# Opposition Brief — Allied Tube & Conduit Corp. v. Indian Head, Inc.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1988
- **Citation:** 486 U.S. 492

## Text

| , weprenic UUUTL, U.

- FILED
No. 87-157 AUG 21 1987

JOSEPH F. SPANIOL,
CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1987

\

>

ALLIED TUBE & CONDUIT CORPORATION,
Petitioner,

—_—V—

INDIAN HEAD, INC.,
Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE SECOND CIRCUIT

RESPONDENT’S BRIEF IN OPPOSITION

FREDRIC W. YERMAN

425 Park Avenue

New York, New York 10022
(212) 836-8000

Attorney for Respondent
Of Counsel:

Michael Malina

Randolph S. Sherman

Ira S. Sacks

Richard A. De Sevo

Bert L. Slonim

Donna M. Gerber

KAYE, SCHOLER, FIERMAN,
HAYS & HANDLER

425 Park Avenue

New York, New York 10022

(212) 836-8000

August 21, 1987

_« COUNTERSTATEMENT OF QUESTION PRESENTED

Should this Court invoke its certiorari jurisdiction to deter-
mine whether a unanimous Court of Appeals erred in refusing
to extend the Noerr-Pennington doctrine to immunize from
antitrust scrutiny under the Rule of Reason a conspiracy
among competitors—motivated, at least in part, by a desire to
maintain their hold on a concentrated market—to exclude a
competing product from an industry code (and, hence, from
the marketplace), where:

(a) The jury found that the conspiracy had “sub-
vert[ed] the consensus standard making process” of the
private trade association, thus eliminating the procom-
petitive benefit that justifies voluntary non-governmental
standard making;

(b) The conspiracy was implemented by stacking the
association’s membership vote with “bodies” who were
“instructed” “how to vote” and ordered to remain
“nailed to [their] seats” until the agreed-upon exclusion
was accomplished; and

(c) The product’s exclusion from the code caused direct
marketplace injury separate and apart from any injury
caused by the code’s adoption by organs of state and local
government?

TABLE OF CONTENTS

STATEMENT OF THE CASE ..........---e eee eeee>

ee ee Cede sees eccercsecceccecce
1. The Parties and Their Products.............

2. The NFPA and the National Electrical Code .

3. The Admitted Conspiracy to Exclude ENMT
I cu ceccccccencccsceces

a. The Conspiracy’s Formation............

b. The May, 1980 Meeting—The Conspiracy
ced cee eeeccececcseossece

4. The Sanders Committee Report.............

5. The Conspiracy’s Market Effect ............

B. The Proceedings Below ............--+-eeeeee:

tv

eect wececcece
The District Court’s Oral Decision..........

The Court of Appeals’ Decision ............

REASONS FOR DENYING THE WRIT.........---.

1. This Case Does Not Involve “Political Activity”
with No Direct Market Impact...............--

Il. Imposing Antitrust Liability for Allied’s Con-
certed Subversion of the NFPA’s Consensus
Standard Making Process Will Not Chill Good-
Faith Debate in Standard Making Bodies........

CONCLUSION .....cccccccccccccccecees mekeee ieee

27

TABLE OF AUTHORITIES

Cases: PAGE

American Society of Mechanical Engineers, Inc. v.
Hydrolevel Corp., 456 U.S. 556 (1982)........... 18-19, 25,
25nn.34&35

Arizona v. Maricopa County Medical Society, 457 U.S.
SN 5 Cc oe uccuawaeducnesesasecesteneanaeel 25n.35

Ashley Meadows Farm, Inc. v. American Horse Shows
Association, 1983-2 Trade Cas. (CCH) 4 65,653
GEE Gs Oe BOD cc cscccccss Vie wuunde dk maaan sean 20n.23

Associated Press vy. United States, 326 U.S. 1 (1945). ..25n.35

Board of Directors of Rotary International v. Rotary

Coe OFS. Gh, Fe es ove cccwnvendevesenses 23
California Motor Transport Co. v. Trucking Unlimited,

SS OB. Fe Ce che neccxpccaveecs esekeneunee 23-24
City of Lafayette v. Louisiana Power & Light Co., 435

DFO vcs h cc evkeceecnvscweneseeneureens 17n.19
City of Los Angeles v. Preferred Communications, Inc.,

8 Re Ree rT eee 23

Consolidated Farmers Mutual Ins. Co. vy. Anchor Sav-
ings Association, 1980-2 Trade Cas. (CCH) 4 63,530
(10th Cir. 1980), aff’g 480 F. Supp. 640 (D. Kan.
SVE a ckdccknudcedsedtecs bankebieeieaeseccenaees 21n.27

E. A. McQuade Tours, Inc. v. Consolidated Air Tour
Manual Comm., 467 F.2d 178 (Sth Cir. 1972), cert.

Geet, GP A. CH Oe 66446 ve ckceacasaceues 21n.27
Eastern Railroad Presidents Conference v. Noerr Motor
Fretes, Bie. « Fae wis CST CRORE cc cccccccecucosns passim

ill
PAGE

ECOS Electronics Corp. vy. Underwriters Laboratories,
743 F.2d 498 (7th Cir. 1984), cert. denied, 469 U.S.
SPN: 3 bueuseeS Kabkesenbsinkeeeeudiennnes 21n.27

Feminist Women’s Health Center, Inc. v. Mohammad,
586 F.2d 530 (Sth Cir. 1978), cert. denied, 444 U.S. 924

twee tectiat eee caeehieedaeebees | acids 19
FTC v. Indiana Federation of Dentists, 106 S. Ct. 2009

GEE wcwene i cdduatlaceuddevescadestsuluaeeteas 25, 26
Giboney v. Empire Storage & Ice Co., 336 U.S. 490

GE ao sok cadecéekesecetedakeneiceriaese 24&n.31

Litton Systems, Inc. vy. American Telephone & Telegraph
Co., 700 F.2d 785 (2d Cir. 1983), cert. denied, 464
i. EE ss dc nknedk cneennda@enceeeunsee 20n.23

MCI Communications Corp. v. American Telephone &
Telegraph Co., 708 F.2d 1081 (7th Cir.), cert. denied,
eee ee re Se 20n.23

Mid-Texas Communications Systems, Inc. v. American
Telephone & Telegraph Co., 615 F.2d 1372 (Sth Cir.),

cert. denied, 449 U.S. 912 (1980). ....6........005. 20n.23
National Society of Professional Engineers v. United
Saaten, GSS UD. G70 CITED vc vcccscccesc 24n.31, 25&n.35

Posadas De Puerto Rico Associates v. Tourism Co., 106
Oa. chal e's pine db aeéu eked eae Carer 24n.32

Roberts v. United States Jaycees, 468 U.S. 609 (1984)... 23

Roofire Alarm Co. vy. Royal Indemnity Co., 202 F.
Supp. 166 (E.D. Tenn. 1962), aff’d without opinion,
313 F.2d 635 (6th Cir.), cert. denied, 373 U.S. 949

Gn gsc vk eve kw ceees5d0 ss sacusnk bineeneekens 21n.27
Rush-Hampton Industries v. Home Ventilating Institute,
419 F. Supp. 19 (M.D. Fla. 1976) .......... 20n.23, 23n.30

PAGE

Sessions Tank Lines, Inc. v. Joor Mfg., Inc., 1986-1
Trade Cas. (CCH) € 66,989 (C.D. Cal. 1986), appeal

pending, Dkt. No. 86-6208 (9th Cir.) .......20n.23, 23n.30
Standard Sanitary Mfg. Co. v. United States, 226 U.S.
ERS x ad 6 ce ka Oise oseeke SACO En eae eee 25n.35

Structural Laminates, Inc. v. Douglas Fir Plywood
Ass’n, 261 F. Supp. 154 (D. Or. 1966), aff'd, 399 F.2d
155 (9th Cir. 1968), cert. denied, 393 U.S. 1024
Seen Ue a vucuu cal ba aden eee beeekan aed eeanseus 21n.27

