APPENDIX A
Judgment and Order of the
United States Court of Appeals
for the Second Circuit
UNITED STATES COURT OF APPEALS
FOR THE
SECOND CIRCUIT
At a stated Term of the United States Court of Appeals for the
Second Circuit, held at the United States Courthouse in the City
of New York, on the 30th day of June, one thousand nine
hundred and seventy-eight.
Present: HON. LEONARD P. MOORE, HON. WILLIAM H.
MULLIGAN, HON. MURRAY I. GURFEIN, Circuit Judges,
WILMORITE, INC., ET AL.,
Plaintiffs-Appellants,
against
EAGAN REAL ESTATE, INC., ET AL.,
Defendants-A ppellees.
77-7625
Appeal from the United States District Court for the Northern
District of New York.
This cause came on to be heard on the transcript of record from
the United States District Court for the Northern District of
New York, and was argued by counsel. —
ON CONSIDERATION WHEREOF, it is now hereby ordered,
adjudged, and decreed that the judgment of said District Court
be and it hereby is affirmed on the opinion of Judge Edmund
A-2
Appendix A — Judgment and Order of the United States
Court of Appeals for the Second Circuit
Port in 77-CV-47 (Sept. 29, 1977). There was no abuse of
discretion by the district court in denying leave to file an
amended complaint, Yecause defendants’ conduct, under the
facts and theory therein alleged, was immune from liability
under antitrust laws.
ls) LEONARD P. MOORE
Leonard P. Moore
is) WILLIAM H. MULLIGAN
William H. Mulligan
ls) MURRAY I. GURFEIN
Murray I. Gurfein
EEE eeeSEeeeeeeeee
A-3
APPENDIX B
Memorandum-Decision and Order of the District Court
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
WILMORITE, INC., FAYETTEVILLE PLAZA, INC., AND
JAMES P. WILMOT, d/b/a FAYETTEVILLE MALL,
Plaintiffs,
v
EAGAN REAL ESTATE, INC., EAGAN REAL ESTATE
MANAGEMENT CORP., EAGAN REAL ESTATE, LEO T.
EAGAN, WILLIAM EAGAN, EDWARD EAGAN, KIM-
BROOK REALTY, KIMBROOK CORP., CFB DEVELOP—
MENT CORP., CAMPERLINO AND FATTI BUILDERS,
INC., FRANK BARGABOS, PYRAMID DEVELOPMENT,
INC., PYRAMID BROKERAGE COMPANY, _INC.,
MICHAEL FALCONE, ALLIED STORES CORPORATION,
DEY BROTHERS AND CO., INC., WINMAR COMPANY,
INC., BARNEY DEASY, PAUL D. LONERGAN,
KATHERINE M. SHEA, JOHN MURPHY, EARL OOT,
ROGER SMITH, ARTHUR REED AND DAVID C.
MURRAY,
Defendants.
77-CV-47
Appearances:
HARRIS, BEACH, WILCOX, RUBIN AND LEVEY, At-
torneys for plaintiffs, 2 State Street, Rochester, New York
14614. James M. Hartman, Esq., of Counsel.
BOND, SCHOENECK & KING, Attorneys for Eagan defend-
ants, One Lincoln Center, Syracuse, New York 13202. N. Earle
Evans, Jr., Esq., of Counsel.
A-4
Appendix B — Memorandum-Decision and
Order of the Instrict Court
HINMAN, HOWARD & KATTEL, Attorneys for Allied
defendants, Security Mutual Building, Binghamton, New York
13901. Pamela S. Dwyer, Esq., of Counsel; Sullivan & Cromwell,
48 Wall Street, New York, New York 10005.
HANCOCK, ESTABROOK, RYAN, SHOVE & HUST, At-
torneys for Pyramid defendants, One Mony Plaza, Syracuse,
New York 13202. William L. Allen, Jr., Esq., of Counsel.
NIXON, HARGRAVE, DEVANS & DOYLE, Attorneys for
Winmar defendants, Lincoln First Tower, Rochester, New York
14603. John Stuart Smith, Esq., of Counsel.
URCIUOLI & COVINO, Attorneys for Kimbrook defendants,
7145 Henry Clay Boulevard, Liverpool, New York 13088. Mario
D’Arrigo, Esq., of Counsel.
NOTTINGHAM, PALTZ, CERIO AND ENGEL, Attorneys for
defendant Murray, One Lincoln Center, Syracuse, New York
13202. Richard L. Engel, Esq., of Counsel.
BRYANT, O’DELL AND BASSO, Attorneys for defendant
Pyramid Brokerage Co., 600 Powelson Building, Syracuse, New
York 13202. John D. Bryant, Esq., of Counsel.
OOT, SETRIGHT AND CIABOTTI, Attorneys for defendant
Oot, 500 Powelson Building, Syracuse, New York 13202. Victor
J. Ciabotti, Esq., of Counsel.
R.J. AND P.R. SHANAHAN, Attorneys for defendant Reed,
Onondaga Savings Bank Building, Syracuse, New York 13202.
William F. Lynn, Esq., of Counsel.
EDMUND PORT, JUDGE
Ps oa
A-5
Appendix B— Memorandum-Decision and
Order of the District Court
MEMORANDUM-DECISION AND ORDER
I. THE MOTIONS
In this $72,000,000 damage action for alleged violations of the
antitrust laws, brought by a developer of regional shopping
centers against competing developers of similar shopping areas
and others in concert with them, the defendants have moved to
dismiss the complaint for failure to state a claim or for summary
judgment.
II]. THE COMPLAINT
Accepting the material facts alleged in the complaint as true
for the purposes of the motions to dismiss, see Hospital Building
Co. v. Trustees of Rex Hospital, 425 U.S. 738, 740 (1976), it alleges
as follows:
Plaintiffs.
Plaintiffs are developers and owners of regional shopping
centers! in New York and other states. They developed and
built Fayetteville Mall and are in the process of developing Great
Northern Mall.
Defendants.
Twenty-seven defendants are named. They are mainly real |
estate investors and developers in Onondaga County. The Eagan
lRegional shopping centers are large shopping centers which seek to draw
customers from a wide suburban area. They usually feature one or more
anchor stores, branch outlets of major department store chains, and a
variety of other retail establishments. See Plaintiffs’ Memorandum 6-8.
They are distinguished from residential shopping centers which are smaller
neighborhood shopping centers, primarily featuring grocery stores, drug
stores and the like. See Beneke v. Board of Appeals 51 Misc. 2d 20, 273
N.Y.S.2d 121, 125 (Sup. Ct. 1966).
A-6
Appendix B — Memorandum-Decision and
Order of the District Court
defendants? are the largest real estate investors and brokers in
the county, owning and operating three regional shopping
centers, Shoppingtown, Fairmount Fair, and Penn Can Mall.
