Ernest W. Hahn, Inc. v. Codding
Decision Date | 22 December 1976 |
Docket Number | No. C-75-2706 WWS,C-76-2424 WWS.,C-75-2706 WWS |
Citation | 423 F. Supp. 913 |
Court | U.S. District Court — Northern District of California |
Parties | ERNEST W. HAHN, INC., a corporation, Plaintiff, v. Hugh B. CODDING and Codding Enterprises, a corporation, Defendants. CODDING ENTERPRISES, a corporation, Plaintiff, v. ERNEST W. HAHN, INC., a corporation, Defendant. |
Michael N. Khourie, Broad, Khourie & Schulz, San Francisco, Cal., William N. Willens, Barrett, Stearns, Collins, Gleason & Kiney, Torrance, Cal., for Ernest W. Hahn, Inc.
Shovlin & Babin, Richard J. Archer, Sullivan, Jones & Archer, San Francisco, Cal., William J. Smith, Santa Rosa, Cal., for Hugh B. Codding and Codding Enterprises.
ORDER DISMISSING COMPLAINTS
In view of the recent decision of the Ninth Circuit in Franchise Realty Interstate Corp. v. San Francisco Culinary Workers, 542 F.2d 1076 (1976), this Court issued an order directing plaintiffs in Hahn v. Codding, C-75-2706, and Codding v. Hahn, C-76-2424 ( ), to show cause why their complaints should not be dismissed.1 Responsive to the order, each side has submitted briefs, and factual material, and has moved to dismiss the other's complaint.
In this action, plaintiff Hahn, a developer and operator of shopping centers, sues defendant Codding, a competing developer and operator, for violation of the antitrust laws. The substance of the antitrust charges is found in paragraphs 12 and 14 of the complaint:
The complaint further alleges that as a proximate result of this conduct:
Hahn's complaint attempts to state a claim for a violation of the antitrust laws under the "sham" exception of the Noerr-Pennington2 doctrine. Those cases established that joint efforts to influence public officials, activities which by their very nature are protected by the First Amendment, do not violate the antitrust laws even though they may have as their object the elimination of competition. Noerr recognized in dictum that under certain circumstances a campaign to influence the decisions of public officials may be a "mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationships of a competitor and the application of the Sherman Act would be justified." 365 U.S. at 144, 81 S.Ct. at 533.
The decision in California Motor Transport v. Trucking Unlimited, 404 U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972), created a further exception to the Noerr protection of First Amendment activity. In Trucking, the Supreme Court held that a complaint, alleging that a group of the largest trucking companies in California had conspired to protest every application for competing operating authority by smaller truckers before the State Public Utilities Commission and the Interstate Commerce Commission, stated a violation of the Sherman Act. The Trucking Court focused upon the "critical" allegations that the resources of the large trucking firms were used to deny the respondents "free and unlimited access" to the administrative tribunals. The result was that the group of large truckers effectively assumed the power of the license-granting agencies, thus enlarging the group's monopoly power. Id., 404 U.S. at 518, 92 S.Ct. 609.
The Franchise decision, supra, analyzed the "sham" and Trucking Unlimited exceptions to the principle of Noerr-Pennington. Judge Duniway concluded that the "sham" exception was limited to situations in which "the defendant is not seeking official action by a governmental body, so that the activities complained of are `nothing more' than an attempt to interfere with the business relationships of a competitor." (At p. 1081.) To state a claim for relief under the Trucking Unlimited exception, the complaint must allege specific activities not protected under the Noerr-Pennington doctrine which have barred plaintiff's access to a governmental agency. (At p. 1082.) The court made clear that conclusory allegations of access bar were not enough, since a complaint which could survive motions to dismiss because such a conclusory allegation was pleaded might deter a competitor from presenting its views in the public forum. (At p. 1082.)
It is clear that the allegations in this complaint do not fall within the "sham" exception to Noerr. Defendants are alleged to have begun "baseless" litigation whose only purpose was the delay or frustration of the project. Whatever their motives in instituting the actions, defendants were obviously seeking official action by a governmental body. By its very nature, litigation is a process which seeks official decision — a determination on the merits of the action by a court. Indeed, such litigation seems almost a necessary outgrowth of large scale urban redevelopment projects such as the proposed Santa Rosa shopping center at issue here. A wide range of laws giving standing to various interests have been created by legislatures in recent years to afford project opponents just such access to the courts.
Even if defendants had an anticompetitive motive in instituting the lawsuits complained of here, that itself is not sufficient to state a violation of Sherman Act Sec. 1. Plaintiff argues that Otter Tail Power Co. v. United States, 410 U.S. 366, 93 S.Ct. 1022, 35 L.Ed.2d 359 (1973), on remand, 360 F.Supp. 451 (D.Minn.1973), aff'd mem., 417 U.S. 901, 94 S.Ct. 2594, 41 L.Ed.2d 207 (1974), established such a claim. In that case, brought under Section 2 of the Sherman Act, 15 U.S.C. Sec. 2, Otter Tail was charged with monopolizing and attempting to monopolize the retail distribution of electric service by refusing to sell power at wholesale rates to municipal power systems; refusing to "wheel" power to those systems; instituting and supporting litigation to prevent or delay the establishment of municipal systems; and denying the municipal systems access to other suppliers. On appeal from the District Court decision, the Supreme Court remanded the litigation issue in light of Trucking Unlimited, supra, and stated, without so holding, that the Sherman Act "may also apply to the use of administrative and judicial process where the purpose to suppress competition is evidenced by repetitive lawsuits carrying the hallmark of insubstantial claims ..." 410 U.S. at 380, 93 S.Ct. at 1031. On remand, the District Court held that the repetitive filing of litigation, which frustrated the sale of revenue bonds to finance the municipal systems, was intended to prevent the establishment of such municipal systems and to preserve the defendant's monopoly position. 360 F.Supp. 451, 451-452 (D.Minn.1973). As Judge Duniway wrote in Franchise, supra, the gravamen of the complaint in Otter Tail was not the instigation of litigation, per se, but the threat of the use of judicial proceedings to retain monopoly power. (At p. 1084.) Moreover, there the litigation did not stand alone but was a part of a course of conduct which included monopolistic practices clearly outside the scope of the protection of the First Amendment.3
The most plaintiff has alleged here is that litigation was instituted for an anticompetitive purpose. But an...
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