Sure-Tan, Inc. v. NLRB, 467 U.S. 883 (1984)......... 24n.33
Town of Hallie v. City of Eau Claire, 471 U.S. 34 (1985) 19
United States v. Johns-Manville Corp., 259 F. Supp. 440

ee ee I ah A A as ead pee uae bs 19-20
United States v. Johnston, 268 U.S. 220 (1925) ....... 18n.21
United States v. O’Brien, 391 U.S. 367 (1968)......... 23

United States v. Southern Motor Carriers Rate Confer-
ence, Inc., 702 F.2d 532 (Sth Cir. 1983), reaff’g en
hanc 672 F.2d 469 (Sth Cir. 1982), rev’d on other

erases. Gt TF. Ge CRO kos sce secccéscvcccecess 20n.23

Wheeling-Pittsburgh Steel Corp. v. Allied Tube & Con-
duit Corp., 573 F. Supp. 833 (N.D. Ill. 1983) ...... 20n.23,
23n.30

United States Constitution:

es id pabekeee ee upeenenee’ passim

Statutes, Rules and Regulations:
Internal Revenue Code:

eT SS Lk 8 oe By er ryan 3
rr ee ee ee ee aeese bees 3

PAGE
Sherman Act:
Se ol § err rrr rrr passim
Rules of the United States Supreme Court:
Ee a eee
Federal Trade Commission:

Administrative Opinion and Ruling, 16 C.F.R.
$f fe Torr rr ret TTT Teter 21n.27

STATEMENT PURSUANT TO
SUPREME COURT RULE 28.1

The parents of respondent (whose name was changed to
TBG, Inc. after the filing of the complaint) are TBG North
America Limited, TBG Holdings, N.V., Favorita Holding
Company Limited, Tamara Corporation, and Thyssen-
Bornemisza Continuity Trust. Respondent has no non-wholly-
owned subsidiaries. Respondent’s domestic affiliates are TBG
North America Ltd., Agriquip Midwest, inc., CCL Leasing
Corp., Cap Inc., CLSI, Inc., C L Systems, Inc., Computer
Library Services International Ltd., Continental Healthcare
Systems, Inc., Ball-InCon Glass Packaging Corp., Greenland
(Delaware) Inc., Information Handling Services, Inc., TBG
Information Systems, Inc., Innotec Group Inc., International
Berkefeld-Celle Filter Corp. of USA, Madera Glass Company,
Moba USA Inc., Multi-Amp Corporation, Multi Amp Services
Corporation, Mokveld Valves Inc., Predicasts International,
Inc., Staalkat U.S.A. Inc., TBG Information Co. Inc., Vulcan
Petroleum Inc., Vicon Credit Corporation, Vicon Farm Ma-
chinery, Inc., and Vicon Southeast, Inc. All of respondent’s
foreign affiliates are privately held companies.

iN THE
Supreme Court of the United States
OCTOBER TERM, 1987
No. 87-157
—~>—

ALLIED TUBE & CONDUIT CORPORATION,

Petitioner,

—_V—_—

INDIAN HEAD, INC.,

| Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE SECOND CIRCUIT

>

RESPONDENT’S BRIEF IN OPPOSITION

The Petition does not present any issue meriting review by
this Court, since neither of the reasons advanced to justify
granting certiorari arises from the record in this case.

(1) Contrary to petitioner’s assertion, the decision of the
Court of Appeals does not apply the Sherman Act to political
activity with no direct marketplace impact. The conspiracy in
question did not involve political activity; it entailed a
deliberate—and successful—effort by competitors in a concen-
trated market to subvert the consensus standard making pro-
| cess of a private trade association in order to deny marketplace

access to a competitive product. Moreover, the jury found that
petitioner’s conspiracy did have a direct impact on the
marketplace—a finding expressly affirmed by the Court of
Appeals, which denied rehearing, inter alia, on that precise
issue.

(2) Nor does this record support petitioner’s contcntion that
the ruling below will chill any First Amendment right to engage

in good-faith debate in private code-making bodies. Far from
good-faith debate, the conspiracy for which Allied was found
liable involved anticompetitive conduct which, as the jury
found, subverted the code-making process and unreasonably
restrained trade.

The Court of Appeals, in reinstating a jury finding of an
unreasonable restraint of trade violative of the Sherman Act’s
Rule of Reason, applied settled principles of law and declined
to extend the Noerr-Pennington doctrine beyond its proper
ambit. That eminently correct ruling does not conflict with any
decision of this Court or of any court of appeals and does not
warrant review by this Court.

STATEMENT OF THE CASE

The Petition correctly states that “[t]he facts giving rise to
this case are well stated in the opinion of the Court of
Appeals.” (Petition (“Pet.”) 2). The Second Circuit’s decision,
however, does not recite all of the pertinent facts material to
consideration of the Counterstatement of the Question Pre-
sented. Accordingly, we set forth such facts below.

A. The Facts
1. The Parties and Their Products

Petitioner and respondent are manufacturers of products
which compete head-on in the marketplace. Carlon, a division
of respondent Indian Head, Inc., manufactures and sells vari-
ous types of electrical conduit and fittings made of polyviny!
chloride (“PVC”). (A. 1554, 508, 515, 517).' Defendant Allied
Tube and Conduit Corporation (“Allied”) is the largest pro-
ducer of electrical metallic tubing (“EMT”)—i.e., steel
conduit—in the United States. (A. 1009).

Electrical conduit is a hollow tube that carries insulated
wires which transmit electrical current. (A. 906-07). The

I Citations to the record conform to those in the Petition.

Carlon product involved in this case—electrical nonmetallic
tubing (“ENMT”)—has a number of significant competitive
advantages over steel conduit due to its pliability, its lower
installed cost and its lower susceptibility to short circuiting. (A.
§18-20, 531-34, 1503 B-C, 1554-55, 1896).* In 1980, when
Carlon began offering ENMT as a substitute for EMT, it
confronted a stable market dominated by five EMT producers,
the largest of which was Allied, with a market share of 35% to
40%. (A. 520, 535-36, 990, 1009-10, 1555, 1647, 1669A).

2. The NFPA and the National Electrical Code

The National Fire Protection Association (“NFPA”) is a
“private, non-governmental . . . voluntary membership orga-
nization” barred by law from “attempt[ing] to influence legis-
lation.”* One of its principal activities is the promulgation,
through a process called “consensus standard making,” of
product standards and codes related to fire protection. (A. 496,
595, 1170-71). As the term implies, NFPA members attempt to
reach a consensus, objectively arrived at on the merits, with
respect to standards that are then offered to the public. (A.
709, 718, 1170). Although the NFPA encourages new member-
ship “so that it can represent as broad a spectrum as possible,”
no single interest is supposed to become so large that it “can
predominate and make the standard the creature of that
interest.” (A. 595, 707-10, 756-58, 1193). While there are no
prerequisites for voting at the annual meetings at which the
standards are adopted, there is an “inherent assumption” that
the members voting at the meeting “know what they are

2 The Petition’s assertion (Pet. 9) that the parties agreed that “the

exclusion of PVC conduit from the 1981 NEC was supported by objective
scientific evidence” is misleading. It was stipulated below that there is a
substantial body of opinion, including views held by those in both the plastic
and steel industries, disagreeing on the relative safety of plastic and steel
conduit. As the district court instructed the jury, “[aJll the jury should
assume is that the parties do not dispute that people disagree on the issue and
there is an objective basis for a concern for safety.” (A. 69).

-

3 A. 1555; see 26 U.S.C. §§ 170(c(2)(D), 501(c)(3).

4

doing” based on full disclosure of all relevant information. (A.
711, 1139-40, 1340, 1556). “=

The NFPA code at issue here is the National Electrical Code
(“NEC”) which sets standards for electrical systems, including
electrical conduit. (A. 496-97, 1556). The NFPA publishes the
NEC every third year following a multistep, several-year-long
process, ending with a vote by the full membership at the
annual meeting. (A. 544-48, 554, 905-06, 1556, 1848-55, 1897).
In 1980, a simple majority vote of those members present at
the meeting was sufficient to approve or defeat a proposal. (A.
1849).