The Kimbrook defendants? own and operate a Planned Unit
Development (PUD) comprised of residential and commercial
uses, in northern Onondaga County. The Kimbrook defendants
are economically controlled by the Eagan defendants.‘ The
Pyramid defendants,> who are independent of the other
developers, own and operate regional shopping centers in
Onondaga County including Seneca Mall, River Mall and
Pyramid Malls. The Allied defendants® operate a department
2The Eagan defendants include Eagan Real Estate, Inc., Eagan Real Estate
Management Corp., Eagan Real Estate, Leo T. Eagan, William Eagan and
Edward Eagan. The individual Eagan defendants control the Eagan entities
either as partners, officers, directors or shareholders. Defendant Winmar
Company is a member of the joint venture operating Penn Can Mall along
with the Eagan defendants. Winmar is otherwise unrelated to the Eagans.
Defendant Barney is a vice-president of Winmar.
3The Kimbrook defendants include Kimbrook Realty, CFB Development
Corp., Camperlino and Fatti Builders, Frank Fatti, William J. Camperlino
and William A. Bargabos. Again, the individual defendants control the
named entities as either partners, officers, directors or shareholders.
44 group of defendants bridges the Eagan and Kimbrook groups. Kimbrook
Corp. is a partner in Kimbrook Realty which in turn operates the Kimbrook
PUD. Defendants Paul D. Lonergan and Katherine M. Shea are officers of
Kimbrook Corp. and also are employees of one of the Eagan interests.
Through this chain, the Eagans allegedly control the Kimbrook defendants.
5The Pyramid defendants include Pyramid Development, Inc. and Michael
Falcone. Another defendant, Pyramid Brokerage Company was named in
the complaint. At argument on the motions to dismiss, however, plaintiffs
agreed to discontinue the action against this defendant as it, apparently,
was unrelated to the other Pyramid defendants. This was done.
6The Allied defendants are Allied Stores Corporation and Dey Brothers and
Co., Ine.
Pt aie
A-7
Appendix B— Memorandum-Decision and
Order of the District Court
store in Shoppingtown and are part of the joint venture now
developing Penn Can Mall. In addition to these major defend-
ants, various individuals’ are named who either are related to
one of the major groups of defendants or have participated in the
opposition to plaintiffs’ development in Onondaga County.
Fayetteville Mall.
In 1965 plaintiff, Wilmorite, Inc., planned to build a regional
shopping center, Fayetteville Mall, in Fayetteville, New York.
Plaintiff obtained an option to purchase a large tract of land
known as Andrea Acres on which to build Fayetteville Mall.
Fayetteville Mall would compete with Shoppingtown, located
two miles away. In June of that year, efforts were initiated by
plaintiffs to change the zoning of Andrea Acres from residential]
and agricultural to commercial. In January of 1967, the Manlius
Town Board amended its zoning ordinance and rezoned Andrea
Acres as “Regional Shopping District.’
Between June, 1965 and the change of the zoning ordinance
creating the “Regional Shopping District”, defendants conspired
to obstruct its passage. They instigated opposition to the
amendment among neighboring merchants and homeowners.
They retained witnesses to appear on behalf of the homeowners
at public hearings and created publicity adverse to the amend-
‘Other individual defendants include Ear] Oot, a real estate developer, John
Murphy, an Eagan employee, Roger Smith, an expert on development of
— centers, Arthur Reed, a planning consultant, and David Murray,
‘Initially, the zone was changed from residential and agricultural to
“Residential Shopping District.” See Beneke v. Board of Appeals, 51 Mise. 2d
20, 273 N.Y.S.2d 121 (Sup. Ct. 1966). Subsequently, the land was rezoned, this
time as “Regional Shopping District.” See Albright v. Town of Manlius, 28
N.Y.2d 108, 320 N.Y.S.2d 50 (1971).
A-8
Appendix B — Memorandum-Decision and
Order of the District Court
ment. They instigated and financed legal proceedings in op-
position to the rezoning.
The first legal proceeding brought by any of the defendants
occurred after plaintiffs’ initial efforts to obtain a rezoning from
the town authorities. These efforts had resulted in the creation
of a “Residential Shopping District” zone for Andrea Acres.
Although not alleged in the complaint, the proceeding was cited
by defendants: Beneke v. Board of Appeals, 51 Misc. 2d 20, 273
N.Y.S.2d 131 (Sup. Ct. 1966). This was an Article 78 proceeding
which annulled the affirmance by the Zoning Board of Appeals
of the issuance of a building permit for Fayetteville Mall on the
grounds that there was insufficient evidence for the building
inspector to determine whether the mall would comply with the
requirements for the “Residential Shopping District” which had
been created at plaintiff's behest. Subsequently, the ordinance
was further amended to create the “Regional Shopping District”
in January of 1967.
The complaint further alleged that after the zoning ordinance
was amended to create the Regional Shopping District, two suits
were commenced challenging the amendment. One was brought
by 148 neighboring property owners and the other by an in-
dividual resident of the town. Both, however, were organized and
financed by various defendants including the Eagans and Allied.
Although both actions were ultimately dismissed by the New
York Court of Appeals in 1971,9 they had been successful below.
Justice Farnham of the New York State Supreme Court held the
amendment void and invalid for lack of a comprehensive plan
and for lack of public notice concerning various conditions on the
IA lbright v. Town of Manlius, 28 N.Y .2d 108, 320 N.Y.S.2d 50 (1971).
A-9
Appendix B — Memorandum-Decision and
Order of the District Court
use of Andrea Acres.!" The Appellate Division reversed in part
holding that the amendment was enacted pursuant to a com:
prehensive plan, but affirmed as to the lack of notice of the
conditions on the lands’ use.!!
The opposition to the zoning amendment and the subsequent
lawsuits were organized and financed with the intent of delaying
or preventing the development of Fayetteville Mall. Defendants
intended to misuse the judicial process and to defeat the lawfully
enacted zoning amendment in order to eliminate plaintiffs as
competitors within Onondaga County. To that extent, the Op-
position and the lawsuits were “sham and wrongful legal
proceedings in opposition to Fayetteville Mall.’”!2 More
generally, defendants conspired to restrain trade, eliminate
competition, prevent the development of plaintiffs’ shopping
center, limit the number of regional shopping centers and the
extent of commercial space to be leased for that purpose, and
finally, to monopolize the development of regional shopping
centers within Onondaga County.
As a result of defendants’ conduct, the construction of
Fayetteville Mall was delayed for six years. The delay caused an
increase in construction costs and a decrease in plaintiffs’
profits. The delay further prevented plaintiffs from obtaining
certain commercial tenants for Fayetteville Mall and enabled
Shoppingtown to lease space to a major department store and
10The unreported decision in Albright v. Town of Manlius, Index No. 67-2797
(Sup. Ct., November 17, 1969), is attached to defendant Murray's motion
papers,
LLAlbright v. Town of Manlius, 34 App. Div. 2d 419, 312 N.Y.S.2d 13 (4th Dept
1970). |
12Plaintiffs’ Complaint 9108(t).
