Amicus Curiae Brief — Allied Tube & Conduit Corp. v. Indian Head, Inc.

No. 87-157

In the Supreme Court of the dn ted Siates

OCTOBER TERM, 1987

ALLIED TUBE & CONDUIT CORPORATION, PETITIONER

v.

INDIAN HEAD, INC.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

BRIEF FOR THE

UNITED STATES AND THE FEDERAL TRADE COMMISSION

AS AMICI CURIAE SUPPORTING RESPONDENT

CHARLES FRIED

Solicitor General

CHARLES F. RULE

Assistant Attorney General

Louis R. COHEN

Deputy Solicitor General

KENNETH G. STARLING

Deputy Assistant Attorney General

PAUL J. LARKIN, JR.

Assistant to the Solicitor General

ROBERT B. NICHOLSON

JOHN J. POWERS, III

ROBERT D. PAUL MARION L. JETTON

General Counsel Attorneys

ERNEST J. ISENSTADT Department of Justice

Assistant General Counsel —_ Washington, D.C. 20530

DEAN C. GRAYBILL (202) 633-2217

FREDERICK E. DOOLEY, JR.

Altorneys

Federal Trade Commission

Washington, D.C. 20580

QUESTION PRESENTED

The United States and the Federal Trade Commission

will address the following question:

Whether petitioner’s actions affecting the contents of

the 1981 National Electrical Code adopted by the National

Fire Protection Association, a private, voluntary member-

ship organization, are shielded from liability under the

Sherman Act, 15 U.S.C. (& Supp. IV) 1 ef seqg., under the

doctrine of Eastern Railroad Presidents Conference v.

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

TABLE OF CONTENTS

Page

Interest of the United States and the Federal Trade

EIEN Oe

Neen es ccc ccc ccescececccscccess

Dee ci etevessereccess 8

Argument: “

The Noerr doctrine does not shield petitioner’s conduct

from scrutiny under the antitrust laws ................. 10

A. The Noerr doctrine shields activities that constitute

petitioning the government .................... 10

B. The NFPA is not a governmental body, and

petitioning the NFPA does not amount to petition-

ee an oe cect ectsdeness. 12

C. Petitioner’s efforts to influence the NFPA are not

shielded by Noerr as an indirect means of petition- '

ime governmental Bodies ..............000000:- 15

Neen en eT eee ce eee cc eccccces 25

TABLE OF AUTHORITIES

Cases:

yee vy Of Mechanical Engineers, Inc. v.

Hydrodevel Corp., 456 U.S. 556 (1982) ......... 1, 15, 23,24

American Society of Sanitary Engineering, 106 F.T.C. 324

EEE EE ES ee |

Brotherhood of Railroad Trainmen vy. Virginia ex rel.

Virginia State Bar, 377 U.S. 1 (1964) ................ 17

California Motor Tansport Co. vy. Trucking Unlimited,

Tee eT ee te own ee sees 11, 12, 20

Cantor v. Detroit Edison Co., 428 U.S. 579 (1976)... ... 22

City of Kirkwood v. Union Electric Co., 671 F.2d 1173

(8th Cir. 1982), cert. denied, 459 U.S. 1170 (1983) ..... 22

Continental Ore Co. vy. Union Carbide & Carbon Corp.,

EN 13

Eastern Railroad Presidents Conference v. Noerr Motor

Pee, aac, See wm. 027 (ISSN)... ee eee eee passim

(111)

IV

Cases — Continued: Page

Federal Prescription Service, Inc. v. American

Pharmaceutical Ass’n, 471 F. Supp. 126 (D.D.C. 1979),

aff'd in part and rev’d in part, 663 F.2d 253 (D.C. Cir.

1981), cert. denied, 455 U.S. 928 (1982) .............. 17

Feminist Women’s Health Center, Inc. v. Mohammad,

586 F.2d 530 (Sth Cir. 1978), cert. denied, 444

ak SEE 600806000 heeese cia since 14, 22

Giboney v. Empire Storage & Ice Co., 336 U.S. 490

SE 64a kbvadducccoasnet cecum cabuentcneeces 20

Litton Systems, Inc. v. AT&T, 700 F.2d 785 (2d Cir.

1983), cert. denied, 464 U.S. 1073 (1984) ............. 22

McDonald v. Smith, 472 U.S. 479 (1985) ......0....... 15

Mid-Texas Communications Systems, Inc. v. AT&T, 615

F.2d 1372 (Sth Cir.), cert. denied, 449 U.S. 912 (1980) . 22

NAACP vy. Claiborne Hardware Co., 458 U.S. 886 (1982) 20

National Society of Professional Engineers v. United

SOR: TEP Was GE 4 6 rh bo ne cnecdcnceseceecs 20, 24

Osborn v. Pennsylvania-Delaware Serv. Station Dealers

Ass'n, 499 F. Supp. 553 (D. Del. 1980) .............. 21

Pell v. Procunier, 417 U.S. 817 (1974) ................. 23

Parker v. Brown, 317 U.S. 341 (1943) ..........00...... 11

Radiant Burners, Inc. v. Peoples Gas Light & Coke Co..,

Be Hs, EE 6.4.4-0.'0 603 andeencehieeckeeteess l

Sessions Tank Liners, Inc. v. Joor Mfg. Co., 827 F.2d 458

(9th Cir. 1987), petitions for cert. pending, Nos. 87-687

GE hb oh dance deecpcnkis torches teneeeets. 12, 24

Southern Motor Carriers Rate Conference, Inc. v. United

SE, Gre Wis SN 6 oo <6.0-5 osc c aus abdbwkucess 14

Structural Laminates, Inc. v. Douglas Fir Plywood Ass’n,

399 F.2d 155 (9th Cir. 1968), cert. Genied, 393 U.S. 1024

0 6b 0 a euu ce kkk ees ae oe cn ee 23

Superior Court Trial Lawyers Ass'n, 107 F.T.C. 510

(1986), appeal pending, No. 86-1465 (D.C. Cir.) ...... 21

Town of Hallie v. City of Eau Claire, 471 U.S. 34

GUD ches can ekGbanaeyvesenus ck ceed cee 9, 15, 24

United Mine Workers of America vy. Illinois State Bar

eo ee eee 17

United Mine Workers of America vy. Pennington, 381

ED als ia kay ob a ots soa ees 6, 11, 14

United States v. American Society of Mechanical

Engineers, Inc., 1972 Trade Cas. (CCH) 44 74,028,

74,029 (S.D.N.Y. 1972) .......