Following NFPA adoption, in addition to serving as the
basis for private decisions that directly affect market competi-
tion,’ the NEC is adopted, in whole, in part or with amend-
ments, by many governmental entities, including state
legislatures and administrative boards and county, city and
other local governmental bodies. (A. 496-97, 690, 900-01,
1557; see generally A. 137-362, 364-453). Because of the NEC’s
reputation as the product of consensus standard making and
the large number of governmenta! bodies involved, inclusion in
the NEC is a practical prerequisite to any product’s inclusion
in governmental codes. (See, e.g., A. 365, 690, 718, 458-59).

Adoption by organs of government, however, is neither
automatic nor routine. (A. 432-53, 903-04). There is significant
lobbying at the legislative level. Indeed, approximately one-
half of the states that adopt electrical codes do not adopt the
NEC verbatim. (A. 433-34). As Allied conceded, the NEC
“does not itself have the force of law” and “is not itself legally
operative.” (A. 1556-57).

3. The Admitted Conspiracy to Exclude ENMT from
the Market

Just before the case was submitted to the jury, Allied
conceded that it had conspired with, inter alia, Republic Steel
Corporation (“Republic”), Wheatland Tube Company
(“Wheatland”), other EMT competitors and Allied’s indepen-

4 See pages 10-11, infra.

5

dent sales agents to exclude ENMT from the 1981 NEC by
stacking the May, 1980 NFPA meeting. (A. 1397, 18-22). Allied
also conceded that it “had a pecuniary or commercial interest
in seeing to it that the product was not approved.” (A. 77-78).
The evidence that compelled these concessions was overwhelm-
ing.

a. The Conspiracy’s Formation

On September 18, 1978, Carlon submitted to the NFPA a
proposal (denominated “Article 331”) to include ENMT in the
NEC. (A. 1560, 563-70, 1756-59). Following approval by the
appropriate technical committees, Article 331 was submitted to
the NFPA membership for consideration at the annual meeting
to be held in May, 1980 in Boston. (A. 1894-95).

When Allied and the other EMT producers became aware of
Article 331, they immediately recognized, as one conspirator
later wrote, that it was the “first major battleground for the
attack on steel markets by segments of the plastic industry
during the 80’s.” (A. 1634). Fully cognizant of the “severe
competitive threat” posed by ENMT (A. 1206), the conspira-
tors agreed to exclude it from the market by rigging the vote on
Article 331 at the May, 1980 meeting. Following committee
approval of Article 331, an “urgent” meeting of the Steel Rigid
Conduit and Electrical Section of the National Electrical Man-
ufacturers Association (the “NEMA Steel Section”) was held
to discuss the matter. (A. 1641, 1701, 970-71, 1558-59). At that
meeting (and another held shortly thereafter), representatives
of Allied and its coconspirators agreed that each Steel Section
member company would “be asked to provide for the attend-
ance of as many NFPA voting members as possible” at the
upcoming meeting, noting that under the NFPA’s then-current
rules persons only had to be members for thirty days to be

5 A. 991, 1205-06, 1351, 1355, 1511-13, 1563. After a study “in detail”
of the adverse effect that Article 331’s adoption would have on Allied’s sales,
Allied’s Board of Directors was told that the company would lose 40% of its
EMT volume by 1984—a loss which in 1984 alone would amount to $20
million. (A. 992-99, 1002-09, 1650).

6

eligible to vote. (A. 1561-62, 1703, 1094, 1207-09, 1562-63).°
For its part, Allied pledged to bring at least 100 people to vote
against Article 331. (A. 1708-13, 974, 1563).

The conspirators left nothing to chance. A formal “battle
plan” was prepared, calling for, among other things, each
participant to “go[ ] all out to have bodies on the floor to
vote” at the May meeting and “to contact all steel companies

. . urging them to add new members and to be in Boston to
vote.” (A. 1708-13, 1634, 1725-29, 1832-34, 1730, 974-77,
1563). As the “battle plan” put it, “[t}he question to ask is:
What is it worth to save our conduit business .. . ?” (A.
1708-13).

Allied immediately took steps to recruit and get its “troops”
in line. (A. 1029, 1212-13). Beginning in February, 1980,
Allied’s national sales manager began contacting its indepen-
dent sales agents—separate companies unaffiliated with
Allied—as an additional source for new-NFPA votes. (A. 1018-
19, 1938, 1515-17, 1562). Allied discussed with them the
adverse economic effect that approval of Article 331 would
have and assigned them targeted numbers of new members to
recruit. (A. 1012-19).

All told, Allied and its coconspirators brought at least 230
voters to the meeting. (A. 1231). Among the 155 persons that
Allied alone brought to the annual meeting to vote against
Article 331 were its employees, sales agents, the agents’ em-
ployees, company executives, employees of two of Allied’s
divisions—neither of which sold electrical products and one of
whose businesses was “lawn furniture and things like that” —
and the wife of the national sales director. (A. 1566, 1032-34).
For the express purpose of “gathering [their] votes,” Allied
paid all of these individuals’ expenses, totalling over $100,000
for membership fees, travel expenses and other costs. (A. 987-
88, 1020-21, 1214-15, 1566-67, 1908-14).

6 It was also agreed that because “[p]roblems regarding restraint of
trade are a very real concern,” there would not be “direct{ ]” discussion of
these problems; instead, future discussions regarding ENMT “must be”
limited to the alleged “safety aspects.” (A. 1703, 972-73, 1095).

b. The May, 1980 Meeting—The Conspiracy
Succeeds

Implementation of the conspiracy to exclude ENMT from
the market commenced with a cocktail party in Boston on the
night of May 18th. “All Allied salesmen, representatives and
personnel” were informed that attendance was “imperative.”
(A. 1585, 1025-27). Allied’s self-described “troops” were given
“Tc]omplete instructions” on what to do at the meeting, includ-
ing (1) where to sit, based on a detailed seating chart broken
down by “groups,” (2) the appointment of “group leaders”
responsible for “keep[ing] order among the troops,” (3) that
“Tlo]nce the NEC ratification starts” the “troops” were “ex-
pected to stay nailed to [their] seats,” and (4) that box lunches
would be provided “in case the session carries over into the
evening—NO ONE leaves . . . until after this evening ses-
sion.” (A. 1587, 1593, 1028-36, 1566). The “troops” were
explicitly told that “[y])our Group Leader will instruct you how
the discussion is progressing and how to vote.” (A. 1593
(emphasis added), A. 1035-37). Representatives of Allied,
Wheatland, Republic and another EMT competitor met “to
reach a consensus. . . as to the procedures that were going to
be followed at the meeting”; and Allied distributed walkie-
talkies to the other steel companies to assure that the “troops”
voted as instructed.’

In accordance with their instructions, the 155 Allied
members—sitting in their predesignated “groups” —“stay[ed]
nailed to their seats” during the annual meeting. (A. 1221,
1566). Paying “no attention” to the substance of the proceed-
ings, the “troops” had no idea as to the merits of what was at
issue. (A. 1106-09, 1177, 1815-21). Thus, even though ENMT’s
claimed safety risk was the purported reason for Allied’s
opposition, very few of its voters had any of the technical
documentation necessary to follow the proceedings; nor did a
single one of them speak in opposition to Article 331 during
the course of the meeting. (A. 1106-08, 1310-11; compare A.

7 A. 1086-92, 1219-21; see also A. 1215-18, 1518-19, 1677, Plaintiff's
Trial Exhibit (“PX”) 412, A. 1567.

8

1352 with A. 606-18, 1761-80). As one stated when questioned
at the meeting as to why, as he put it, he was “instructed to
vote to return [Article 331] to committee,” “I was just told to
come to the meeting and be present when they voted... .”
(A. 1111-12).

Although Allied’s voters paid no attention to the substance
of the proceedings, they were careful to follow the conspira-
tors’ instructions communicated to them via their “group
leaders” by walkie-talkies and “signals”’—“thumbs up, yes,
thumbs down, no.” (A. 1037-40, 1306-09, 1566-67). Two votes
were taken on Allied’s coconspirator’s motion to return Article
331 to committee. (A. 606, 1041-42). The first, a voice vote,
was inconclusive. (A. 618, 1774). The second, a standing vote,
was taken amidst “a lot of confusion and congestion.” (A. 619-
23, 1041-43). When the dust settled, the Chair ruled that
Article 331 had been defeated by only four votes—394 to 390.
(A. 634, 1567). Despite requests by Carlon and others, no
recount was permitted under the NFPA’s rules, since no one
who voted against Article 331 requested one. (A. 627-34, 1775-
80). Finally, “[t]o insure that there would not be [any] change”
in the outcome, Allied’s “troops” were kept in their seats until
2:00 a.m. when the final vote on the complete NEC was taken.
(A. 1228-30, 1317-18). Absent the 230 “troops” brought by
Allied and its coconspirators to do their bidding (A. 1231),
Article 331 would have been overwhelmingly approved.