A-10
Appendix B — Memorandum-Decision and
Order of the District Court
other tenants who had earlier signed lease options for
Fayetteville Mall.
Great Northern Mall.
After the dismissal of the Fayetteville Mall lawsuits in 1971,!%
defendants’ conduct is free of complaint by the plaintiffs until
1975, when plaintiffs initiated plans to develop Great Northern
Mall. This proposed mall would compete with defendants’
regional shopping center, Penn Can Mall. Once again, the land
involved was zoned residential and agricultural, and plaintiffs
applied for a zoning change to permit the construction of a
regional shopping center. At the same time, the Kimbrook
defendants were applying for a zoning change to permit a 23 acre
shopping center. By March of 1976, the zoning change for
plaintiffs had been granted and Kimbrook withdrew its request.
Following the zoning change, litigation again ensued. In
March, 1976, Kimbrook sued to declare the zoning amendment
for Great Northern Mall invalid.!4 In June, Kimbrook brought
another suit — an Article 78 to reverse the recommendation of
the Onondaga County Planning Board which had recommended
the change and the resolution of the Town Board of Clay by
which the zoning amendment had been enacted. This latter case
was dismissed by the court in December of 1976. As had been the
case with the Fayetteville Mall litigation, both of these suits
were brought at the direction of the Eagans and were en-
couraged and financed by those defendants along with Allied. In
13See note 9 supra,
MThis suit has been discontinued with prejudice since the commencement of
the case at bar, See Order of the Hon. Donald Miller, Justice of the Supreme
Court of the State of New York, signed July 20, 1977.
ee pete cack ew ieee
A-11
Appendix B — Memorandum-Decision and
Order of the District Court
addition, these two recent suits were also instigated and
financed by the Pyramid defendants.
The same motives which had inspired the earlier Fayetteville
Mall litigation are responsible for these two suits. Defendants
intend to misuse the judicial process and defeat the zoning
change in order to delay or prevent the development of Great
Northern Mall. The “sham and wrongful legal proceedings”! are
motivated by anticompetitive and monopolistic purposes.
Finally, the suits are affecting Great Northern Mall in the same
manner that the earlier litigation affected Fayetteville Mall:
Development and construction are delayed: costs are increased:
profits are lost; plaintiffs are prevented from entering into
leases; and competition is restricted.
Plaintiffs request the court to declare defendants’ actions
unlawful in violation of the Sherman Act's prohibitions on
restraint of trade, 15 U.S.C. §1, and monopolies, 15 U.S.C. §2,
and also in violation of New York law. An injunction against
further unlawful activity is requested. In addition. claiming
damages of $24,000,000, plaintiffs request judgment for
$72,000,000, or treble damages on the antitrust claims, and
$24,000,000 on their unfair competition claim. Lastly, costs and
attorneys’ fees are asked for.
15Plaintiffs’ complaint 9 108(ee).
A-12
Appendix B — Memorandum-Decision and
Order of the Instrict Court
II]. CONTENTIONS
The contentions of the parties boil down to the confined issue
of whether the facts before me insulate the defendants from
antitrust liability under the Noerr-Pennington doctrine,'® or
bring the case within the sham exception!’ to that doctrine.
For the reasons stated, I find the defendants’ conduct to be
within the protection of Noerr-Pennington and, consequently,
the defendants’ motions to dismiss the complaint in its entirety
are granted.!*
IV. DISCUSSION
The Noerr-Pennington doctrine has its genesis in Eastern
Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365
U.S. 127 (1961¥Noerr). The defendants in Noerv, twenty-four
railroads, a trade association of their presidents, and a public
reiations firm, were charged with conspiring to restrain trade
and monopolize the long distance freight business. Plaintiffs,
various truckers and trucking interests, alleged that defendants
had engaged in a publicity campaign whose sole motivation was
to destroy competition; that defendants had used the third party
technique, i.e., adverse publicity prepared by defendants was
misrepresented as the views of independent persons; and that
l6See Eastern Railroad Presidents Conference vy. Noerr Motor Freight, Inc.,
365 U.S. 127 (1961); United Mine Workers v. Pennington, 381 U.S. 657 (1965).
l7See California Motor Transport Co. v. Trueking Unlimited, 404 U.S. 508
(1972).
\8Defendants contend that once the federal claims are dismissed, the state
claims should be dismissed for lack of pendent jurisdiction. See United Mine
Workers y. Gibbs, 383 U.S. 715, 726 (1966). At oral argument plaintiffs
conceded that, if the federal claims are dismissed, the entire complaint
should then be dismissed as well.
—————l
A-13
Appendiz B — Memorandum-Decision and
Order of the District Court
defendants had attempted to influence legislation and had
pursuaded the Governor of Pennsylvania to veto a pro-truckers
measure.
The district court found that the defendants’ publicity cam-
paign was malicious, intended only to destroy competition and
the plaintiffs’ good will, and fraudulent through use of the third
party technique. The district court held for the plaintiffs finding
that defendants’ publicity campaign violated the Sherman Act,
although it refused to impose liability based on the veto of the
truckers’ legislation.!9 Jd. at 133.
The Supreme Court reversed. As its starting point it
acknowledged, as the district court hac, that “no violation of the
Act can be predicated upon mere attempts to influence the
passage or enforcement of laws.” Jd. at 135. This is true even if
such laws would produce a restraint or monopoly. The court
reasoned that
[in a representative democracy such as this, these
branches of government [, legislative and executive,] act
on behalf of the people and, to a very large extent, the
whole concept of representation depends upon the ability
of the people to make their wishes known to their
representatives.
Id. at 137. The Sherman Act was intended to regulate business,
not politics. Furthermore, the exercise of the First Amendment
right to petition the government could be jeopardized by im-
posing antitrust liability in these circumstances.
l9Defendants counterclaimed in like tenor that plaintiffs’ publicity campaign
violated the Sherman Act. The counterclaim was dismissed. The district
court found that plaintiffs’ publicity campaign was defensive in nature,
designed only to influence legislation and not to destroy the railroads as
competitors. Thus no Sherman Act liability was imposed on the truckers.
Noery, supra, 365 US. at 134.
A-14
Appendix B — Memorandum-Decision and
Order of the District Court
Having concluded that no antitrust liability attaches to “mere
solicitation of governmental action”, Jd. at 138, the Court
considered whether certain factors removed defendants’
publicity campaign from the shield of antitrust immunity. First,
defendants’ anticompetitive motive was of no consequence. Even
though defendants’ “sole purpose . .. was to destroy the truckers
as competitors”, /d., solicitation of government action remained
immune. Secondly, even if the court finds the deception of the
public and public officials to be deliberate and reprehensible,
that is “of no consequence so far as the Sherman Act is con-
cerned.” Jd. at 145. Finally, the district court’s finding that
defendants intended to injure plaintiffs, even if they secured no
legislation, was held again not to create liability. All the
evidence dealt with defendants’ efforts to influence the passage
and enforcement of law. “There are no specific findings that the
railroads attempted directly to persuade anyone not to deal with
the truckers.” /d. at 142. Any fallout from defendants’ campaign
which injured plaintiffs was incidental and insufficient for
creating antitrust liability. Characterizing the case as a “no-
holds-barred fight”, /d. at 144, between plaintiffs and defen-
dants, which had been fought “along lines normally accepted in
our political system”, /d. at 145, the Court removed the case from
the purview of the Sherman Act.