Cases — Continued: Page

United States v. Cruikshank, 92 U.S. 542 (1875) ........ 15

United States v. National Malleable & Steel Castings Co.,

1957 Trade Cas. (CCH) 4 68,890 (N.D. Ohio 1957),

aff'd, 358 U.S. 38 (1958) ..... 2... cece eee e ee eeneee 23

United States v. Rock Royal Co-op., 307 U.S. 533 (1939) . 11

United States v. Trenton Potteries Co., 273 U.S. 392

CI a 5n: sok 6 FR AENOROABADS NRE KE 0 8846940500. 8

Virginia Academy of Clinical Psychologists v. Blue Shield

of Virginia, 624 F.2d 476 (4th Cir. 1980), cert. denied,

BGA SD hk ich aéoewesccitvisseccecsesens 21

Constitution, statutes, and regulation:

Tg Ne ee 11, 20

Health Care Quality Improvement Act of 1986, Pub. L.

No. 99-660, 100 Stat. 3784 (to be codified at 42 U.S.C.

ED Bind cdecntaseadesenccresssesncevcens 24

Internal Revenue Code (26 U.S.C.):

DEED vwcccccvccnecesescccescensosseueses 16, 17

DRED bcc wacccccveccocstnersoenasanvese 17

Local Government Antitrust Act of 1984, 15 U.S.C.

(& Supp. IV) 34 ef seg. .. 2... eee eee ees 23

National Cooperative Research Act of 1984, 15 U.S.C.

GIDE GO GID. ovcncccvecccccccececcewscsscncccciens 22

Newspaper Preservation Act, 15 U.S.C. 1801 ef seq. ..... 22

Sherman Act § 1, 15 U.S.C. (& Supp. IV) 1 ........---- 5

Treas. Reg. 1.501(c)(3)-M(c)3lit) ©. 6 eee ee 17

Miscellaneous:

1 Annals of Cong. 738 (J. Gales ed. 1789)...........-.. 15

Hearings on S.J. Res. 33 Before the Consumer Subcomm.

of the Senate Comm. on Commerce, 90th Cong., Ist

IE ocx cvee cee ccbncncesewedeestsvewseden 23

H.R. Rep. 1981, 90th Cong., 2d Sess. (1968) ........ x 24

Howe & Badger, The Antitrust Challenge to Non-profit

Certification Organizations, 60 Wash. U.L.Q. 357

Cg oh cues oes GASSCEeaeeeesscceebeneesteeeet 24

VI

Miscellaneous — Continued:

IRS, Pub. No. 78, Cumulative List of Organizations

Described in Section 170(c) of the Internal Revenue

SS ee, ee

Nat’l Bureau of Standards, NBS/R 87-3576, The ABC’s of

Standards-Related Activities in the United States

(May 1987)

"SAV eGeeecee eee ee eee e ea Cae RHA EE EES Se Oe 8 Se oe

Page

16

In the Supreme Court of the Anited States

OCTOBER TERM, 1987

No. 87-157

ALLIED TUBE & CONDUIT CORPORATION, PETITIONER

Vv.

INDIAN HEAD, INC.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

BRIEF FOR THE

UNITED STATES AND THE FEDERAL TRADE COMMISSION

AS AMICI CURIAE SUPPORTING RESPONDENT

INTEREST OF THE UNITED STATES

AND THE FEDERAL TRADE COMMISSION

The Department of Justice and the Federal Trade Com-

mission have the primary responsibility for enforcing the

antitrust laws. The courts have traditionally applied the

antitrust laws to private standard-making organizations

and their members,' and the Department and the Comimnis-

sion have engaged in enforcement actions against such

organizations.2 The Department and the Commission

' See, e.g., American Society of Mechanical Engineers, Inc. v.

Hydrolevel Corp., 456 U.S. 556 (1982), affg 635 F.2d 118 (2d Cir.

1980); Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364

U.S. 656 (1961).

2 See, e.g., American Society of Sanitary Engineering, 106 F.7.C.

324 (1985) (consent decree); United States v. American Society of

Mechanical Engineers, Inc., 1972 Trade Cas. (CCH) 44 74,028,

74,029 (S.D.N.Y. 1972) (consent decree).

(1)

2

have an interest in assuring that the Noerr} doctrine is not

interpreted to exempt from antitrust scrutiny anti-

competitive activities conducted by members of private

standard-making organizations.

STATEMENT

1. Carlon, a division of respondent Indian Head, Inc.,

manufactures and sells electrical non-metallic tubing

(ENMT), a flexible plastic electrical conduit made from

polyvinyl chloride, which is used in building construction

to carry insulated electric wires. Respondent claims that

ENMT has significant competitive advantages over steel

conduit that performs the same function, including

pliability, lower installed cost, and lower susceptibility to

short-circuit’ g; in 1980, there was also a scientific basis

for concern a out the safety of ENMT, particularly in

fires in high-rise buildings. The dispute in this case stems

from respondent’s efforts to have the National Fire Pro-

tection Association (NFPA) list ENMT as a permissible

type of electrical conduit in the 1981 edition of the Na-

tional Electrical Code (NEC). Pet. App. 3a-4a.

The NFPA is a private, voluntary organization with

more than 31,500 individual and group members repre-

senting industry, labor, academic organizations, the in-

surance industry, and other interests. The NEC, which is

revised every three years,* establishes product and per-

* See Eastern Railroad Presidents Conference v. Noerr Motor

Freight, Inc., 365 U.S. 127 (1961).

* The revision of the NEC is a multi-step process. A proposed

amendment is first submitted to a code-making panel composed of

professionals with relevant technical expertise. No more than one-

third of the membership of such a panel may represent a single in-

terest. If approved by the panel, a proposal is transmitted to the full

NFPA membership, where its fate is decided by majority vote.

Members may appeal an adverse vote to the NFPA’s Standards Coun-

cil and ultimately to its Board of Directors. Finally, under a procedure

3

formance requirements for the design and installation of

electrical wiring systems, including electrical conduit. The

code is influential world-wide, and is adopted by a

substantial number of state and local governments, either

without change or with modest revisions. Pet. App. 4a-5a

& n.l. Because many state and local governmental

authorities rely on the NEC, a firm that wishes to market a

new electrical product in a category covered by the NEC,

such as electrical conduit, must as a practical matter ob-

tain approval for that product in the NEC (C.A. App.

1557). Private certification laboratories, such as Under-

writers Laboratories, also normally will not list and label

an electrical product that is not approved by the NEC

(C.A. App. 1558; Tr. 145-146, 300).

In 1978, respondent asked the NFPA to list ENMT as a

permissible type of electrical conduit in the 1981 edition of

the NEC (Pet. App. 6a; C.A. App. 1555). In December

1979, the NFPA code-making panel responsible for

reviewing ENMT, after initially rejecting the product, ap-

proved it for inclusion in the 1981 NEC (Pet. App. 6a;

C.A. App. 1561). This decision was then subject to ap-

proval by a simple majority of the members attending the

NFPA’s 1980 annual meeting (Pet. App. 5a).