The subversion of the NFPA’s consensus standard making
process was the subject of criticism during the meeting itself.
(A. 1771-73, 1110-11, 1127-28, 1142-45). After the meeting,
there was a “negative reaction” to the conspirators’ conduct,
including editorials in trade magazines castigating the “mob
rule” that had “abuse[d]” the NFPA and turned its “codemak-
ing process . . . into a battleground for establishing commer-
cial preference for competing product types.” (A. 1332,
1934-37, 1224-27, 1304). Allied, however, was unrepentant.
The only “lesson” that its Director of Public Safety Issues
drew from this hostile reaction was that the next time Allied

9

sought to rig a vote, it should “not [be] so obvious.” (A. 1330-
31, 1606-09).

Following the defeat of Article 331, Carlon (and the Na-
tional Association of Home Builders) appealed on the ground
that the vote was not based on the “technical merit[s],” was
“not representative of the membership of the association and
cannot be construed as [a] consensus.” (A. 1905-06, 636-37,
642, 1567). The NFPA Board of Directors, eschewing any
investigation of the substance of these allegations and viewing
the scope of its review as limited to the question of whether the
Association’s rules had been followed, found that, while the
rules had been “circumvented,” they had not been violated,
and denied the appeal, returning Article 331 to committee “for
further study.”* :

4. The Sanders Committee Report

In the wake of the May, 1980 meeting, the NFPA Board of
Directors was “concerned. . . very much” about the “circum-
vent{ion]” of the Association’s rules. (A. 1163, 1171-72, 1194-
98). As Jack Sanders, its Chairman, testified, the conspirators’
“battle plan” was inconsistent with the spirit and intent of the
NFPA’s consensus standard making procedures. (A. 1173). For
it was wholly contrary to the NFPA’s goals “for a company
that would like to keep a competitive product off the market to
register as many of its employees as possible . . . so that they
can vote against that competitive product.” (A. 1193-94; see A.
674-75, 1571).

In order to “combat any potential” for the repeat of “that
kind of activity,” the NFPA Board appointed a committee
headed by Mr. Sanders to review the “stacking” of the 1980
meeting and to take steps “to maintain the integrity of the
[Association’s] standards.” (A. 1163, 1171-72, 1571). After a
“review in-depth [of] the entire procedural activities under
which we develop our codes and standards,” the committee
recommended, and the Board adopted, new regulations. (A.

8 A. 638-46, 1164-69, 1177-79, 1181-84, 1186-87, 1835-37, 1568.

10

1169-70, 1174-75, 1856-75, 1571). These included increasing to
180 days from 30 the minimum time that a person must be an
NFPA-member in order to vote at the annual meeting. (A.
1197-98). As Mr. Sanders testified, the specific purpose of this
change was “to avoid block voting by special interest groups in
the future.” (A. 1174, 1197).’

5. The Conspiracy’s Market Effect

The successful conspiracy to exclude Article 331 from the
1981 NEC had the direct effect of excluding Carlon’s product
from the marketplace. In addition to the exclusionary impact
in those jurisdictions which adopted the NEC as their electrical
code and precluded the lawful use of Carlon’s product alto-
gether, Carlon was injured by the “stigma”—and Allied’s
marketing of that stigma—resulting from the wrongful exclu-
sion of ENMT from the NEC even in those jurisdictions where
Carlon’s innovative and less expensive product could be law-
fully used, /.e., jurisdictions which (1) had no electrical code;
(2) had adopted the 1981 NEC, but modified it to permit
ENMT’s use; or (3) later adopted the 1984 NEC, which itself
permitted the use of ENMT. This stigmatization of ENMT was
successful because of the NEC’s reputation as a product of
consensus standard making. Thus, it was undisputed that
“{t}hird party certifiers of electrical equipment such as Under-
writers Laboratories will normally not list and label a product
without NEC approval.” (A. 1557-58; see A. 694-95, 704, 922-
23, 1706, 1989). Similarly, many electrical inspectors, contrac-
tors and distributors will not use a product absent NEC
approval and the UL label, and underwriters will refuse to
insure structures that are not built in conformity with the
NEC. (A. 556-57, 693-94, 700-01, 1558). And Allied fully
capitalized on Carlon’s predicament, doing “everything it

9 With the new rules in place, and without opposition by Allied,
Article 331 was finally included in the 1984 NEC, but with the limitation that
ENMT could be used only in structures up to three stories in height. (A. 672,
674, 1353, 1381, PX-S595 pp. 201-03). At its May, 1986 meeting, the NFPA
approved a new Article 331 deleting the three-story limitation from the 1987
NEC. Allied’s appeals from that approval were denied.

11

could to make sure that as many people as possible found out
about the defeat of Article 331,” including advertisements and
distribution of documents to “people in the industry” inform-
ing them of the defeat.'”

In short, ENMT’s exclusion from the 1981 NEC—the “pfti-
mary code for the electrical industry in the United States” —
effectively excluded it from the marketplace. (A. 1556; see A.
696, 704, 800). This adverse market effect flowed directly from
the consensus standard making process itself and tlie public’s
reliance on the NEC as the purported product of unbiased
industry consensus. (See A. 719, 916-17). The 198i NEC gives
no hint that it was the product of subversion or that it was
adopted on any grounds other than the merits (see A. 1917-26);
and, needless to say, neither Allied nor its coconspirators
informed the public that the Code resulted from a stacked
meeting at which the process had been subverted. To the
contrary, as noted above, Allied fully exploited the “stigma”
that its own conduct brought about throughout the market-
place.

B. The Proceedings Below
1. The Trial

After extensive pretrial proceedings, a bifurcated trial com-
menced on March 4, 1985 before Hon. John E. Sprizzo and a
jury on Carlon’s claim that Allied and its coconspirators had
“combined and conspired to prevent competition from non-
metallic tubing by excluding it from the 1981 NEC” by “sub-
vert[ing the] . . . NFPA’s consensual standards, rules and
procedures.” (A. 18-22). After four days of deliberation, the
jury, in response to special questions, rendered its verdict,
finding, inter alia, that “Allied’s conduct in opposing Article

10 ‘Trial Transcript pp. 2979-89; see A. 1454-55.

11 As the above discussion demonstrates, Allied is plainly wrong when
it asserts that its subversion “caused Carlon no harm,” that Carlton “proved
damages only for injury attributable to legislative enactment of the NEC,”
and that “the record contains no evidence supporting the ‘stigma’ theory or
indicating that Allied ‘marketed’ the stigma.” (Pet. 19-20) (emphasis added).

12

331 adversely impact[ed] competition,” “constitute[d] an un-
reasonable restraint of trade in violation of the antitrust laws,”
and was “a substantial or material factor in excluding Article
331 from the 1981 NEC.”'* Among its other findings, the jury
concluded that “[rjegardless of whether Allied’s conduct vio-
lated any of the rules or regulations of the NFPA”—which the
jury found it did not—“Allied’s conduct subvert[ed] the con-
sensus standard making process of the NFPA” and did not
“constitute the least restrictive means of effectively expressing
Allied’s opposition to the use of ENMT in the marketplace.””’

At the conclusion of the damages phase of the trial, the
court instructed the jury that any award of damages must be
limited to those incurred by Carlon as a result of the actions of
Allied and its coconspirators “at the May 1980 meeting and
[their] marketing of that defeat [of Article 331] in the market-
place.”'* The court went on to instruct the jury that Carlon did

12. A. 474M, 474N, 474K. Under the court’s Rule-of-Reason charge,
the jury was instructed to consider whether the NFPA’s rules were “reasona-
bly designed to secure a consensus with respect to safety of products as they
were accepted or not accepted in the electrical code” and whether “the
procedures that were followed at the floor meeting in May of 1980 [were]
consistent with the spirit . . . of the rules of the NFPA.” (A. 1446-47). In
finding that Allied’s conduct unreasonably restrained trade under that
charge, the jury implicitly answered these questions in the negative—findings
buttressed by the specific determination that Allied’s conduct “subvert[ed]
the consensus standard making process of the NFPA.” (A. 474G).