The Court, however, did leave room for antitrust liability
under certain circumstances.
There may be situations in which a publicity campaign
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 relationship of a competitor and the application
of the Sherman Act would be justified.
Stier = ee wtrisetic.
A-15
Appendix B — Memorandum-Decision and
Order of the District Court
Id. at 144. But it concluded that those circumstances were not
presented by the facts before it.2
The Supreme Court reaffirmed Noerr in a suit between
trustees of the United Mine Workers retirement fund and coa!
company owners. United Mine Workers v. Pennington, 381 US.
657 (1965) (Pennington). In the district court, defendant coal
companies won a verdict on their counterclaim that the union
had squeezed smaller mines out of operation in violation of the
antitrust statutes as part of its efforts to recover higher wages
for miners. The district court had let the jury consider attempts
by the union to influence TVA officials and the Secretary of
Labor, insofar as such conduct was motivated by illegal intent.
__ The Supreme Court reversed. “Noerr shields from the Sherman
Act a concerted effort to influence public officials regardless of
intent or purpose.” Jd. at 670. The Court went further than
Noerr, however, and immunized such activity even if ac-
companied by conduct proscribed by antitrust law.
The principles of Noerr were extended to proceedings before
administrative agencies and the courts in California Motor
Transport Co. v. Trucking Unlimited, 404 U.S. 508 (1972)
(Trucking Unlimited). “The right of access to the courts is indeed
but one aspect of the right of petition.” Jd at 510. Trucking
20
But this certainly is not the case here. No one denies that the
railroads were making a genuine effort to influence legislation and
law enforcement practices. Indeed, if the version of the facts set forth
in the truckers’ complaint is fully credited, as it was by the courts
below, that effort was not only genuine but also highly successful
Under these circumstances, we conclude that no attempt to interfere
with business relationships in a manner proscribed by the Sherman
Act is involved in this case.
Noerr, supra, 365 U.S. at 144 (emphasis added).
A-16
Appendix B — Memorandum-Decision and
order of the District Court
Unlimited also outlined the requirements for stating a claim
under the sham exception to Noerr.
Plaintiffs in Trucking Unlimited were truckers operating in
California; defendants were truckers operating both within
California and in interstate commerce. Plaintiffs alleged that
defendants conspired to destroy competition and put plaintiffs
and others out of business. Defendants’ conspiracy was allegedly
“a concerted action ... to institute state and federal proceedings
to resist and defeat applications by [plaintiffs] to acquire
operating rights or to transfer or register those rights.” Jd. at
509. More critical were other allegations which claimed that
defendants’ power and resources were used to deter plaintiffs’
use of administrative and judicial proceedings “so as to deny
them ‘free and unlimited access’ to those tribunals.” /d. at 511.¢!
[T]he allegations are not that the conspirators sought “to
influence public officials,” but that they sought to bar
2lMr. Justice Stewart's concurring opinion summarizes the complaint as
follows:
The complaint contains allegations that the petitioners have:
1. Ayreed jointly to finance and to carry out and publicize a con-
sistent, systematic and uninterrupted program of opposing ‘with or
without probable cause and regardless of the merits’ every ap-
plication, with insignificant exceptions, for additional operating
rights or for the registration or transfer of operating rights, before
the California PUC, the ICC, and the courts on appeal.
2. Carried out such agreement (a) by appearing as protestants in all
proceedings instituted by plaintiffs and others in like position or by
instituting complaints in opposition to applications or transfers or
registrations; (b) by establishing a trust fund to finance the foregoing,
consisting of contributions monthly in amounts proportionate to each
defendant's annua! gross income; (c) by publicizing and making
known to plaintiffs and others in like position the foregoing program.
Trucking Unlimited, supra, 404 U.S. at 518.
A-17
Appendic B— Memorandum-Decision and
Order of the District Court
their competitors from meaningful access to adjudicatory
tribunals and so to usurp that decisionmaking process.
Id. at 512. Plaintiffs further alleged that defendants initiated
proceedings “with or without probable cause, and regardless of
the merits of the cases.” Jd. Defendants’ conduct indicated a
purpose and intent to deprive plaintiffs of access to the agencies
or courts— “ ‘to discourage and ultimately to prevent [plaintiffs]
from invoking’ the processes of the administrative agencies and
courts and thus [fell] within the exception to Noerr.” Id
Perjury, bribery and misrepresentations in the adjudicatory
process corrupt it and effectively bar access to agency action or
the courts.
Such circumstances state a claim within the sham exception to
Noerr. Justice Stewart, concurring in the judgment but not in
the court’s opinion, noted that the complaint alleged that the
defendants conspired not to invoke the processes of the courts
and the administrative agencies, but to prevent plaintiffs from
invoking these processes. /d. at 518.
Otter Tail Power Co. v. United States, 410 U.S. 366 (1973),
(Otter Tail) is also relied upon by plaintiffs to support their claim
that defendants’ use of the administrative and judicial process
was a sham. Otter Tail was a suit against a power company for
monopolization of the retail distribution of electric power. The
district court found that defendant had refused to sell or
distribute power wholesale to municipally owned electric
companies, had denied the municipal companies access to other
suppliers of power, and had brought litigation to prevent the
establishment of municipal electric companies. Defendants’
actions had occurred in retaliation for municipalities ter-
minating their franchises with defendant and seeking to
establish their own electric systems. The district court’s decision
rendered prior to Trucking Unlimited held “Noerr does not free
A-18
Appendix B — Memorandum-Decision and
Order of the Instrict Court
from antitrust sanctions the institution of court litigation.”
United States v. Otter Tail Power Co., 331 F. Supp. 54, 62 (D.
Minn. 1971). Consequently, the district court made no findings as
to whether the litigation brought by Otter Tail was within the
protective cover of Noerr or was sham and outside it. The
allegations and proof of Otter Tail’s conduct distinguish it from
this case. The Supreme Court remanded for consideration in
light of Trucking Unlimited.?2 :
The thrust of these cases is that the First Amendment protects
citizens in their efforts to petition any branch of the govern-
ment. This protection is afforded, even if such action is an-
ticompetitive or monopolistic, by immunizing it from liability
under the antitrust laws. There is a limit to this protection,
however: the immunity is lost of the challenged activity is in fact
sham.