Petitioner is a major domestic producer of steel conduit

(Pet. App. 3a-4a). Recognizing that the NFPA’s approval

of respondent’s product would be likely to harm sales of

steel conduit, petitioner met with members of the steel in-

dustry and others to consolidate opposition to ENMT at

the 1980 NFPA meeting. Petitioner and its confederates

known as a tentative interim amendment, a code-making panel, the

Standards Council, and the Board of Directors may temporarily in-

clude a proposal in the Code on an interim basis until the next code

cycle. Pet. App. Sa-6a. The NFPA publicly describes itself as using

“widely accepted consensus procedures representing a balance of in-

terests and opportunity for review and comment at all levels” and “one

of the most democratic and procedurally fair systems of code develop-

ment in existence” (C.A. App. 1988, 1991).

4

agreed to bring as many votes as possible to the upcoming

NFPA meeting; petitioner itself pledged to bring at least

100 votes. /d. at 6a.° Petitioner eventually paid the NFPA

membership dues and expenses for 155 persons, including

its Own executives, employees and sales agents, to join the

Organization and to attend the meeting, at a cost of more

than $100,000 (id. at 7a; C.A. App. 1566).

At the NFPA meeting, petitioner instructed its person-

nel where to sit, and group leaders ‘nstructed the steel-

group voters how to vote, using walkie talkies and hand

signals to facilitate communication (Pet. App. 7a-8a; C.A.

App. 1566-1567). Few of petitioner’s voters understood

the merits of the debate over respondent’s product, and

none spoke in oppositon to approval of ENMT during the

meeting (Pet. App. 8a). At the conclusion, the NFPA

members decided by a vote of 394-390 to return the ENMT

proposal to committee (ibid.). If petitioner and its allies

had not “packed” the meeting, ENMT would have been

approved by the NFPA for inclusion in the 1981 NEC (see

J.A. 24). Respondent appealed the membership’s vote to

the NFPA’s Board of Directors, but the Board denied the

appeal on the ground that the NFPA rules had been cir-

cumvented but not violated (Pet. App. 8a). Respondent

thereafter applied for a temporary interim amendment to

include ENMT in the 1981 NEC, but a subcommittee of

the Board eventually denied respondent’s request on the

ground that the proposal did not contain appropriate

emergency subject matter (ibid.; C.A. App. 1570).°

* Prior to submission of the liability issue to the jury, petitioner

conceded that it had agreed with other steel companies to oppose

respondent’s product (Pet. App. 9a; Tr. 2160).

* Subsequently, the NFPA amended its rules to prevent similar at-

tempts to circumvent its rules (Pet. App. 21a; Tr. 307-308). In 1984,

ENMIT was approved for inclusion in the code, for use in buildings

with three or fewer stories (Pet. App. 9a n.3; Tr. 258).

5

2. In October 1981, respondent brought suit in the

United States District Court for the Southern District of

New York, alleging that petitioner and others had

unreasonably restrained trade in the manufacture and sale

of tubing for use in above-ground electrical wiring in

buildings, in violation of Section i of the Sherman Act, 15

U.S.C. 1 (J.A. 4-7, 14).’ A bifurcated trial was held. After

the presentation of evidence on liability, the jury was in-

structed to apply the “rule of reason” and to determine

whether petitioner and others had unreasonably restrained

trade (Tr. 2160, 2165).* The jury returned a verdict in

respondent’s favor (J.A. 23-25). In answers to inter-

rogatories, the jury also found that petitioner had not

violated any NFPA rules or procedures but had subverted

the NFPA’s consensus standard-making process. In addi-

tion, the jury found that petitioner’s actions adversely af-

fected competition and constituted an unreasonable

restraint of trade (J.A. 24-25).

The court then instructed the jury on damages. The

court told the jury that it could not award respondent

damages for petitioner’s lobbying efforts before legislative

and political bodies with respect to the safety of ENMT,

but could award respondent damages for the losses it suf-

fered through the exclusion of its product from the 1981]

NEC (Pet. App. 9a n.3; Tr. 3266). The jury returned a ver-

dict of $3.8 million in lost profits.

’ Respondent named both petitioner and the NFPA as defendants

but dismissed its action against the NFPA before tzial.

’ The district court instructed the jury that it could tind that

standard-making has procompetitive aspects; that petitioner's conduct

during the vote on ENMT had nonetheless been anticompetitive; and

that if the anticompetitive effects of petitioner’s actions outweighed

any procompetitive benefits, respondent was entitled to prevail (Tr.

2164-2169).

6

3. The district court subsequently granted a judgment

n.o.v. for petitioner, concluding (Pet. App. 23a-32a) that

petitioner’s actions were shielded from antitrust liability

by the Noerr-Pennington doctrine. See Eastern Railroad

Presidents Conference v. Noerr Motor Freight, Inc., 365

U.S. 127 (1961); United Mine Workers of America v. Pen-

nington, 381 U.S. 657 (1965). The court characterized the

NFPA as “akin to a legislature” (Pet. App. 28a), and also

reasoned that, because the NFPA’s standards are routinely

adopted by state legislatures, petitioner’s lobbying efforts

before the NFPA constituted “a genuine attempt to in-

fluence legislative action” (id. at 26a; see also id. at 30a).

The court rejected respondent’s argument that petitioner’s

actions before the NFPA were, in fact, a sham not entitled

to immunity under Noerr, on the ground that petitioner

had a legitimate concern about the safety of respondent’s

product (id. at 28a). The court concluded that petitioner

could not be held liable for the injury to respondent that

stemmed from the actions of private parties, because, in

the court’s view, respondent had not relied on that theory

at trial (id. at 28a-29a, 31a).

4. The court of appeals reversed (Pet. App. la-22a).

The court stated that respondent did not seek damages for

any injury arising from the adoption of the NEC by state

or local governments and that respondent was awarded

Ccamages only on the theory “that the stigma of not obtain-

ing NEC approval of its product and [petitioner’s}

‘marketing’ of that stigma caused independeni

marketplace harm to [respondent] in those jurisdictions

permitting use of [polyvinyl chloride] conduit” (id. at 9a

n.3). Viewing the case in that light, the court of appeals

ruled that petitioner was not protected by Noerr.

The court declined to treat private standard-making

bodies like the NFPA as if they were governmental bodies

(Pet. App. 12a-17a). The court said, “Noerrs holding

depended on the unique nature of petitions directed to the

government in our political system; [this Court] focused

upon the ‘right of the people to inform their represen-

tatives in government of their desires with respect to the

passage and enforcement of laws’” (id. at 13a (quoting

365 U.S. at 139)). The court stressed the need of govern-

mental bodies for a free flow of information and the

safeguards that protect the public interest in governmental

action. By contrast, the court said, the NFPA, like other

private standard-making organizations, is not accountable

to the electorate but may be presumed to be acting

primarily on its own behalf (Pet. App. 13a-15a). The court

added that extending Noerr to so called “quasi-legislative”

bodies, like the NFPA, would present serious practical

problems about how to limit the scope of immunity (/d. at

15a). The court concluded that the fact that governments

routinely adopt provisions modeled on the NEC does not

transform the NFPA into “a governmental organ” (/d. at

16a-17a).