13 A. 474F, 474G, 474L. The parties agreed upon the wording of the
questions put to the jury. Contrary to petitioner’s assertion that the jury did
not understand the subversion question (see, e.g., Pet. 18), Allied did not
challenge at trial or in its post-trial motion the wording of any of the
questions or of the district court’s charge relating to subversion.

14 A. 118. Judge Sprizzo charged the jury that:

[T)he plaintiff's argument is what happened in May 1980 has created a
certain stigma on the product which has carried through and that the
defendants have attempted to market that stigma in the years which
have ensued so that the extent of the damages which it now suffered

13

not claim, and the jury could not award, damages based on
any lobbying activities of Allied. (A. 118). Based upon these
instructions, the jury found that “as a proximate result of
Allied’s unreasonable restraint of trade in violation of the
antitrust laws,” Carlon lost $3.8 million in profits."

2. The District Court’s Oral Decision

In an oral ruling from the bench, Judge Sprizzo held that the
Noerr-Pennington doctrine “require[{d]” that the jury’s verdict
be set aside. (App. 23a-24a, 25a). The underlying rationale of
the court’s decision is not entirely clear. On the one hand, the
district court suggested that the NFPA functions as a quasi-
legislature and that, as a result, Allied’s conduct in causing the
Association to keep Article 331 out of the NEC constituted
petitioning for legislation. (See, e.g., App. 25a-26a, A. 467).
On the other hand, the court also expressed a view that once
the NEC is adopted by the NFPA it “will almost inescapably be

are a direct result of what happened in 1980, and that is the plaintiff’s
claim. The plaintiff claims [its] damages do result from what happened
in May 1980 and not from any conduct of the defendants that they
were engaged in other than the marketing of that defeat in 1980 in the
years that follow. That's the plaintiff’s claim. (A. 117) (emphasis
added).

15 A. 1494, 4740. In light of, inter alia, the court’s charge, Carlon’s
and Allied’s counsel’s opening and closing arguments at the damages phase
of the trial, and Allied’s stipulation of facts as incorporated in the final pre-
trial order (A. 117-18, 1479-80, 1485-88, 2627-36, 2678; see page 10, supra),
it is remarkable that Allied could now claim that “Judge Sprizzo did not
submit the stigma theory to the jury” and that “from complaint through trial
openings, summation and verdict” the “only theory on which Carlon
litigated the case” was that governmental adoption of the subverted NEC
“excluded its ENMT product from the market.” (Pet. 19, 20) (emphasis in
original). If, as Allied argues, Carlon was injured exclusively by legislative
enactment of the NEC (Pet. 19), i.e., only in those jurisdictions adopting the
NEC, there would have been no need for Allied to have “marketed” the
defeat of Article 331; for exclusion from the NEC would ipso facto have
resulted in exclusion of Carlon’s product from the market in those jurisdic-
tions. Allied’s “marketing efforts” served to put the nail in the coffin in the

- remaining jurisdictions. (See pages 10-11, supra).

14

followed by the legislatures of the various states” and, as a
result, the entire NFPA standard setting process—including the
complained-of concerted conduct—was an attempt by Allied
and its coconspirators to persuade state legislatures to adopt
their anti-ENMT position. (App. 25a-26a).

3. The Court of Appeals’ Decision

On April 22, 1987, the Court of Appeals for the Second
Circuit (in an opinion by Senior Circuit Judge Lumbard,
joined by Circuit Judges Kearse and Pratt) unanimously re-
versed, rejecting both of Allied’s arguments for antitrust ex-
emption.'® At the outset, “declinfing] Allied’s invitation to
extend Noerr-Pennington immunity to lobbying activities di-
rected toward a ‘quasi-legislative body’ such as the NFPA,” the
Court recognized that none of the concerns upon which
Noerr’s holding was based applied to private organizations.
(App. 12a). Unlike a government, a private organization is
unelected, unaccountable and “ ‘presumed to be acting primar-

ily on. . . its own behalf.’ ” (App. 13a-14a, quoting Town of
Hallie v. City of Eau Claire, 471 U.S. 34, 45 (1985)). Thus,
“(njo . . . safeguards [similar to these-applicable to govern-

ments] exist to prevent a private organization from adopting
policies contrary to the interests of the general public—in the
instant case, establishing an anticompetitive restraint of trade.”
(App. 14a). Echoing this Court’s decision in American Society
of Mechanical. Engineers, Inc. v. Hydrolevel, Inc., 456 U.S.
556, 570 (1982), Judge Lumbard emphasized that the concern
that private standard setting organizations “might operate
contrary to the public interest becomes particularly acute in
view of their importance within the economy.” (App. 15a).
Agreeing with the Fift1 Circuit’s analysis in Feminist Women’s
Health Center, Inc. v..Mohammad, 586 F.2d 530 (Sth Cir.
1978), cert. denied, 444 U.S. 924 (1979), the Court concluded
that the fact that state and local governments may—but are

16 The Court’s decision is officially reported at 817 F.2d 938.

15

not required to—adopt the NEC “does not transform the
NFPA into a governmental organ.” (App. 16a).

Turning to Allied’s second argument—that its subversion of
the standard making process was protected as an “indirect

petition” —the Court held that “Allied’s behavior, which itself

caused independent antitrust injury to Carlon, should not be
excused merely because its actions also indirectly influenced
state and local governments.” (App. 17a). Again agreeing with
the view of the Fifth Circuit,’’ the Court differentiated be-
tween the “submission of a group’s recommendations to the
government”—which is protected—and “the antecedent con-
duct which generated those recommen *ations”—which is not
protected. (App. 17a). Nor was the Court “swayed by Allied’s
contention that . . . the only effective method of influencing

. . governments is through the NEC amendment process.”
(App. 18a). As Allied conceded, it had the opportunity to
lobby the governments and, indeed, “over half the states and
cities [that Allied] polled either amended the NEC before
adopting it or refused to adopt it at all.” (App. 18a-19a). The
Court of Appeals likewise rejected Allied’s argument that
denial of antitrust immunity “woulda be inconsistent” with this
Court’s ruling in Noerr since, unlike the railroads’ publicity
campaign in that case, Allied’s subversion did not “constitute
‘political activity’ conducted within the ‘political arena.’ ”
(App. 19a). “Simply put, Allied’s conduct did not constitute
petitioning of the government within the meaning of Noerr-
Pennington; rather, its conduct was a subversion of the legiti-
mate purposes of the NFPA.” (App. 17a)."*

17 See Feminist Women’s Health Center v. Mohammad, supra, 586
F.2d at 545; United States v. Southern Motor Carriers Rate Conference, Inc.,
702 F.2d 532, 542 (Sth Cir. 1983), reaff’g en banc 672 F.2d 469 (Sth Cir.
1982), rev'd on other grounds, 47) U.S. 48 (1985).

18 The Court of Appeals also rejected Allied’s contention that “its
conduct did not constitute an unreasonable restraint of trade.” (App. 19a-
20a). First, the Court “refuse[d] to permit [Allied] to use its literal compli-
ance with [the NFPA’s] rules as a shield to protect [its conspiracy] from

16

Following the panel’s decision, Allied petitioned the Second
Circuit for rehearing and rehearing en banc, arguing, inter alia,
that the Court of Appeals had misconceived the trial record in
concluding that Carlon’s damage award was based on injury
stemming from the direct marketplace effect of Allied’s con-
duct. (See Petition for Rehearing at 7-13). On June 11, 1987,
that petition was denied, no judge who heard the appeal and

no active judge of the Court “ha[ving] requested that a vote be
taken thereon.”