Plaintiffs argue that the more recent Supreme Court opinions
have abrogated the Noerr-Pennington doctrine. They argue that
the language of Trucking Unlimited and Otter Tail has extended
the sham exception to Noerr so far that the exception literally
swallows the rule of Noerr. This reading of the Supreme Court's
opinion is unfounded.
Trucking Unlimited is based on the notion that the defendants
could so abuse the adjudicatory process as to deny plaintiffs
meaningful access to that forum. By such action, defendants
could control the judicial or administrative process and thereby
arrogate the adjudicatory function. This notion accords with
Noerr; it does not weaken or restrict the basic thesis of Noerr.
220n remand the district court found that Otter Tail’s repetitive use of
litigation was designed mainly to preserve its monopoly and was “sham.”
United States v. Otter Tail Power Co., 360 F. Supp. 451 (D. Minn. 1973), aff'd,
417 U.S. 901 (1974).
iia crates te i caer et ES a ee te
A-19
Appendix B — Memorandum-Decision and
Order of the District Court
The interest sought to be protected by Noerr was access to the
various arms of the government. The First Amendment right of
petition guarantees all citizens the right to appeal to the
legislature or the judiciary. This right is not conditioned upon
motive. The defendants in Noerr and Pennington were within
their rights in seeking to influence the passage of legislation for
reasons of personal gain. The vice in Trucking Unlimited was
action which denied others access to the adjudicatory tribunal.
In that case, defendants’ abuse of the process rather than its
legitimate use prevented plaintiffs from freely exercising their
First Amendment right of petition through administrative and
judicial channels. Thus, the defendants in Trucking Unlimited
could not avail themselves of Noerr’s antitrust immunity, since
this immunity grows out of respect for the free exercise of First
Amendment freedoms.
The allegations of the complaint in Trucking Unlimited
charged “that the power, strategy, and resources of the
petitioners [defendants] were used to harass and deter
respondents [plaintiffs] in their use of administrative and
judicial proceedings so as to deny them ‘free and unlimited
access’ to those tribunals”, Trucking Unlimited, supra, 404 U.S.
at 511, resulting in effectively barring their use by the plaintiffs.
No such charges can be made out against the defendants here on
the material before me.
. Noerr remains the guiding principle and Trucking Unlimited
is its logical application. Appeal to the government, including
use of the judicial process by instigation or commencement of
lawsuits, cannot alone be the basis for antitrust liability.
Rather, it is the corruption of the administrative or judicial
process that removes the shield of antitrust immunity provided
by Noerr.
A-20
Appendix B — Memorandum-Decision and
Order of the Instrict Court
This reading of Noerr and Trucking Unlimited is supported by
the reported cases. All of the cases which have refused to permit
defendants to avail themselves of Noerr’s immunity have rested
on conduct which effectively denied plaintiffs the right of access
to an arm of the government. The merits of the views pressed are
only material if they illumine access-barring conduct.
In Woods Exploration & Producing Co. v. Aluminum Company
of America, 438 F.2d 1286 (5th Cir. 1971), cert. denied, 404 U.S.
1047 (1972) (Woods), the Fifth Circuit refused to extend the
immunity of Noerr to defendants who had filed false in-
formation before a Texas regulatory agency. Woods was decided
before the Supreme Court’s opinion in Trucking Unlimited,
supra, 404 U.S. 508 (1972), and interpreted the Ninth Circuit's
opinion in that case to hold “Noerr-Pennington inapplicable to
the alleged filing of false nominations by defendants because this
conduct was not action designed to influence policy, which is all
the Noerr-Pennington rule seeks to protect.” Woods, supra, 438
F.2d at 1298 (emphasis added). It held “ijn light of this deter-
mination ... that the abuse of the administrative process here
alleged does not justify antitrust immunity.” Jd. Having found
that the administrative process was corrupted by the filing of
false information, the result reached in Woods undoubtedly
brings it within the sham exception of Noerr-Pennington.
However, the Fifth Circuit's restricted view of Trucking
Unlimited was dispelled when the Supreme Court emphasized
that “{t]he right of access to the courts is indeed but one aspect of
the right of petition.” Trucking Unlimited, supra, 404 U.S. at
510.
Woods was followed by the District of Columbia Circuit in
Israel v. Baxter Laboratories, Inc. 466 F.2d 272 (D.C. Cir. 1972)
(Israel). Israel was a suit which grew out of efforts to induce the
FDA to bar one of plaintiff's drugs from the market. Plaintiff
ee ee ee
a eee eee TS
A-21
Appendix B — Memorandum-Decision and
Order of the District Court
alleged that defendants had suppressed, concealed and
misconstrued information before the FDA. In reversing the
district court’s grant of summary judgment in favor of defen-
dants, the court of appeals construed Woods in conjunction with
the recent decision of the Supreme Court in Trucking Unlimited
and emphasized defendants’ abuse of the administrative
proceedings.
The basic concern of the courts of appeal (and one
District Judge) in both Woods and Trucking Unlimited
may be deemed the integrity of the regulatory process.
No actions which impair the fair and impartial func-
tioning of an administrative agency should be able to hide
behind the cloak of an antitrust exemption.
Id. at 278 (footnotes omitted). The Tenth Circuit has similarly
construed the sham exception to Noerr.
[T]he term “sham” in this context would appear to mean
misuse or corruption of the legal process. Therefore, the
utilization of the court or administive agency in a
manner which is in accordance with the spirit of the law
continues to be exempt from the antitrust laws.
Semke v. Enid Automobile Dealers Association, 456 F.2d 1361,
1366 (10th Cir. 1972). See also Mountain Grove Cemetery
Association v. Norwalk Vault Co., 428 F. Supp. 951, 955 (D.
Conn. 1977); Associated Radio Service Co. v. Page Airways Inc.,
414 F. Supp. 1088, 1096 (N.D. Texas 1976).
Applying these principles to the present case, the conduct
attributed to the defendants is within the protective cover of
Noerr. In broad brush conclusory allegations the defendants are
charged with illegal actions before the Town Boards of Manlius
and Clay, in connection with proposed amendments to their
zoning ordinances, and with unlawfully contesting the zoning
amendments in the courts of New York State.
A-22
Appendix B — Memorandum-Decision and
Order of the District Court
In considering amendments to their zoning ordinances, the
town boards were acting in a legislative capacity. See Berenson
v. Town of New Castle, 38 N.Y.2d 102, 111, 378 N.Y.S.2d 672, 682
(1975); Thomas v. Town of Bedford, 11 N.Y.2d 428, 433, 230
N.Y.S.2d 684, 687 (1962). Noerr, supra, 365 U.S. 127, shields
attempts to influence legislative action from the reach of the
antitrust laws.
In Bob Layne Contractor, Inc. v. Bartel, 504 F.2d 1293 (7th Cir.
1974), the plaintiff, a subdivider, successfully obtained a change
of zone from residential to commercial for part of a large
residential subdivision being developed by it. The change of zone
was opposed by an association of residents of the subdivision.