The court also rejected petitioner’s argument that its ef-

forts to lobby the NFPA were entitled to immunity under

Noerr as indirect attempts to influence state and local

governments (Pet. App. 17a-19a). Relying on the principle

that exemptions from the antitrust laws are to be narrowly

construed, the court explained that, while submission of a

recommendation to the government is protected by Noerr,

antecedent anticompetitive conduct outside the political

arena that injures-a rival is not entitled to immunity (/d. at

17a-18a). The reason, it said, is that the policies under-

lying the Noerr doctrine do not justify immunizing an-

ticompetitive conduct undertaken to persuade a private

organization, because a party can always lobby state and

local governments directly (/d. at 18a). Finally, the court

rejected petitioner’s claim that any attempt to !ohby state

and local governments not to approve ENMT would have

been futile once the NFPA endorsed that product. The

8

court pointed out that governments frequently modify the

NEC before adopting it (id. at 18-19a).°

SUMMARY OF ARGUMENT

The court of appeals ruled correctly that petitioner’s ac-

tions affecting the contents of the 198i National Electrical

Code are not protected by the Noerr doctrine. Neither the

fact that the National Fire Protection Association follows

forms and procedures that in some ways resemble those of

a legislative body, nor the fact that the NEC has a

foreseeable major influence on the contents of various

state and municipal codes, turns petitioner’s actions into

“mere attempts to influence the passage or enforcement of

laws.” Noerr, 365 U.S. at 135.

The National Fire Protection Association is not a

legislative body or part of government at any level, and at-

tempts to influence its decisions are not protected by

Noerr merely because the activities of NFPA members in

reaching those decisions may bear some resemblance to

political activities. The NFPA is a private, voluntary

membership organization that “may be presumed to be

acting primarily on * * * its own behalf,” rather than in

® The court also rejected petitioner’s claim that its conduct did not

constitute an unreasonable restraint of trade as a matter of law (Pet.

App. 19a-22a). Petitioner argued that an industry participant in a

standard-setting organization should not be held liable under the an-

iitrust laws when it is motivated (at least in part) by legitimate, scien-

tifically justified safety concerns and when the organization’s deci-

sionmaking procedures are procedurally fair. The court rejected that

argument on the ground that petitioner had subverted the integrity of

the NFPA’s procedures in order to obtain an anticompetitive result,

and the court declined “to permit a defendant to use its literal com-

pliance with a standard-setting organization’s rules as a shield to pro-

tect such conduct fron antitrust liability” Gd. at 21a). The court also

ruled that petitioner’s restraint of trade could not be justified on safety

grounds (id. at 22a, citing United States v. Trenton Potteries Co., 273

U.S. 392, 397-398 (1927)).

9

the public interest. Town of Hallie v. City of Eau Claire,

471 U.S. 34, 45 (1985). Its voting members are not selected

by, nor are they answerable to, the general public. And the

constitutional right that underlay the decision in

Noerr—the “right of the people to inform their represen-

tatives in government of their desires with respect to the

passage or enforcement of laws” (365 U.S. at 139)—has no

direct application to attempts to influence persons who are

not “representatives in government.”

Nor does the fact that the NEC has a foreseeable major

influence on the contents of many state and municipal

codes immunize petitioner’s activitics. To be sure, the

Noerr doctrine protects not only direct communications to

“representatives in-government” but also some indi-ect

communications and some activities preliminary to direct

or indirect communications with government represen-

tatives. But the activities alleged in this case do not fit into

any of these protected categories.

First, the actions at issue in this case cannot be viewed as

indirect communications to “representatives in govern-

ment,” or as preliminary steps in that process, because the

NFPA is not permitted by the Internal Revenue Code

to—and does not—attempt to influence state or local

code-making. Its pertinent activity is to promulgate stand-

ards for various industries, which it then offers to the

public. The mere fact that one of several consequences of

the promulgation of standards by the NFPA is that some

governmental bodies will enact those standards into

positive law does not mean that any person’s right to peti-

tion his government is traversed by holding NFPA

members accountable under the antitrust laws for thei

conduct within the organization. .

Second, in any event, the Noerr doctrine does not shield

activities that are illegal (whether because they create

unreasonable restraints of trade or otherwise) for reasons

that are wholly independent of any restraint of trade

10

resulting from the governmental activity that the defend-

ant wishes to bring about. An otherwise unlawful group

boycott, for example, does not become protected activity

merely because one of its objectives is to attract the atten-

tion of the legislature. The decision below was based on

the conclusion that petitioner’s actions created a stigma

that injured respondent at times and in places where its

product did not violate local codes. If petitioner’s conduct

constituted an unreasonable restraint of trade independent

of any governmental actions that may have resulted from

that conduct, such a restraint does not become lawful

merely because governmental actions are one of its conse-

quences. '®

ARGUMENT

THE NOERR DOCTRINE DOES NOT SHIELD PETITIONER'S

CONDUCT FROM SCRUTINY UNDER THE ANTITRUST LAWS

A. The Noerr Doctrine Shields Activities That Constitute Peti-

tioning The Government

The Noerr doctrine originated in this Court’s decision in

Eastern Railroad Presidents Conference v. Noerr Motor

Freight, Inc., 365 U.S. 127 (1961). In that case, Penn-

sylvania truck operators and their trade association filed a

Sherman Act complaint against 24 Easiern railroads, an

association of the presidents of the railroads, and a puolic

‘relations firm, alleging that the defendants had pursued a

.obbying and public relations campaign that was designed

to encourage the enactment and retention of laws and law

enforcement practices that would be destructive of the

trucking industry. 365 U.S. at 129-130, 138-139, 142-143.

The Court ruled that the defendants could not be held

liable under the Sherman Act for their activities. /d. at

135-145.

‘© We take no position on the second question presented by the peti-

tion, «e., the tegality of petitioner’s conduct under the Sherman Act

assuming the inapplicability of Noerr.

Beginning with the premise, established in United States

v. Rock Royal Co-op., 307 U.S. 533 (1939), and Parker v.

Brown, 317 U.S. 341 (1943), that a Sherman Act violation

cannot be based on a restraint of trade that is the result of

valid governmental action, the Court concluded that the

Sherman Act does not prohibit private parties from band-

ing together to lobby the legislature to create a restraint of

trade in their favor. As the Court put it, there is an “essen-

tial dissimilarity” between an agreement to seek favorable

government action and the type of agreements traditional-

ly condemned by the Sherman Act. Noerr, 365 U.S. at

136-137. The Court also noted that construing the Sher-

man Act to reach efforts to petition the government would

hamper the ability of government to act in the public

good, because representative government depends on the

ability of citizens freely to inform their representatives of

their wishes. Jd. at 137. That result, moreover, would im-

pute to the Sherman Act “a purpose to regulate, not

business activity, but political activity, a purpose which

would have no basis whatsoever in the legislative history

of that Act.” /bid. (footnote omitted). Finally, the Court

found that applying the Sherman Act to the political con-

duct at issue in that case would infringe on the right to

petition government protected by the First Amendment.

