Baltimore Scrap Corp. v. The Joseph Co.

• Decision Date: 01 November 2000
• Docket Number: No. 00-1141,00-1141
• Citation: 237 F.3d 394
• Parties: (4th Cir. 2001) BALTIMORE SCRAP CORPORATION, formerly known as Brooklyn Salvage Corporation, Plaintiff-Appellant, v. THE DAVID J. JOSEPH COMPANY, t/a United Iron & Metal Company; DAVID J. WORKUM, III; JOHN DOES 1-10; I. D. SHAPIRO; JAMES SHAPIRO; CHARLES BAUM; UNITED HOLDINGS COMPANY, INCORPORATED; UNITED OPERATING COMPANY, INCORPORATED; UNITED INVESTMENT ENTERPRISES PARTNERSHIP, Defendants-Appellees. FRANCIS X. DUGGAN; RICH & HENDERSON, PC; DONALD LEVENSON; MARLEN TRADING COMPANY; ISAAC M. NEUBERGER; THOMAS M. WOOD, IV; WARREN K. RICH; TIMOTHY R. HENDERSON; DAVID B. IRWIN, Movants. . Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 394

237 F.3d 394 (4th Cir. 2001)

BALTIMORE SCRAP CORPORATION, formerly known as Brooklyn Salvage Corporation, Plaintiff-Appellant, v. THE DAVID J. JOSEPH COMPANY, t/a United Iron & Metal Company; DAVID J. WORKUM, III; JOHN DOES 1-10; I. D. SHAPIRO; JAMES SHAPIRO; CHARLES BAUM; UNITED HOLDINGS COMPANY, INCORPORATED; UNITED OPERATING COMPANY, INCORPORATED; UNITED INVESTMENT ENTERPRISES PARTNERSHIP, Defendants-Appellees.

FRANCIS X. DUGGAN; RICH & HENDERSON, PC; DONALD LEVENSON; MARLEN TRADING COMPANY; ISAAC M. NEUBERGER; THOMAS M. WOOD, IV; WARREN K. RICH; TIMOTHY R. HENDERSON; DAVID B. IRWIN, Movants.

No. 00-1141.

UNITED STATES COURT OF APPEALS, FOR THE FOURTH CIRCUIT.

Argued: November 1, 2000.

Decided: January 18, 2001.

Appeal from the United States District Court for the District of Maryland, at Baltimore.

Benson E. Legg, District Judge. (CA-96-827-L)

[Copyrighted Material Omitted] COUNSEL: ARGUED: Lewis A. Noonberg, PIPER, MARBURY, RUDNICK & WOLFE, L.L.P., Baltimore, Maryland, for Appellant.

G. Jack Donson, TAFT, STETTINIUS & HOLLISTER, L.L.P., Cincinnati, Ohio; Carter G. Phillips, SIDLEY & AUSTIN, Washington, D.C., for Appellees.

ON BRIEF: Kathleen A. Ellis, PIPER, MARBURY, RUDNICK & WOLFE, L.L.P., Baltimore, Maryland; Charles S. Hirsch, Robert A. Scott, BALLARD, SPAHR, ANDREWS & INGERSOLL, L.L.P., Baltimore, Maryland, for Appellant. Daniel R. Warncke, TAFT, STETTINIUS & HOLLISTER, L.L.P., Cincinnati, Ohio; Robert J. Carson, Gary R. Jones, Baltimore, Maryland, for Appellees; Thomas M. Wood, IV, Allan P. Hillman, NEUBERGER, QUINN, GIELEN, RUBIN & GIBBER, P.A., Baltimore, Maryland, for Appellees.

Before WILKINSON, Chief Judge, WILLIAMS, Circuit Judge, and Frank J. MAGILL, Senior Circuit Judge of the United States Court of Appeals for the Eighth Circuit, sitting by designation.

Affirmed by published opinion. Chief Judge Wilkinson wrote the opinion, in which Judge Williams and Senior Judge Magill joined.

OPINION

WILKINSON, Chief Judge:

This antitrust case stems from a protracted dispute over Baltimore Scrap Corp.'s attempt to install a scrap metal shredder in Baltimore, Maryland in 1991. Baltimore Scrap alleges that the defendants violated the Sherman Act, 15 U.S.C. S 1 (1994), by surreptitiously financing litigation in state court in order to prevent or delay Baltimore Scrap's entry into the market. The defendants argue that the Noerr-Pennington doctrine immunizes those who petition the courts from antitrust liability. The district court ruled that although the defendants' conduct was wrong, it was nonetheless protected by Noerr-Pennington. See Baltimore Scrap Corp. v. The David J. Joseph Co., 81 F. Supp.2d 602, 603 (D. Md. 2000). Because neither the sham exception nor the fraud exception to Noerr-Pennington immunity applies here, we affirm the judgment of the district court.

I.

On July 15, 1991, Baltimore Scrap leased land in the city of Baltimore in order to install a metal shredder there. Baltimore Scrap's proposed shredder caused great concern among two groups. The first was comprised of citizen associations of Baltimore who opposed the shredder on environmental grounds. These organizations voiced their opposition to the Maryland Department of Environment and to the Mayor of Baltimore in August of 1991.

The defendants, including The David J. Joseph Co. (DJJ), I.D. Shapiro, and the Shapiro family, composed the second group. The defendants controlled the only other metal shredder in the Baltimore area. DJJ and Shapiro wanted to ensure that their shredder maintained its monopoly in that area. Unlike the citizen groups, however, DJJ and Shapiro did not publicly voice their concerns about Baltimore Scrap's proposed shredder. Indeed, until their role was inadvertently revealed in late March of 1993, the defendants' plan to prevent Baltimore Scrap from building a shredder was a closely-guarded secret.