The defendants in the antitrust suit included eleven property
owners in the subdivision who had commenced an action in the
state court to enforce a restrictive covenant common to the tract
limiting the property to residential use. There were also named
as defendants the majority shareholder and the corporate owner
of a nearby subdivision, as well as a retail store in the same
community and its partner corporation. The stockholder and the
retail store both contributed to a fund to oppose the change of
zone. Although the contributing subdivider and retail store
would both suffer economic damage from the change of zone,
their cooperation with the other defendants to defeat the change
of zone did not deter the court of appeals from affirming
summary judgment in defendants’ favor. Jd. at 1296.
In other contexts, where defendants have appealed in their
own interests to local legislative bodies, such appeals have been
immunized from attacks under the antitrust laws. Franchise
Realty Interstate Corp. v. San Francisco Local Joint Executive
Board of Culinary Workers, 542 F.2d 1076 (9th Cir. 1976), cert.
denied, 45 U.S.L.W. 3634 (March 21, 1977) (Franchise Realty)
(opposition before the San Francisco Board of Permit Appeals to
ia nim aaa MM Uasle
A-23
Appendix B — Memorandum-Decision and
Order of the District Court
the grant of building permits for McDonalds restaurants); Metro
Cable Co. v. CATV of Rockford, Inc., 516 F.2d 220 (7th cir. 1975)
(activity inducing city council not to grant plaintiffs a franchise
for cable TV).
Similarly, allegations that defendants commenced lawsuits or
instigated their commencement, do not give rise to antitrust
liability. The immunity created by Noerr extends to efforts to
petition for relief of grievances through the judicial process.
Trucking Unlimited, supra, 404 U.S. at 510. Mountain Grove
Cemetery Association v. Norwalk Vault Co., 428 F. Supp. 951 (D.
Conn. 1977); Central Bank of Clayton v. Clayton Bank, 424 F.
Supp. 163 (E.D. Mo. 1976); Ernest W. Hahn, Inc. v. Codding, 423
F. Supp. 913 (N.D. Cal. 1976); Bethlehem Plaza v. Campbell, 403
F. Supp. 966 (E.D. Pa. 1975). See also Taylor Drug Stores, Inc. v.
Associated Dry Goods Corp., F.2d , 46 U.'S.L.W. 2104
(6th Cir., August 12, 1977).
Plaintiffs acknowledge that opposition to zoning amendments
and subsequent litigation, standing alone, are protected by
Noerr. They contend, however, that the complaint alleges facts
that bring it within the sham exception to Noerr. Their basic
argument is that defendants’ opposition to the zoning amend-
ment was intended to delay or prevent the construction first of
Fayetteville Mall and later of Great Northern Mall. They did not
legitimately oppose the zoning amendments, but sought to
monopolize the operation of regional shopping centers in
Onondaga County and thereby to restrict competition. They did
not properly invoke the courts but, rather, intended to misuse
the judicial process for anticompetitive and monopolistic
purposes. This abuse of the judicial forum is allegedly demon-
strated by the ultimate dismissal of three of defendants’ suits;
plaintiffs contend that defendants’ conduct amounts to a
“pattern of abusive resort to adjudicatory tribunals.” Plaintiffs’
Memorandum 51.
A-24
Appendix B — Memorandum-Decision and
Order of the Tnstrict Court
Defendants’ opposition to the proposed zoning amendments
before the Town Board of Manlius and Clay does not fall within
the sham exception to Noerr. Defendants’ instigation and
financing of opposition to the zoning amendments does not rise
to the level of sham. In Noerr, the use of the third party
technique, which involved misrepresentations and which was
characterized as unethical, did not remove the shield of antitrust
immunity from the defendants’ actions. The allegations herein
fall short of those in Noerr and, therefore, are clearly in-
sufficient to state a claim under the sham exception.
Access-barring has been applied in the legislative setting, as
well as the adjudicatory. In Metro Cable Co. v. CATV of
Rockford, Inc., 516 F.2d 220 (7th Cir. 1975), defendants prevailed
upon the city council not to hold a hearing on plaintiff's ap-
plication for a cable TV franchise. Even this was insufficient to
remove the shield of Noerr. Since plaintiffs could gain access to
council members through informal channels, the denial of a
formal hearing did not amount to a denial of access. In Franchise
Realty, supra, 542 F.2d 1076, the absence of any allegations that
plaintiffs were deterred from applying to the San Francisco
Department of Public Works for building permits removed the
case from the sham exception. This despite the presence of
general allegations of access-barring. In the case at bar,
plaintiffs have totally failed to state a claim that access to the
town boards has been denied. The complaint shows that
plaintiffs initiated the zoning proceedings. They applied for the
zoning amendments for their regional shopping centers and both
requests for amendments were granted. This is hardly access-
barring. While plaintiffs argued that defendants “seek ef-
fectively to bar plaintiffs from all municipal zoning boards in
Onondaga County”, Plaintiffs’ Memorandum 65, the allegations
of the complaint obviously bely this assertion.
std nn eae Se =
See Fa
A-25
Appendiz B — Memorandum-Decision and
Order of the District Court
Plaintiffs next argue that defendants’ lawsuits challenging the
zoning amendments state a claim under the sham exception.
Allegedly, the suits challenging the zoning amendments were
brought with anticompetitive and monopolistic purpose:
Defendants intended to delay and ultimately to prevent
plaintiffs from entering the Onondaga County market for
regional shopping centers. This intent assertedly removes the
shield of Noerr and brings the case within the boundaries of the
sham exception.
However, the Supreme Court explicitly held that intent does
not alter the protection afforded by the First Amendment.
The right of the people to inform their representatives in
government of their desires with respect to the passage or
enforcement of laws cannot properly be made to depend
upon their intent in doing so. It is neither unusual nor
illegal for people to seek action on laws in the hope that
they may bring about an advantage to themselves and a
disadvantage to their competitors.
Noerr, supra, 365 U.S. at 139. The right to pursue or protect
personal interests through the adjudicatory process is no less
entitled to the same protection. Noerr went on to hold that,
insofar as defendants’ actions were “directed toward obtaining
governmental action, [their] legality was not at all affected by
any anticompetitive purpose [they] may have had.” Jd. 140. This
basic principle was unchanged by the decision in Trucking
Unlimited. In that case the Court noted that the complaint
alleged anticompetitive and monopolistic purposes behind
defendants’ conspiracy. But the Court then discussed this alleged
intent in the context of access-barring allegations which were
described as more critical. Trucking Unlimited, supra, at 511.
The gist of Trucking Unlimited is access-barring; motive is
important to the extent that defendants, by resorting to the
courts, intended to bar plaintiffs’ access to that forum.
A-26
Appendix B — Memorandum-Decision and
Order of the District Court
Ernest W. Hahn, Inc. v. Codding, 423 F. Supp. 913 (N.D. Cal.