REASONS FOR DENYING THE WRIT

The Petition’s effort to implicate the doctrine of Eastern
Railroad Presidents Conference v. Noerr Motor Freight, Inc.,
365 U.S. 127 (1961), and its progeny, and thereby raise issues in
this case worthy of review by this Court, proceeds on two

critical but manifestly false assumptions: (1) that the case -

involves “political activity that has no direct market place
impact”; and (2) that application of the Sherman Act to
Allied’s conduct “will chill good-faith debate in private code-
making bodies . . . .” (Pet. 12). Since both assumptions are
demonstrably incorrect, the Petition collapses like a house of
cards.

This case does not concern political activity of the sort
exempted from antitrust scrutiny by the Noerr-Pennington
doctrine. Nor will the imposition of Sherman Act liability for
the blatantly anticompetitive conspiracy proved—indeed,
admitted—here chill any good-faith debate in private code-
making bodies.

antitrust liability.” (App. 21a). Nor did the Court “find any merit” in Allied’s
reliance on the existence of objective scientific evidence to support the
exclusion of Carlon’s product from the NEC since the “ ‘objective validity’
of a restraint has never been a defense to an antitrust charge.” (App. 22a).

17

I. This Case Does Not Involve “Political Activity” with No
Direct Market Impact.

In Noerr, this Court held that the antitrust laws do not apply
to “activities compris[ing] mere solicitation of governmental
action with respect to the passage and enforcement of laws.”
365 U.S. at 138.'? Put another way, the Sherman Act does not
prohibit conduct which seeks to induce the government to take
action in restraint of trade, since any other rule would impinge
on constitutionally protected rights of free speech and petition.
But when private conduct itself unreasonably restrains trade by
directly impacting the marketplace, Noerr and the policies it
reflects are not pertinent and the antitrust laws apply with full
vigor.

Petitioner, apparently aware of this limitation on Noerr’s
scope, strives to bring this case within the doctrine by asserting
that Allied’s conduct was solely political and had no direct
marketplace impact. (Pet. 12). The record, however, is clear
that the conspiracy to exclude Carlon’s product had a direct
market impact separate and apart from any action by organs
of state or local government with respect to the adoption of the
NEC. (See pages 10-11, supra).

As the Court of Appeals specifically noted (App. 17a),
“Allied’s behavior . . . itself caused independent antitrust
injury to Carlon. . . ,” a conclusion that follows inexorably
from the jury’s finding that Carlon suffered compensable

19 Petitioner takes issue with the Court of Appeals’ treatment of the
Noerr doctrine as an “exemption” from the antitrust laws to be construed
narrowly. (Pet. 12). Petitioner’s semantic quibbling takes it nowhere. As
Justice Brennan noted in City of Lafayette v. Louisiana Power & Light Co.,
435 U.S. 389, 399 (1978), the doctrine is one of “implied exclusion from
coverage of the antitrust laws” and is subject to a “presumption against
repeal by implication.” Indeed, as the Court there pointed out, the doctrine
has been “unavailing to prevent antitrust enforcement which, though impli-
cating [the] fundamental policies [underlying the doctrine,] was not thought
severely to impinge upon them.” /d. at 400. In this case, the policies
underlying the Noerr doctrine are not implicated at all because Allied’s
conspiracy in unreasonable restraint of trade in no way entailed the solicita-
tion of governmental action.

18

injury arising from the stigma of not obtaining NFPA approvai
of its product and Allied’s marketing of that stigma. (App. 9a
n.3).”” Unable to square its Noerr theory with that critical fact,
petitioner would have this Court review the Court of Appeals’
decision with respect to the adequacy of the trial record to
support the jury’s finding.”' That finding knocks the prop out
from under the Petition’s effort to raise a significant Noerr
issue here. For, on Allied’s own statement of the issue it seeks
to present, its anticompetitive conduct did have a “direct
marketplace impact,” and that alone disposes of the Noerr
claim.

Nor did the conspiracy in this case comprise “mere solicita-
tion of governmental action” within the meaning of Noerr.
Allied’s conspiracy was a classic combination in unreasonable
restraint of trade, not an effort to persuade government to act.
The NFPA—a concededly “private, non-governmental . . .
organization” (A. 1555)—is not an organ of government; and
subverting its consensus standard making process was not
governmental petitioning.

In marked contrast to the concerted publicity campaign
immunized in Noerr, Allied’s conspiracy to exclude Carlon’s
product from-the marketplace by excluding it from the NEC
was a restraint of trade squarely within antitrust’s mainstream.
In Noerr’s language, it was “characterized by an express. . .
agreement . . . that the participants will jointly . . . help one
another to take away the trade freedom of others. . . .” 365
U.S. at 136. As this Court noted in American Society of

20 In Noerr, by contrast, the private truckers’ only injury was conced-
edly caused by the Governor’s veto of legislation. 365 U.S. at 130.

21 Thus, petitioner argues that “Allied’s vote packing and other activity
at the NFPA meeting . . . caused Carion no harm. Carlon suffered injury
only when state and local legislatures enacted the NEC without Article 331.”
(Pet. 19). The record is directly to the contrary (see pages 10-11, supra), as
the Court of Appeals held in reversing the grant of judgment n.o.v. Indeed,
Allied focused its petition for rehearing on this very issue—a petition the
Court unanimously rejected. In any event, this Court “dofes] not grant
certiorari to review evidence and discuss specific facts.” United States v.
Johnston, 268 U.S. 220, 227 (1925).

Lets er

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19

Mechanical Engineers v. Hydrolevel Corp., 456 U.S. 556, 571
(1982), “a standard setting organization like ASME can be rife
with opportunities for anticompetitive activity . . . .” Allied
and its cohorts seized that opportunity to hamper their com-
petitor’s access to the marketplace. In Hydrolevel’s words,
Allied “successfully used its position within [the NFPA] in an
effort to thwart [Carlon’s] competitive challenge.” Jd. at 562.
It is inconceivable that Congress intended to shield such
conduct from Sherman Act scrutiny solely because some state
legislatures and municipal bodies decided to adopt the Code
that Allied utilized to further its anticompetitive scheme.

The Court of Appeals’ refusal to extend Noerr immunity to
lobbying activities directed towards a so-called “quasi-
legislative” body properly maintained the doctrine’s limited
applicability to true governmental petitioning. (See App. 12a).
The NFPA, while possessing very substantial power to affect
the economic well-being of companies attempting to market
products covered by the codes it adopts, is not an organ of
government and has not been delegated any governmental
authority.” As this Court has noted, “[w]e may presume,
absent a showing to the contrary, that [a governmental organ]
acts in the public interest. A private party, on the other hand,
may be presumed to be acting primarily on his or its own
behalf.” Town of Hallie v. City of Eau Claire, 471 U.S. 34, 45
(1985). For that reason, concerted efforts to persuade private
groups to take anticompetitive action do not constitute the type
of political petitioning the Noerr doctrine excludes from anti-
trust scrutiny. See, e.g., Feminist Women’s Health Center, Inc.,
v. Mohammad, 586 F.2d 530, 542 (5th Cir. 1978), cert. denied,
444 U.S. 924 (1979) (communications within hospital staff “as
a matter of law unprotected [under Noerr]”; United States v.
Johns-Manville Corp., 259 F. Supp. 440, 452-54 (E.D. Pa.

22 _ Significantly, the NFPA itself has eschewed any such role by stating
that it “is not an administrative arm of any state or local jurisdiction. . . .”
(Decision of NFPA Board of Directors on Appeal of Allied Tube and
Conduit Corp., Sept. 26, 1986, p. 8) (emphasis in original).