In September of 1991, Baltimore Scrap applied for a zoning permit from the Baltimore City Board of Municipal and Zoning Appeals. In November, the leaders of the citizen groups testified against the permit. One week later, the Board denied Baltimore Scrap's application. Baltimore Scrap appealed this decision to the Baltimore City Circuit Court, which upheld the Board.

In May of 1992, Baltimore Scrap filed a new zoning application with the Board. Because the Baltimore zoning code does not allow the Board to consider "substantially the same proposal" until twelve months after the previous application was denied, Baltimore Scrap changed its application to add new protections against soil contamination at the site. The Board ruled that the application was different enough to warrant a new hearing even though twelve months had not elapsed since the previous denial of a permit. The Board then approved a permit for Baltimore Scrap on August 6, 1992.

At this point, Shapiro decided to secretly fight the approval of the permit. Shapiro's attorney contacted another lawyer, David Irwin, to handle the appeal. An employee from a different company co-owned by Shapiro contacted Gloria Sipes. Sipes was the president of one of the citizen groups, the Community of Curtis Bay Association. The employee told Sipes that local businesses would pay for an attorney if the citizen groups wanted to appeal the Board's decision. The employee told Sipes to contact David Irwin for the appeal. The caller did not reveal her identity, or who she represented. Sipes consulted with the other citizen groups, and they decided to accept the support of their unknown benefactor. The citizen organizations did not ask who was funding the appeal and "did not care" who paid the lawyer.

Irwin filed his appeal on behalf of the citizen groups on August 27, 1992. Irwin understood that DJJ and Shapiro controlled the appeal. Baltimore Scrap moved to dismiss the appeal based upon the citizen groups' lack of standing. After the statutory appeal period expired, Sipes moved to intervene in the lawsuit as an individual party. Judge Ward of the Baltimore City Circuit Court ruled that the citizen groups and Sipes all had standing, and granted Sipes' motion to intervene. He thus denied Baltimore Scrap's motion to dismiss.

Chief Judge Hammerman, also of the Baltimore City Circuit Court, heard the citizen groups' appeal on the merits on January 7, 1993. He agreed with Judge Ward that Sipes' motion to intervene was timely. After originally ruling for the citizen groups on the merits, Chief Judge Hammerman eventually affirmed the Board's decision to grant Baltimore Scrap a permit once the Board clarified a technical point. The citizen groups filed a motion with Chief Judge Hammerman to stay his decision pending appeal.

Throughout this time, DJJ and Shapiro left no public trace of their involvement in the lawsuit. In late March, however, a so-called "errant fax" exposed the role of the defendants. This fax was supposed to go to a lawyer working for DJJ and Shapiro, but instead was sent to a friend of Baltimore Scrap's president. On April 3, Irwin met with representatives from the citizen groups involved in the lawsuit. He told them that DJJ and Shapiro were funding the litigation. He asked them whether they wanted to continue with the appeal. The citizen groups decided to keep pursuing the appeal, despite the knowledge of DJJ and Shapiro's involvement.

Baltimore Scrap argued in its opposition to the motion to stay that the lawsuit was a fraud because DJJ and Shapiro were the real parties in interest. Irwin responded in his pleadings that the notion that the defendants directed the conduct of this case or drafted the previous motion was "preposterous, inflammatory, and not based in reality." Irwin emphasized in open court during an April 23 hearing on the motion to stay that the citizen groups were the only parties he represented. When Chief Judge Hammerman questioned Irwin about the errant fax, Irwin told the judge that nothing in the errant fax "says my law firm is involved with" DJJ and Shapiro. Irwin stated to the court, "I continue to deny, as my papers do, that I am representing anyone but the people represented here." Chief Judge Hammerman denied Irwin's motion to stay because he thought that the citizen groups did not have a likelihood of success on appeal. In reaching this decision, Chief Judge Hammerman observed that he saw the hand of the defendants in the lawsuit, and that "they have gone from the role of an interested observer to the role of an active participant."

Despite the denial of the motion to stay, the citizen groups appealed to the Maryland Court of Special Appeals. In a twelve-page opinion, the Court of Special Appeals denied the appeal. See Sipes v. Board of Municipal and Zoning Appeals, 635 A.2d 86 (Md. Ct. Spec. App. 1994). It called the case "dead on arrival in the circuit court" because the citizen groups did not have standing since they were neither an aggrieved party nor a taxpayer. Id. at 97; accord id. at 89. Although Sipes as an individual did have standing, her motion to intervene was time-barred as a logical extension of the citizen groups' lack of standing. Id. at 94. The citizen groups did not pursue an appeal from this decision. Baltimore Scrap's shredder became fully operational in July, 1993.

Baltimore Scrap sued DJJ, the Shapiro family, and the Shapiro family's companies. The complaint alleged violations of the Sherman Act, 15 U.S.C. S 1, violations of Maryland antitrust law, Md. Code Ann. Com. Law. II SS 11-204 et seq., and various state common law tort claims including malicious use of process, abuse of process, and fraud. The district court found that the defendants' actions were "deceitful," "underhanded," and "morally wrong." Baltimore Scrap Corp., 81 F. Supp.2d at 603. Nevertheless, the district court dismissed Baltimore Scrap's claims because of the defendants' NoerrPennington immunity. See id. Baltimore Scrap now appeals.

II.

The Noerr-Pennington doctrine guarantees citizens their First Amendment...