Id. at 137-138. Accordingly, the Court held that the Sher-

man Act did not reach the activities of the railroads “at

least insofar as those activities comprised mere solicitation

of governmental action with respect to the passage and en-

forcement of laws.” Jd. at 138. See also United Mine

Workers of America v. Pennington, 381 U.S. 657, 669,

671 (1965); California Motor Transport Co. v. Trucking

Unlimited, 404 U.S. 508, 510-511 (1972) (stating that the

Noerr doctrine rests on the First Amendment). ''

'' Noerr left open the question whether an ostensibly political cam-

paign that is a sham to disguise an attempt to disrupt the business

operations of a competitor is subject to the Sherman Act. Noerr, 365

12

Relying on Noerr, petitioner argues that it cannot be

held liable for lobbying the NFPA to exclude respondent’s

product from the 1981 NEC, because its conduct was tan-

tamount to an attempt to petition governmental bodies to

reject respondent’s product. That contention lacks merit

for two reasons. First, the NFPA is a private organization,

not the government, and persuading a private organiza-

tion to take steps that injure a rival is not equivalent to

petitioning the government to take governmental action

that injures a rival. Second, petitioner’s actions before the

NFPA are not protected by Noerr as an indirect way of

petitioning state and local governmental bodies. The

NFPA may not and does not seek to influence state or

local code-making, and in any event Noerr does not shield

activities that are unlawful for reasons wholly independent

of any restraint of trade resulting from governmental ac-

tivity.

B. The NEPA Is Not A Governmental Body, And Petitioning The

NFPA Does Not Amount To Petitioning The Government

The NFPA is a private, voluntary, membership

organization, whose leadership and membership are

neither elected by nor answerable to the body politic, and

petitioner stipulated that the NFPA is not a governmental

entity. Activities seeking to influence NFPA may bear

some resemblance to political activities, but petitioner’s ef-

forts to cause the NFPA to exclude respondent’s product

from the 1981 National Electrical Code do not constitute

efforts to lobby a governmental body under Noerr. '°

U.S. at 144. The Court expressly endorsed that exception to Noerr in

California Motor Transport, 404 U.S. at 515-516.

'2 The court of appeals in Sessions Tank Liners, Inc. y. Joor Mfe

Co., 827 F.2d 458 (9th Cir. 1987), petitions for cert. pending, Nos.

87-687 and 87-916, on which petitioner relies heavily, also suggested

that a standard-making organization may be quasi-governmental, and

treated the private organization as the relevant legislative body in

deciding whether the sham exception to Noerr was applicable. /d. at

. 463, 464-469.

13

Noerr shields political activity directed towards govern-

ment. The Court’s opinion in Noerr described conduct

that involves “an attempt to persuade the legislature or the

executive to take particular action” (365 U.S. at 136) and

-teps undertaken “in the political arena” (id. at 141). Noerr

spoke of “an agreement jointly to seek legislation or law

enforcement” (id. at 136), “associations [formed] for the

purpose of influencing the passage or enforcement of

laws” (id. at 137), the public’s right “freely [to] inform the

government of [its] wishes” (ibid.), “activities [that] com-

prised mere solicitation of governmental action with

respect to the passage and enforcement of laws” (id. at

138), “seek[{ing}] action on laws” (id. at 139), and

“depriv[ing] the government of a valuable source of infor-

mation” (ibid.). Referring to the facts of the case, the

Court also noted that the railroads’ publicity campaign

was “directed toward governmental action,” was “designed

to influence governmental action,” was “a publicity cam-

paign to influence governmental action” (id. at 140,

142-143}, and was “a ‘no-holds-barred fight’ between two

industries,” which is “commonplace in the halls of

legislative bodies” (id. at 144 (footnote omitted)). Actions

taken to persuade a private organization not to approve a

competitor’s product do not fit any of these characteriza-

tions.

The Noerr decision was based on the notion that a

governmental body may validly act in ways that restrain

trade, and private persons may engage—and combine to

engage —in activities seeking to persuade it to do so. 365

U.S. at 136. But this Court has long s‘nce made it clear

that private entities are not governmy «tal bodies for this

purpose.'? In Continental Ore Co. v. Union Carbide &

Carbon Corp., 370 U.S. 690 (1962), the Canadian govern-

') Significantiy, petitioner does not clam that the NEPA’s

standard-setting activities would constitute state action exempt trom

the antitrust laws. Nor would that claim have merit, since the NFPA ts

14

ment had appointed a Union Carbide subsidiary as its war-

time agent to purchase and allocate to Canadian industries

the vanadium products they required. The plaintiff alleged

that Union Carbide directed its subsidiary to exclude the

plaintiff from the Canadian market as part of a conspiracy

to monopolize the vanadium industry. Union Carbide

argued that it was immune under Noerr, but this Court

found that Noerr was “plainly inapposite” and that Union

Carbide’s conduct was “wholly dissimilar” to that of the

railroads in Noerr. Id. at 707. Noerr was inapposite,

because the purchasing agent in Continental Ore was not a

public official and there was “ ‘no indication that the Con-

troller or any other official within the structure of the

Canadian Government approved or would have approved

of ’” Union Carbide’s practices. Pennington, 381 U.S. at

671 n.4 (citation omitted). The Court concluded that sub-

jecting a party such as Union Carbide to liability “for

eliminating a competitor from the Canadian market by ex-

ercise of the discretionary power conferred upon [its sub-

sidiary] by the Canadian government would effectuate the

purposes of the Sherman Act and would not remotely in-

fringe upon any of the consitutionally protected freedoms

spoken of in Noerr.” Continental Ore, 370 U.S. at

707-708. See also Feminist Women’s Health Center, Inc.

v. Mohammad, 586 F.2d 530, 544-545 (Sth Cir. 1978),

cert. denied, 444 U.S. 924 (1979) (medical review

organizations whose recommendations may be followed

by a statutory board are not governmental bodies for pur-

poses of Noerr).

The right to petition government is essential to a

representative democracy because it allows citizens to

a non-governmental entity, and ils activities are not specifically

authorized, nor subject to on-going supervision, by any government.

See Southern Motor Carriers Rate Conference, Inc. v. United States,

471 U.S. 48, 57 (1985).

15

“communicate their will” to the legislature and govern-

ment officials. 1 Annals of Cong. 738 (James Madison) (J.

Gales ed. 1789). See also McDonald v. Smith, 472 U.S.

479, 482 (1985); id. at 486 (Brennan, J., concurring);

United States v. Cruikshank, 92 U.S. 542, 552 (1875).