1976), is a case similar to the one at bar. Plaintiffs were
developers of regional shopping centers; defendants were
competing developers. Plaintiffs claimed that defendants had
conspired to bring a series of baseless lawsuits with the purpose
of precluding plaintiffs from obtaining necessary bonding and,
thus, preventing plaintiffs from building competing shopping
centers. The suits were intended to delay construction, create
additional costs for plaintiffs and ultimately make development
economically unfeasible. The court dismissed the complaint for
failure to state a claim. It held that defendants’ anticompetitive
motive for suing did not create Sherman Act liability. Actions
protected by the First Amendment under Noerr did not lose that
protection because of defendants’ anticompetitive intent. /d. at
916-17. The court pointed out how easily an antitrust complaint,
such as the one here, can carry the germ of the very disease it
purports to attack.
The court made clear that conclusory allegations of access
bar were not enough, since a complaint which could
survive motions to dismiss because such a conclusory
allegation was pleaded might deter a competitor from
presenting its views in the public forum.
Id. at 916 (citing Franchise Realty).
Other cases have reaffirmed the principle that access-barring
is the cornerstone to the sham exception. Mountain Grove
Cemetery Association v. Norwalk Vault Co., 428 F. Supp. 951 (D.
Conn. 1977); Central Bank of Clayton v. Clayton Bank, 424 F.
Supp. 163 (E.D. Mo. 1976); Bethlehem Plaza v. Campbell, 403 F.
Supp. 966 (E.D. Pa. 1975). These cases emphasized the need for
alleging abuse, not mere use, of the adjudicatory process. In the
instant case plaintiffs have not alleged any unethical or corrupt
actions on the part of defendants in suing to declare the zoning
——
— se’
~_
—
A-27
Appendix B — Memorandum-Decision and
Order of the District Court
amendments void. It is not alleged that perjury, bribery,
misrepresentations, or any improprieties occurred during the
litigation. Mere use of the state courts to challenge zoning
amendments through Article 78 proceedings cannot be
characterized as an abuse of the judicial process. On the con-
trary, it is one of the facets of the First Amendment right of
petition protected by Noerr.
Mountain Grove Cemetery Association, Central Bank of
Clayton, and Bethlehem Plaza involved single lawsuits by the
defendants. All three cases noted that no “pattern of baseless,
repetitive claims”, Trucking Unlimited, supra, 404 U.S. at 513,
was alleged. Trucking Unlimited stated that such a pattern may
evidence an intent to abuse the judicial process and bar plaintiffs
from access to the courts. In the present case, however, no such
pattern appears.
Three proceedings were instituted to invalidate the change of
zone obtained by the plaintiff in connection with Fayetteville
Mall. Kimbrook has instituted two proceedings in connection
with the change of zone for Great Northern Mall.
The first suit instituted in connection with Fayetteville Mall
resulted in a disposition favorable to the defendants herein.22
The other two actions were consolidated. The defendants herein
prevailed in the trial court4 and were partially successful in the
Appellate Division,” the determination of which was ultimately
reversed by the Court of Appeals.?6
23Beneke v. Board of Appeals, 51 Misc. 2d 20, 273 N.Y.S.2d 121 (Sup. Ct. 1966),
24See note 10 supra.
25See note 11 supra.
26See note 9 supra.
A-28
Appendix B — Memorandum-Decision and
Order of the District Court
The first Kimbrook action resulted in a dismissal in the trial
court from which an appeal was filed.2? The second proceeding,
an Article 78 and declaratory judgment action, was terminated
by an order of discontinuance with prejudice on motion of
Kimbrook. Kimbrook moved for such disposition after the town
board had granted it relief on its application for a change of zone
permitting a shopping center within its Planned Unit
Development and after the town board had passed a further
resolution in connection with the change of zone obtained by the
plaintiffs. In Kimbrook’s view, these actions of the Clay Town
Board eliminated its objections to the change of zone granted
Wilmorite.2*
These are hardly the threads from which a “pattern of
baseless, repetitive claims”, Trucking Unlimited, supra, 404 U.S.
at 513, can be woven. Free access to the courts does not mean
unopposed access. Franchise Realty, supra, 542 F.2d 1086
(Markey, J. Concurring).
Plaintiffs argue that the Supreme Court’s opinion in Otter Tail
Power Co. v. United States, 410 U.S. 366 (1973), supports their
assertion that the mere filing of lawsuits constitutes access-
barring conduct. Plaintiffs contend that defendants’ suits
achieve their anticompetitive purposes through the in terrorem
impact which the suits exert on plaintiffs.
27See Plaintiffs’ Memorandum 54; Eagan Defendants’ Memorandum 21.
28See Order of the Hon. Donald H. Miller, Justice of the Supreme Court of the
State of New York, July 20, 1977. Certified copies of Justice Miller's Order,
Kimbrook's motion, and supporting papers were provided to the court by
Kimbrook's attorney herein; copies were forwarded to all counsel. These
papers have been made a part of the Clerk’s file in this action.
After receipt of these papers, plaintiffs’ counsel acknowledged the fact of
the discontinuance of Kimbrook’'s state court action but disputed the
materiality of this fact to the instant suit.
nreeeneseiernnese CARNEROS: = NR str hie ke
A-29
Appendiz B — Memorandum-Decision and
Order of the District Court
Plaintiffs have overstated the holding in Otter Tuil. The
Supreme Court merely remanded the case for consideration
under Trucking Unlimited, because the district court had held
Noerr inapplicable to the judicial setting. The Supreme Court’s
opinion is silent as to whether the allegations fall under the
protection of Noerr or within the sham exception. On remand
the district court merely found that the repetitive litigation
brought by defendant was “designed principally to prevent the
establishment of municipal electric systems and thereby to
preserve defendant’s monopoly.” United States v. Otter Tail
Power Co., 360 F. Supp. 451 (D. Minn. 1973), affd, 417 U.S. 901
(1974). The district court held that this litigation came within
the sham exception to Noerr. What plaintiffs overlook in relying
on Otter Tail is that defendant's conduct there was part of a
larger unlawful scheme characterized by monopolistic practices.
The district court had earlier found that Otter Tail had refused
to sell or distribute power to municipal systems and had denied
these systems access to other suppliers of power. In addition, the
litigation brought by defendant made it impossible to obtain a
“no-litigation certificate”? thereby precluding proposed munici-
pal electric systems from obtaining bonding necessary for their
establishment. See Otter Tail Power Co. vy. United Ste’es, 410
US. 366, 365-72 (1973).
Plaintiffs’ reliance on Associated Radio Service Co. v. Page
Airways, Inc., 414 F. Supp. 1088 (N.D. Tex. 1976), which denied a
motion to dismiss, disregards similar allegations. Defendants in
that case were alleged to have conspired to commit a series of
acts including interference with business relationships, pirating
of proprietary information, destruction of plaintiff's records,
and spurious litigation. In such a context, which included
allegations of attempts “to manipulate the court system”, /d. at
29United States v. Otter Tail Power Co., 331 F. Supp. 54, 62(D. Minn. 1971).