20

1966) (communications before private standard setting associa-
tion not Noerr protected).”*

As for the Petition’s assertion that Allied’s conduct here was
nothing more than an effort to bring “indirect influence” to
bear on state legislatures (Pet. 13), it is both factually and
legally incorrect. As a matter of fact, petitioner’s statement
that “lobbying within the code-making body is the only effec-
tive way to influence ensuing legislation” (Pet. 11; emphasis
added), is contrary to the record, as both the district court”

23. See also MCI Commun. Corp. v. American Tel. & Tel. Co., 708 F.2d
1081, 1159-60 (7th Cir.), cert. denied, 464 U.S. 891 (1983); United States v.
Southern Motor Carriers Rate Conference, 702 F.2d 532, 542 (Sth Cir. 1983),
reaff’g en banc 672 F.2d 469, 477 (Sth Cir. 1982), rev’d on other grounds, 471
U.S. 48 (1985); Mid-Texas Commun. Sys., Inc. v. American Tel. & Tel. Co.,
615 F.2d 1372, 1382 (Sth Cir.), cert. denied, 449 U.S. 912 (1980); Litton Sys.
Inc. v. American Tel. & Tel. Co., 700 F.2d 785, 807 (2d Cir. 1983), cert.
denied, 464 U.S. 1073 (1984); Ashley Meadows Farm, Inc. v. American
Horse Shows Ass’n, 1983-2 Trade Cas. (CCH) 4 65,653, at 69,352-53
(S.D.N.Y. 1983).

The three district court decisions the petitioner cites as reaching a conclu-
sion opposite to that of the Court of Appeals here all treated the standard
setting organization as the equivalent of an organ of government for Noerr
purposes. Sessions Tank Lines, Inc. v. Joor Mfg., Inc., 1986-1 Trade Cas.
(CCH) § 66,989 (C.D. Cal. 1986), appeal pending, No. 86-6208 (9th Cir.);
Wheeling-Pittsburgh Steel Corp. v. Allied Tube & Conduit Corp., 573 F.
Supp. 833 (N.D. Ill. 1983); Rush-Hampton Indus. v. Home Ventilating Inst.,
419 F. Supp. 19 (M.D. Fla. 1976) (Pet. 15). This view misconstrues the
essence of the right to petition underlying Noerr, as the Court of Appeals
properly explained. (App. 15a-17a). In any event, those decisions are plainly
distinguishable and in no way conflict with the decision below. (See page 23
n.30, infra).

24 Petitioner makes the same incorrect assertion when it states that “fhe
effective route to Allied’s goal was via the NFPA.” (Pet. 13) (emphasis
added).

25 “[T]here is obviously an opportunity to change the mind of the
legislature and . . . there is an opportunity for the defendant and the
plaintiff to lobby at that level . . . .” (App. 26a). And the record is plain
that Allied availed itself of that opportunity. (A. 1204, 1322-29).

21

and the Court of Appeals” expressly noted. And, as a matter
of law, to suggest that concerted subversion of the NFPA’s
standard making process was merely a political effort to
persuade state and local governments to adopt the Code would
mean that the Sherman Act could never be applied to standard
setting conspiracies, so long as some governmental organ
ultimately adopted the agreed-upon standards.”’

It is most significant that, in finding that Allied’s conduct
unreasonably restrained trade, the jury—pursuant to the
district court’s instruction—found that the conspiracy’s anti-
competitive effect outweighed whatever procompetitive justifi-
cation the standard setting process may have had. To immunize
conduct that the fact finder determined had a net anticompeti-
tive impact in the marketplace solely because the code pro-
duced by the conspiracy later was adopted by some—though

26 “Nor are we swayed by Allied’s contention that, because of the
heavy reliance placed upon the NEC by various governments, the only
effective method of influencing these governments is through the NEC
amendment process. Allied’s own survey shows that over half the states and
cities polled either amended the NEC before adopting it or refused to adopt
it at all. As the district court acknowledged, ‘there is obviously an opportu-

nity to change the mind of the legislature and . . . there is an opportunity
for the defendant and the plaintiff to lobby at that level... . *° ” (App.
18a-19a).

27 Needless to say, the Sherman Act’s Rule of Reason has been
consistently applied to standard-setting conspiracies. E.g., ECOS Elec. Corp.
v. Underwriters Laboratories, 743 F.2d 498, 502-03 (7th Cir. 1984), cert.
denied, 469 U.S. 1210 (1985); Consolidated Farmers Mut. Ins. Co. v.
Anchor Sav. Ass’n, 1980-2 Trade Cas. (CCH) 4 63,530, at 76,843 (10th Cir.
1980), aff*g 480 F. Supp. 640, 648-56 (D. Kan. 1979); E.A. McQuade Tours,
Inc. v. Consolidated Air Tour Manual Comm., 467 F.2d 178, 185-88 (Sth Cir.
1972), cert. denied, 409 U.S. 1109 (1973); Structural Laminates, Inc. v.
Douglas Fir Plywood Ass’n, 261 F. Supp. 154, 158 (D. Or. 1966), aff’d, 399
F.2d 155 (9th Cir. 1968), cert. denied, 393 U.S. 1024 (1969); Roofire Alarm
Co. v. Royal Indemnity Co., 202 F. Supp. 166, 169-70 (E.D. Tenn. 1962),
aff'd without opinion, 313 F.2d 635 (6th Cir.), cert. denied, 373 U.S. 949
(1963).

The Federal Trade Commission has also issued Administrative Opinions
and Rulings proscribing standardization or certification programs that have
the purpose or effect of lessening competition. See, e.g., 16 C.F.R.
§ 15.457(e) 44 1-3 (1986).

22

not all—state and local governments would effectively elimi-
nate any antitrust review of private standard making. The
Court of Appeals, in accord with the amicus curiae views of
both antitrust enforcement agencies, properly declined to ex-
pand the Noerr doctrine to reach so extreme a result; and there

is no reason for this Court to review that eminently sound
conclusion.”

II. Imposing Antitrust Liability for Allied’s Concerted
Subversion of the NFPA’s Consensus Standard Making
Process Will Not Chill Good-Faith Debate in Standard
Making Bodies.

In attempting to manufacture a “special and important
reason” for grant of the writ,” Allied asserts that application
of the Sherman Act to its conduct “will chill good-faith debate
in private code-making bodies” in violation of the First
Amendment. (Pet. 12). Again, petitioner puts a question not
presented by this record. The decision below does not limit
anyone’s right to debate or express an opinion as to the safety
or suitability of any product on any occasion. Allied’s conspir-
acy involved far more than the exercise of any First Amend-
ment right. No amount of rhetoric can transform this
vote-packing conspiracy—a “battle plan” which enlisted hun-
dreds of know-nothing “bodies” with “instructions” on how to
vote—into the “expression” of “opinion” or “debate” or
“persua(sion].” (Pet. 11, 17, 12, 18). Allied’s protestations of
free speech have a hollow ring in light of the fact that not one
of the conspirators’ executives or “troops” spoke at the May,
1980 meeting in opposition to Article 331. It is fatuous to

28 _Petitioner’s effort to analogize this case to Noerr itself is unavailing.
(See Pet. 14-15). The advertising campaign in Noerr was merely part of a
general effort to elicit public support for the railroads’ lobbying efiorts.
Here, in sharp contrast, Allied’s actions at the NFPA were entirely outside
the political arena, involving no contacts with government or appeals to the
public to support direct lobbying efforts. Indeed, it is undisputed that the
NFPA itself did not engage im lobbying efforts; nor could it, in light of its

Status as a charitable organization under the Internal Revenue Code. (See
page 3 n.3, supra).

29° -—s«US. Sup. Ct. R. 17.1.

23

suggest that application of the Sherman Act to Allied’s con-
spiracy to subvert the NFPA’s processes will chill “good-faith”
debate by anyone.”