That right is not involved in an attempt to influence a

private standard-making organization. On the one hand, a

private organization “may be presumed to be acting

primarily on * * * its own behalf.” Town of Hallie v. City

of Eau Claire, 471 U.S. 34, 45 (1985). Members of stand-

ard-making organizations “may weli view their position

* * * at least in part, as an Opportunity to benefit their

employers,” rather than the public. American Society of

Mechanical Engineers, Inc. v. Hydrolevel Corp., 456 U.S.

556, 571 (1982). And on the other hand, subjecting at-

tempts to influence private standard-making bodies to an-

titrust scrutiny does not restrict the right of any person, in-

cluding a member of such an organization, to “inform the

government of [its] wishes” (Noerr, 365 U.S. at 137), or to

enter into “an agreement jointly to seek legislation or law

enforcement” or to “solicit{] * * * governmental action

with respect to the passage and enforcement of laws” (id.

at 136, 138). In particular, nothing in the decision below

restricts the right of petitioner, alone or with other persons

(including members of the NFPA), to urge any govern-

mental body to adopt or enforce governmental policies

hostile to the use of ENMT.

C. Petitioner's Efforts To Influence The NFPA Are Not Shielded

By Noerr As Au Indirect Means Of Petitioning Governmental

Bodies

Petitioner contends (Br. 16-35) that even though the

NFPA is not a governmental body, its conduct at the

NFPA meeting constitutes a Noerr-protected indirect

method of petitioning state and local legislatures. Peti-

tioner maintains that it expected that excluding ENMT

from the 1981 National Electrical Code would influence

16

state and local governments not to allow the use of that

product. Petitioner therefore submits that its successful ef-

forts to exclude ENMT from the 1981 NEC were a pro-

tected form of petitioning government, even though they

were indirect both in their nature and their effect. That

claim misconstrues the protection offered by the Noerr

doctrine.

It is clear that the Noerr-protected right to petition

government can take indirect forms. Noerr itself was ex-

plicit that the activities it protected include not only direct

communications to legislators and other government of-

ficials but also various forms of indirect communication,

as well as other preliminary, organizational, and

preparatory steps.'* In some cases, it may be difficult to

draw the correct line between activity that is protected by

Noerr and activity that is subject to scrutiny under the

Sherman Act. This, however, is not a hard case, for two

reasons.

1. The NFPA is not and cannot be the vehicle for peti-

tioner or anyone else to petition state and local govern-

ments with respect to their building codes. The NFPA

does not, and is not permitted to, attempt to influence

legislation; it is a charitable organization, exempt from

federal taxation under Section 501(c)(3) of the Internal

Revenue Code, and is prohibited from attempting to in-

fluence legislation.'’ Accordingly, the NFPA’s standard-

'4 In Noerr, the railroads’ anti-trucking publicity campaign was

directed at participants in the political process. 365 U.S. at 129-130,

140. While the publicity campaign did not involve direci solicitation of

government action, it did take place “in the political arena” through

efforts to convince the voters to put pressure on their elected represen-

tatives to restrain the truck operators and through publicity to sway

government policy makers. /d. at 140-141.

'S See IRS, Pub. No. 78, Cumulative List of Organizations De-

scribed in Section 170(c) of the Internal Revenue Code of 1954, al 861

(1986). The NFPA cannot maintain its status as a charitable

17

making process is not a “petitioning” activity, and peti-

tioner’s activities within the NFPA cannot, as such, be

justified as an effort to set a direction for the NFPA

preparatory to a petitioning campaign. ‘°

Petitioner did, of course, hope and expect that state and

local legislatures would look to the 1981 NEC for

guidance, but nothing in Noerr suggests that an activity

undertaken with the mere hope or expectation that some

governmental bodies will take notice is exempt from

scrutiny under the antitrust laws. This Court described the

activities protected in Noerr as “political activities” under-

taken “in the political arena.” Noerr, 365 U.S. at 140-141.

What the Court sought to protect was the right of the

“people * * * freely (to] inform the government of their

wishes” (id. at 137). In this case, the direct purpose and et-

fect of petitioner’s efforts at the NFPA convention were to

prevent the inclusion of ENMT in the NEC, a

organization under Section 170(c) of the Internal Revenue Code if it is

disqualified under Section 501(c)(3) because of its “attempt(s} to in-

fluence legislation.” 26 U.S.C. 170(c)(2)(D), 501(c)(3). Under Section

§01(c)(3), an organization may qualify as a “charitable organization”

only if “no substantial part” of its activities consists of an attempt to

influence the government to pass legislation. See also Treas. Reg.

1.501(c)(3)-1(c)(3 ii).

'© Compare, e.g., United Mine Workers of America v. Illinois State

Bar Ass’n, 389 U.S. 217 (1967) (union’s hiring of lawyers to prepare its

members’ claims for presentation to the government is protected peti-

tioning activity); Brotherhood of Railroad Trainmen v. Virginia ex

rel. Virginia State Bar, 377 U.S. 1 (1964) (individuals may join to

recommend competent lawyers to each other as preparation for pcil-

tioning the courts); Federal Prescription Service, Inc. v. American

Pharmaceutical Ass'n, 471 F.Supp. 126, 129-130 (D.D.C. 1979), affd

in part and rev'd in part, 663 F.2d 253 (D.C. Cir. 1981), cert. denied,

455 U.S. 928 (1982) (Noerr protects effort by one organization to

solicit other organizations to rally in a joint campaign to induce

government action; court distinguishes attempt to exclude competitor

through adoption of code of ethics).

18

private industry code. Although state and municipal

governments ultimately might decide to adopt the NEC, in

whole or in part, that governmental decision cannot be the

result of any lobbying campaign by the NFPA.

Petitioner has the right, singly or in combination with

others, to urge state and municipal legislatures to prohibit

or restrict the use of respondent’s product, and the Noerr

doctrine insulates that activity from liability under the

Sherman Act. As stated above, Sherman Act scrutiny of

petitioner’s activities within the NFPA would not in any

way restrict petitioner’s right to engage in “petitioning” ac-

tivity; it would merely prevent petitioner from providing

momentum to that activity by the misuse of an inherently

nonpolitical organization.

2. The essence of Noerr is that the Sherman Act does

not prohibit private persons from combining to restrain

trade by enlisting the instrumentalities of government to

impose retraints—even if the restraints themselves might

otherwise be judged unreasonable, and even if the private

persons’ conduct is of the ugly sort that sometimes occurs

in the rough-and-tumble of the political process. The Sher-

man Act was not intended to trump the right of govern-

ment to regulate economic behavior, or the right of the

citizenry to ask it to do so, whether or not the requests are

“reasonable.” Moreover, the Court made it clear in Noerr

that “efforts to influence the passage and enforcement of

laws” (365 U.S. at 142) do not lose Noerr protection mere-

ly because a rival may have “sustained some direct injury

as an incidental effect of the * * * campaign to influence

governmental action” (id. at 143).