A-30
Appendix B — Memorandum-Decision and
Order of the District Court
1096, plaintiff's contention that the complaint stated a claim
under the sham exception was sustained.
Otter Tail and Associated Radio both held that defendants’ use
of litigation came within the sham exception when it was part of
a larger scheme employing unprotected anticompetitive and
monopolistic practices. In the case at bar, plaintiffs allege only
that defendants opposed zoning amendments and litigated their
validity. These actions are all protected by the First Amend-
ment. No actions violating the antitrust laws and not im-
plicating the First Amendment are alleged. Defendants con-
ducted no broad scheme of monopolistic activity of which
litigation was only a part. See Ernest W. Hahn, Inc. v. Codding,
423 F. Supp. 913, 916 (N.D. Cal. 1976).
Finally, defendants argue that Noerr’s vitality has been
seriously undermined by the recent decision in Cantor v. Detroit
Edison Co., 428 U.S. 579 (1976). Ty contend that Noerr is
derived from Parker v. Brown, 317 U.S. 341 (1943), and that
“Cantor dramatically reduces the antitrust immunity formerly
granted under Parker v. Brown.” Plaintiffs’ Memorandum 67.
Plaintiffs ignore that Noerr is based not only on Parker, but also
on respect for the First Amendment. Furthermore, Bates v.
State Bar of Arizona, 45 U.S.L.W. 4895 (June 27, 1977), em-
phasizes that plaintiffs’ concern for the continuing vitality of
Parker is misspent. The Court in Bates, although divided as to
the First Amendment issue, was unanimous in its affirmance of
“the Arizona Supreme Court’s determination that appellants’
Sherman Act claim is barred by the Parker v. Brown exemp-
tion.” Id. at 4898.
Although the defendants’ motions to dismiss the complaint
were based on Rule 12(b\6), Fed. R. Civ. P., the plaintiffs ad-
dressed themselves extensively to the sufficiency of the com-
plaint under Rule 8, Fed. R. Civ. P. Although this fifty-page
complaint would not likely be termed the short statement
|
A-31
Appendix B — Memorandum-Decision and
Order of the District Court
required by Rule 8, failure to comply with that rule has not been
considered by me. In discussing Rule 8, plaintiffs cite Hospital
Building Co. v. Trustees of Rex Hospital, 425 U.S. 738 (1976), for
the proposition that dismissals in antitrust cases should be
granted sparingly before the plaintiff has had an opportunity for
discovery. Plaintiff's Memorandum 33. Plaintiffs also contend
that leave to replead should be granted for noncompliance with
Rule 8. Plaintiffs’ Memorandum 78. Neither of these principles
is absolute. See George C. Frey Ready-Mixed Concrete, Inc. v.
Pine Hill Concrete Mix Corp., 554 F.2d 551 (2d Cir. 1977) (Frey).
The dismissal here is on substantive grounds and not for
failure to comply with Rule 8. Accordingly, “the well-pleaded
material facts alleged in the complaint [have been] taken as
admitted.” Jd. at 553 (citing Gumer v. Shearson, Hammill & Co.,
516 F.2d 283, 286 (2d Cir. 1974). And because this is an antitrust
action within the protection of the Noerr-Pennington doctrine,
its dismissal prior to discovery is not inappropriate. See Frey,
supra, 554 F.2d 555, and cases cited therein.
Ordinarily, upon a dismissal for failure to state a claim, I
would grant leave to amend the complaint. In this case, however,
no purpose would be served by denying an absolute dismissal at
this time. Upon the oral argument, under questioning by the
court, plaintiffs’ counsel stated that all of the relevant facts,
other than evidentiary details, which existed in support of
plaintiffs’ claim were alleged in the complaint. The allegations of
the complaint, as fleshed out by the additional material supplied
and considered by me,” clearly demonstrate the lack of factual
30In addition to the materials supplied the court through affidavits, exhibits,
published and unpublished opinions relating to Fayetteville Mall and Great
Northern Mall, see notes 8-11 supra, I received a letter dated August 2, 1977,
from Kimbrook’s attorneys. See note 28 supra. Copies of the letter and
enclosures were forwarded to all attorneys for response and plaintiffs’
counsel did respond.
A-32
Appendix B — Memorandum-Decision and
Order of the District Court
issues and the entitlement of defendants to summary judgment
dismissing the complaint.
The complaint should be dismissed against all defendants.
Since the grounds discussed herein are dispositive of all motions
made, it is unnecessary to consider the motions to dismiss the
complaint as against individual defendants based on specific
deficiencies in the complaint. Having considered matters outside
the complaint, for the reasons herein, it is
ORDERED, that the defendants’ motions to dismiss the
complaint be and the same hereby are treated as motions for
summary judgment, Rule 12(bX6) Fed. R. Civ. P.; and it is
further
ORDERED, that said motions be and the same hereby are
granted in all respects; and it is further
ORDERED, that the clerk enter a judgment dismissing the
complaint herein, as to all defendants.
ls) EDMUND PORT
Senior United States District Judge
Dated: Auburn, New York
September 29, 1977
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A-33
APPENDIX C
Constitutional and Statutory Provisions
A. United States Constitution:
Amendment I — Congress shall make no law respecting an
establishment of religion, or prohibiting the free exercise
thereof; or abridging the freedom of speech, or of the press; or
the right of the people peaceably to assemble, and to petition
the Government for a redress of grievances.
B. Sherman Act (15 U.S.C. §§1 et seq.):
Section 1 — Every contract, combination in the form of trust
or otherwise, or conspiracy, in restraint of trade or commerce
among the several States, or with foreign nations, is declared
to be illegal. Every person who shall make any contract or
engage in any combination or conspiracy hereby declared to be
illegal shall be deemed guilty of a felony, and, on conviction
thereof, shall be punished by fine not exceeding one million
dollars if a corporation, or, if any other person, one hundred
thousand dollars or by imprisonment not exceeding three
years, or by both said punishments, in the discretion of the
court.
Section 2 — Every person who shall monopolize, or attempt to
monopolize, or combine or conspire with any other person or
persons, to monopolize any part of the trade or commerce
among the several States, or with foreign nations, shall be
deemed guilty of a felony, and, on conviction thereof, shall be
punished by fine not exceeding one million dollars if a cor-
poration, or, if any other person, one hundred thousand
dollars or by imprisonment not exceeding three years, or by
both said punishments, in the discretion of the court.
A-34
Appendix C — Constitutional and Statutory Provisions
C. Clayton Act (15 U.S.C. §§12-27):
Section 4 — Any person who shall be injured in his business or
property by reason of anything forbidden in the antitrust laws
may sue therefor in any district court of the United States in
the district in which the defendant resides or is found or has
an agent, without respect to the amount in controversy, and
shall recover threefold the damages by him sustained, and the
cost of suit, including a reasonable attorney’s fee.
Sa
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