There is simply no substance to the Petition’s effort to cloak
Allied’s conduct in the First Amendment. “Where speech and
conduct are joined in a single course of action, the First
Amendment values must be balanced against competing soci-
etal interests.” City of Los Angeles v. Preferred Communica-
tions Inc., 106 S. Ct. 2034, 2038 (1986), citing United States v.
O’Brien, 391 U.S. 367, 376 (1968). As this Court established in
Roberts v. United States Jaycees, 468 U.S. 609, 623 (1984),
“It}]he right to associate for expressive purposes is not...
absolute.” Rather, “[iJnfringements on that right may be justi-
fied by regulations adopted to serve compelling state interests,
unrelated to the suppression of ideas, that cannot be achieved
through means significantly less restrictive of associational
freedoms.” Jd. Accord, Board of Directors of Rotary Interna-
tional v. Rotary Club, 107 S. Ct. 1940, 1947-48 (1987). Here,
even if—contrary to the record—one were to view Allied’s
conspiracy as, to some extent, an association “for expressive
purposes,” applying the Sherman Act to it would cause only an
“incidental abridgment” of Allied’s First Amendment right to
expressive association “no greater than is necessary to accom-
plish the [Sherinan Act’s] legitimate purposes.” Roberts v.
Jaycees, supra, 468 U.S. at 628. See California Motor Trans-
port Co. v. Trucking Unlimited, 404 U.S. 508, 514-15 (1972)
(“It is well settled that First Amendment rights are not immu-

30 ~=—- Alllied’s conduct distinguishes this case from the district court
decisions on which it relies because there was no subversion of the consensus
standard making process in any of those cases. See Sessions Tank Lines, Inc.
v. Joor Mfg. Inc., supra, 1986-2 Trade Cas. at 62,065; Rush-Hampton
Indus. v. Home Ventilating Inst., supra, 419 F. Supp. at 23-24; Wheeling-
Pittsburgh Steel Corp. v. Allied Tube & Conduit Corp., supra, 573 F. Supp.
at 836. It is noteworthy that Allied, which was the plaintiff in Wheeling-
Pittsburgh and which already had been sued by Carlon, elected not to appeal
the district court’s decision granting Noerr protection to concerted activity
before the NFPA—a conclusion which Allied had argued to that court
“would establish a dangerous precedent.” (Memorandum of Law of Allied,
filed May 20, 1980, at 11-12).

24

nized from regulation when they are used as an integral part of
conduct which violates a valid statute”), citing Giboney v.
Empire Storage & Ice Co., 336 U.S. 490, 502 (1949).*!

That Allied’s conspiracy was not constitutionally protected
speech is most apparent when one considers the consequences
of a contrary result. No one could seriously contend that the
First Amendment would bar legislation by Congress or a state
legislature specifically designed to protect the public from the
anticompetitive consequences of the conduct demonstrated on
this record. Surely, if a state may constitutionally proscribe
truthful advertising of lawful conduct” and the NLRB may
constitutionally prohibit a truthful request to the executive to
enforce a valid law,” then Congress can constitutionally pro-
hibit trade association members from combining to subvert
consensus standard making by stacking membership meetings
and causing the added voters to cast their ballots on instruction
with no regard for the merits, all in order to keep a new, better
or more economical product out of an industry code and, thus,
off the market.

To apply Noerr’s antitrust exemption to the egregious sub-
version of consensus standard making involved in this case
would, as a practical matter, remove the Sherman Act’s protec-
tion from all aspects of the standard making process whenever
the resulting standards are ultimately adopted by some organ
of government. Since there are many thousands of privately
promulgated standards covering a vast array of products,
many of which are adopted in whole or in part by organs of

31 In Giboney, in an opinion by Noerr’s author, Justice Black, this
Court unanimously held that a state could constitutionally prohibit, under its
general prohibition of conspiracies in restraint of trade, a union’s peaceful
and truthful picketing. Cf. National Soc’y of Prof. Eng’rs v. United States,
435 U.S. 679, 697 (1978) (ban on standard making organization’s expressing
“opinion [or] policy statement . . . implying that competitive bidding is
unethical” is constitutional).

32 ~Posadas De Puerto Rico Assocs. v. Tourism Co., 106 S. Ct. 2968,
2976-80 (1986).

33, Sure-Tan Inc. v. NLRB, 467 U.S. 883, 894-97 (1984).

25

government, application of the Noerr doctrine to legitimize
Allied’s conspiracy would enable members of private organiza-
tions that this Court has recognized are “rife with opportuni-
ties for anticompetitive activity” to seize such opportunities
in order to injure their rivals and deprive the public of new,
innovative and more economical products.

But that is not all. It would also undermine the credibility of
standard making throughout the economy (and thus deprive
the public of its benefits), since the public could not know
whether the standards promulgated by trade associations are
truly the product of a “consensus” on the merits, or whether,
as here, they are simply the result of economically motivated,
private combinations of competitors who have subverted the
standard making process.

In this regard, Allied’s protestations that its subversion of
the standard making process to exclude ENMT was motivated
by a concern for safety are beside the point. (See Pet. 14-15).
For, as this Court held in FTC v. Indiana Federation of
Dentists, 106 S. Ct. 2009 (1986), the belief that a restraint of
trade is lawful because it allegedly prevents consumers from
making “unwise and even dangerous choices” is “ ‘nothing less
than a frontal assault on the basic policy of the Sherman
Act.’ ” Id. at 2020, quoting National Society of Professional
Engineers v. United States, 435 U.S. 679, 695 (1978). Even
assuming the best of motives—although Allied’s motive to save
its conduit business from competition was conceded here (see
page 5, supra)—if one may rig a code to exclude an unsafe
product, one may equally rig a code to include one.”

34 American Soc’y of Mech. Eng’rs v. Hydrolevel, supra, 456 U.S. at
559, 571.

35 _— Alllied’s repeated reliance on the fact that its conduct did not violate
the NFPA’s rules is misplaced (see Pet. 11, 16, 20), for the Sherman Act “is
its own measure of right and wrong.” Standard Sanitary Mfg. Co. v. United
States, 226 U.S. 20, 49 (1912). See also National Soc’y of Prof. Eng’rs v.
United States, supra, 435 U.S. at 688. Plainly, if the rules or by-laws of a
trade association, or the abuse of such rules, may contravene the Sherman
Act, then the absence of a rule cannot shelter conduct that unreasonably

26

It would constitute a supreme irony to invoke the very factor
that makes standard making organizations’ potential for in-
flicting anticompetitive harm so great—the influential role they
play in the adoption of standards by governmental entities—as
a basis for providing them and their members a blanket
antitrust immunity. The Noerr doctrine—narrowly crafted to
preserve the right to petition the government—is not so per-
verse as to license combinations of competitors to deprive the
public of new and economical products by subverting private
industry codes. Nothing in the Court of Appeals’ opinion
infringes Allied’s or anyone else’s right to petition. The only
conduct that the decision will “chill” is conspiracies, such as
Allied’s, that exclude rivals from the marketplace by subvert-
ing private standard making proceedings, thus “impair[ing] the
ability of the market to advance social welfare by ensuring the
provision of desired goods and services to consumers at a price
approximating the marginal costs of providing them.” FTC v.
Indiana Federation of Dentists, supra, 106 S. Ct. at 2018. The
sparing exercise of this Court’s certiorari jurisdiction is not
warranted to review a decision which correctly refused to
accord such anticompetitive conduct blanket Sherman Act
immunity through an unsound extension of the Noerr doctrine.

restrains trade. See, e.g., Arizona v. Maricopa Cty. Med. Soc’y, 457 U.S. 332
(1982); National Soc’y of Prof. Eng’rs v. United States, supra, 435 U.S. at
692-96; Associated Press v. United States, 326 U.S. 1, 14-19 (1945); Ameri-
can Soc’y of Mech. Eng’rs v. Hydrolevel, supra, 456 U.S. at 570-74.

27

CONCLUSION

For the foregoing reasons, it is respectfully submitted that
the Petition should be denied.

Dated: August 21, 1987
New York, New York

Respectfully submitted,

FREDRIC W. YERMAN

425 Park Avenue

New York, New York 10022
(212) 836-8000

Of Counsel: Attorney for Respondent

Michael Malina

Randolph S. Sherman

Ira S. Sacks

Richard A. De Sevo

Bert L. Slonim

Donna M. Gerber

KAYE, SCHOLER, FIERMAN,
HAYS & HANDLER

425 Park Avenue

New York, New York 10022

(212) 836-8000

28

PROOF OF SERVICE

1, Fredric W. Yerman, attorney for Respondent herein, and a
member of the Bar of the Supreme Court of the United States,
do hereby certify that on the 2lst day of August, 1987, I
caused to be served by hand three copies of the foregoing
Respondent’s Brief in Opposition to Petition for Writ of
Certiorari on Marvin E. Frankel, Kramer, Levin, Nessen,
Kamin & Frankel, 919 Third Avenue, New York, New York
10022. I further certify that all parties required to be served
have been served.

Dated: August 21, 1987

Fredric W. Yerman
425 Park Avenue
New York, New York 10022

(212) 836-8000
Attorney for Respondent

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0829%3A03. Public record. Not legal advice.