The Noerr doctrine does not, however, shield actions

that are illegal (whether because they create unreasonable

restraints of trade or otherwise) for reasons that are whol-

ly independent of any restraint of trade resulting from the

governmental activity that the defendant wishes to bring

about. No one would suggest that kidnapping a

19

legislator —even as a symbolic gesture—is a permissible

way of communicating with the legislature. Nor should

anyone suggest that price fixing, or a group boycott, is

permissible even if its sole ultimate purpose is to attract

the legislature’s attention; the suggestion is particularly in-

apt if one of the objectives is to impose a direct restraint

independent of any restraint resulting from governmental

action.!’

In the present case, the court of appeals understood

(Pet. App. 9a n.3) that respondent prevailed because peti-

tioner engaged in conduct that constituted unlawful

restraint of trade without regard to the action of any

governmental body. The court reasoned that such conduct

did not become lawful under Noerr merely because one

foreseeable consequence of the 1981 NEC was that various

governmental bodies would adopt legislation that would

impose restraints of their own. That reasoning, we submit,

was correct.

The restraint of trade that respondent alleged in this

case was not the exclusion of respondent’s product from

local building codes but the actions of petitioner in ex-

cluding ENMT from the NEC.'*® Respondent contended,

inter alia, that this action injured it in jurisdictions that

permitted a product not listed in the NEC to be used. (For

instance, private organizations such as Underwriters

'? We are not here invoking the so-called “sham’ exception to the

Noerr doctrine. See 365 U.S. at 144. We assume that petitioner’s hope

that legislation would be adopted was both genuine and one of the

motivating forces. Our point is that activity that is unlawful on its own

terms is not made lawful by the fact that one of its motives is a desire

to influence the adoption of legislation.

Ԥ Petitioner therefore misses the point in arguing (Br. 39-41) that

the state action doctrine protects it from liability for its actions during

the 1980 NFPA meeting, on the ground that the doctrine “precludes

Sherman Act recovery for trade restraints imposed by, legislative

enactments.” Respondent was not awarded damages for that injury.

20

Laboratories rely on the NEC listing in evaluating and ap-

proving electrical products.) This injury appears to have

been measured by the jury here: The district court in-

structed the jury that in determining damages it could con-

sider the stigma of exclusion from the 1981 NEC and that

it could not award damages premised on any lobbying ac-

tivities on petitioner’s part (see Tr. 3264-3267); the jury, so

instructed, returned a $3.8 million damage award. '*

Petitioner’s claims (Br. 32-33) that it was pursuing a suc-

cessful “grass roots” lobbying campaign, that it was

“generat[ing] public pressure for or against. legislation,”

and that its activities were analogous to trade association

lobbying, simply ignore the fact that its conduct allegedly

included an unlawful restraint of trade that was complete

in itself without regard to any legislative response. Noerr

protects the right to seek governmental restraints on com-

petitors. It does not shield completed wrongs committed

on the way to the legislature. Cf. NAACP v. Claiborne

Hardware Co., 458 U.S. 886, 912-915 (1982) (“right of

business entities to ‘associate’ to suppress competition may

be curtailed”). ?°

'Y Petitioner ignores the effect of its actions on respondent in the

private arena when it claims (Br. 21, 22, 40-41) that its actions betore

the NFPA “did not in themselves have any anticompetitive effect” and

‘hat the injury to respondent, “if any, was caused by the adoption of

the NEC by the various state legislatures.”

20 In Claiborne Hardware, the Court noted that it did not need to

decide “the extent to which a narrowly tailored statute designed to

prohibit certain forms of anticompetitive conduct or certain types of

secondary pressure may restrict protected First Amendment activity.”

458 U.S. at_915 n.49. Sec also National Society of Professional

Engineers v. United States, 435 U.S. 679, 697-698 & n.27 (1978) (First

Amendment right of free speech and petition does not prevent en-

forcement of injunction prohibiting anticompetitive provision of an

industry code); California Motor Transport, 404 U.S. at 513-515

(First Amendment right of tree speech does not prohibit government

regulation of anticompetitive agreements); Giboney v. Empire Storage

& Ice Co., 336 U.S. 490, 497-504 (1949) (same).

21

Petitioner claims (Br. 25) that if it was to squelch com-

petition from ENMT it had to do so by excluding ENMT

from the NEC because in many jurisdictions lobbying

against the NEC is a fruitless endeavor. Even if that claim

were true,?! it would hardly justify affording petitioner

immunity. The fact that an activity obtains legislative

results does not prove that it is protected petitioning. In a

variety of similar contexts, commercial schemes for

dramatizing a cause and focusing governmental attention

have been found to violate the antitrust laws when they

restrain competition.?? Petitioner’s argument would im-

munize the adoption of private restraints, whether or not

reasonable, whenever the private parties developing them

hope and expect that at some future point their work prod-

uct will be adopted by one or more governmental entities.

The courts of appeals, however, have repeatedly rejected

2! It may well be exaggerated. The court of appeals pointed out that

more than half of the states and cities polled by petitioner amended

the NEC before adopting it or declined to adopt it at all (Pet. App.

18a-19a; id. at 4a-Sa n.1). That evidence undercuts petitioner’s claim

that lobbying local governments is fruitless.

22 See, e.g., Virginia Academy of Clinical Psychologists v. Blue

Shield of Virginia, 624 F.2d 476, 482 (4th Cir. 1980), cert. denied, 450

U.S. 916 (1981) (Blue Shield Plans’ collaboration in defiance of state

statute, which may have been designed to force the state to bring a

lawsuit that would produce a judicial resolution of the plans’

grievances, was not petitioning protected by Noerr); Osborn v.

Pennsylvania-Delaware Serv. Station Dealers Ass'n, 499 F. Supp. 553,

555-558 (D. Del. 1980) (service station owners’ joint refusal to serve

public, intended to force federal agency to amend price control regula-

tions, was not protected by Noerr); Superior Court Trial Lawyers

Ass'n, 107 F.T.C. 510 (1986), appeal pending, No. 86-1465 (D.C.

Cir.) (boycott by government-paid lawyers directed at obtaining

higher government payments not Noerr-protected). But see Crown

Central Petroleum Corp. v. Waidman, 486 F. Supp. 759 (M.D. Pa.),

rev'd on other grounds, 634 F.2d 127 (3d Cir. 1980).

22

claims of immunity for private restraints notwithstanding

the hope or expectation of governmental endorsement.??

Finally, petitioner argues (Br. 23, 31-35) that, unless

Noerr applies in this case, the fear of antitrust liability will

paralyze private standard-making organizations. That dire

prediction is based on questionable assumptions and, in

any event, is beside the point. Standard-making organiza-

tions present opportunities for collusive action to restrain

competition. If there are sound policy arguments for im-

munizing conduct before such organizations, those

arguments should be addressed to Congress.?* Petitioner's

conduct does not fit within the boundaries of the Noerr

doctrine, and that doctrine should not be distorted on the

basis on dubious policy arguments.

23 For example, the Second Circuit has held that the tariffs put into

effect by AT&T are not protected under Noerr simply because they

were filed with FCC. Litton Systems, Inc. v. AT&T, 700 F.2d 785,

806-809 (1983), cert. denied, 464 U.S. 1073 (1984). See also Mid- Texas

Communications Systems, Inc. v. AT&T, 615 F.2d 1372, 1382-1383

(Sth Cir.), cert. denied, 449 U.S. 912 (1980) (AT&T’s refusal to inter-

connect, made prior to FCC involvement, is not covered by Noerr),

City of Kirkwood v. Union Electric Co., 671 F.2d 1173, 1180-1181

(8th Cir. 1982), cert. denied, 459 U.S. 1170 (1983) (Noerr does not

cover all attempts to manipulate the government; filing of rate request

not covered by Noerr). The Fifth Circuit has held that communica-

‘ions within medical review committees are not protected by Noerr,

even though a committee’s recommendations may be adopted by a

state board. Feminist Women’s Health Center, Inc. v. Mohammad,

$86 F.2d at 545. Cf. Cantor v- Detroit Edison Co., 428 U.S. 579,

601-602 (1976) (plurality opinion) (privately-developed utility

marketing program filed as a tariff with a state public service commis-

sion is not within the scope of Noerr immunity, where pro foriia state

approval “amounts to little more than approval of a private

proposal”).

24 Similar arguments have frequently been made to Congress by a

variety of industries. In some cases, Congress found those arguments

persuasive and enacted legislation to alter the statutory regime. See,

e.g., National Cooperative Research Act of 1984, 15 U.S.C. (& Supp.

1V) 4301 et seg.; Newspaper Preservation Act, 15 U.S.C. 1801 e/ seq.;

23

Virtually all private conimercial conduct is subject to

antitrust scrutiny. Far from paralyzing such conduct, the

antitrust laws, when properly applied, facilitate commer-

cial conduct that benefits the public by inhibiting

unreasonable private restraints of trade. There is no

reason to believe that subjecting private standard-making

organizations to the antitrust laws will paralyze them.?°

Moreover, the record of antitrust enforcement in this area

refutes petitioner’s claim that standard-making -organiza-

tions will be “chilled” unless they are afforded immunity.

Private litigants have brought Sherman Act claims against

such organizations and their participants for decades.?°

Yet the private standard-making system has blossomed

from nearly 14,000 active standards in 1964 to approx-

imately 30,000 standards today.?’

Local Government Antitrust Act of 1984, 15 U.S.C. (& Supp. IV) 34

et seq. Congress rarely grants an industry an automatic, outright im-

munity. See Health Care Quality Improvement Act of 1986, Pub. L.

No. 99-660, 100 Stat. 3784 (to be codified at 42 U.S.C. 11101-11152)

(immunity from certain damage actions). Most often, Congress does

not act On a request for immunity.

25 Petitioner asserts (Br. 25-26) that although it has the alternative

of direct petitioning of state and local governments, this is “at best ir-

relevant under Noerr.” In fact, the availability of alternative means of

asserting First Amendment rights is a consideration in evaluating the

reasonableness of government restrictions on such rights. E.g., Pell v.

Procunier, 417 U.S. 817, 824 (1974).

26 E.g., American Society of Mechanical Engineers v. Hydrolevel

Corp., supra; Structural Laminates, Inc. v. Douglas Fir Plywood

Ass'n, 399 F.2d 155 (9th Cir. 1968), cert. denied, 393 U.S. 1024

(1969); United States v. National Malleable & Steel Castings Co., 1957

Trade Cas. 4 68, 890 (N.D. Ohio 1957), aff'd per curiam, 358 U.S. 38

(1958).

27 Hearings on S.J. Res. 33 Before the Consumer Subcom. of the

Senate Comm. on Commerce, 90th Cong., Ist Sess. 14 (1967); Nat'l

Bureau of Standards, NBS/IR 87-3576, The ABC's of Standards-

Related Activities in the United States | (May 1987).

24

Private standard-making organizations play an impor-

tant role in the marketplace. But as this Court observed in

Hydrolevel, such organizations may have power that can

“ ‘result in economic prosperity or economic failure, for a

number of businesses of all sizes throughout the country,’

as well as entire segments of an industry.” 456 U.S. at 570

(quoting H.R. Rep. 1981, 90th Cong., 2d Sess. 75 (1968)).

Private standard-making also “can be rife with oppor-

tunities for anticompetitive activity” (456 U.S. at 571), in

part because the proceedings of such organizations are

conducted in private and are not open to public scrutiny.

Compare Town of Hallie v. City of Eau Claire, 471 U.S.

at 45 n.9. Application of the antitrust laws to standard-

making organizations is necessary to assure the survival of

competitive conditions in those industries that engage in

such activities.2* Petitioner’s argument that private

standard-making should be immunized from the antitrust

laws should be addressed to Congress, which alone has the

power to grant the exemption that petitioner seeks. Na-

tional Society of Professional Engineers v. United States,

435 U.S. 679, 689 (1978).

2’ The NFPA has already amended its rules to prevent a similar

subversion of its procedures. Thus, contrary to the Sessions’ court’s

concerns (827 F.2d at 463-464), subjecting the conduct of members of

standard-making organizations to antitrust scrutiny will not interfere

with the free flow of information to state and municipal governments.

Nor is it likely that the possibility of antitrust liability of members of

standard-making organizations will discourage these groups from

continuing their useful contributions, given the substantial commer-

cial benefits of uniform industry standards. See, e.g., Howe &

Badger, The Antitrust Challenge to Non-profit Certification

Organizations, 60 Wash. U.L.Q. 357, 377-380 (1982).

— A ll en

a en

25

CONCLUSION

The judgment of the court of appeals that petitioner’s

actions are not entitled to Noerr immunity should be af-

firmed.

Respectfully submitted.

CHARLES FRIED

Solicitor General

CHARLES F. RULE

Assistant Attorney General

Louis R. COHEN

Deputy Solicitor General

KENNETH G. STARLING **

Deputy Assistant Attorney General

PAUL J. LARKIN, JR.

Assistant to the Solicitor General

ROBERT B. NICHOLSON

ROBERT D. PAUL JOHN J. POWERS, III

General Counsél MARION L. JETTON

ERNEST J. ISENSTADT Attorneys

Assistant General Counsel

DEAN C. GRAYBILL

FREDERICK E. DOOLEY, JR.

Altorneys

Federal Trade Commission

DECEMBER 1987

+s US GOVERNMENT PRINTING OFFICE 1987— 202-037/60212