Baltimore Scrap Corp. v. David J. Joseph Co.
| Decision Date | 06 January 2000 |
| Docket Number | No. CIV. L-96-827.,CIV. L-96-827. |
| Citation | 81 F.Supp.2d 602 |
| Parties | BALTIMORE SCRAP CORPORATION v. THE DAVID J. JOSEPH CO., et al. |
| Court | U.S. District Court — District of Maryland |
Charles S. Hirsch (Ballard, Spahr, Andrews & Ingersoll, LLP), Baltimore, MD, and Carl W. Hittinger (Stevens & Lee), Philadelphia, PA, for plaintiff.
Robert J. Carson and Gary Ralph Jones (Baker & Baker), Baltimore, MD, and G. Jack Donson (Taft, Stettinius & Hollister), Cincinnati, OH, for defendant The David J. Joseph Co., t/a United Iron & Metal Co.
Thomas M. Wood, IV. and John J. Kuchno (Neuberger, Quinn, Gielen, Rubin & Gibber, PA), Baltimore, MD, for movant United States Holdings Co., Inc.
This is an antitrust suit. Before this Court are the defendants' motions for summary judgment. Because the parties have extensively briefed the issues, the Court will dispense with a hearing. See Local Rule 105.6 (D.Md.1999). For the reasons stated herein, the Court will, by separate Order, grant the defendants' motions and close the case.
Because of the complexity of the facts, a brief introduction may be useful. In 1991, the plaintiff, the Baltimore Scrap Company, ("Baltimore Scrap" or "BSC"),1 proposed installing a new scrap metal shredder in the Fairfield section of Baltimore City. The proposal required zoning approval from the City. A coalition of citizens groups openly opposed the shredder on environmental grounds. The defendants,2 who owned an existing shredder and did not welcome the competition, secretly set about to thwart BSC's zoning application.
After initially rejecting it, the Board of Municipal Zoning Appeals (BMZA) approved Baltimore Scrap's application on August 6, 1992. The defendants had standing to appeal the BMZA's decision to the Circuit Court for Baltimore City. The defendants were concerned, however, that an appeal in their name, a competitor with a spotty environmental track record, would lack credibility.3 The defendants decided that bankrolling an appeal by a citizens group, while masking their own involvement, presented a better strategy.
To carry out their plans, the defendants contacted an attorney and offered to pay him if he were, in turn, approached by the citizens groups. An employee of one of the defendants' subsidiaries (Marlen Trading Company), posing as a "concerned local business," approached the citizens groups, offering that if the citizens wished to pursue an appeal of the BMZA decision, Marlen would pay their legal costs, including attorneys' fees. The employee also steered the citizens to the attorney whom the defendants had already contacted. The citizens groups accepted the offer. Neither Marlen nor the attorney told the citizens that the defendants, rather than an environmentally concerned local business, were behind the appeal.
Over the next seven months, the defendants were actively, albeit clandestinely, involved in the citizens' appeal. The defendants paid the bills, reviewed the pleadings, and suggested strategies. Eventually, however, the defendants' involvement in the zoning litigation came to light through what the parties refer to as the "errant fax."
Ultimately, Baltimore Scrap's application was successful and its shredder was built. BSC argues, however, that the appeal delayed the installation of the shredder by approximately eighteen months. Claiming fraud and violation of the antitrust laws, the plaintiff filed the instant suit.
The Court finds the defendants' actions deceitful and underhanded. This is a conclusion reached not only by this Court, but also by the defendants' own antitrust attorney. Concerned that their secret role in the zoning appeal might expose them to antitrust liability, the defendants consulted Richard Wertheimer, a partner at the Washington, DC law firm of Arnold & Porter. Wertheimer advised the defendants that their actions, while probably not illegal, were unworthy of a respectable business.
Although morally wrong, the defendants' disguised role in the zoning appeal was not illegal. Under the Noerr-Pennington doctrine, a company may, even secretly and for anticompetitive purposes, sponsor a lawsuit against a competitor, so long as the lawsuit is neither a sham, meaning that it is not objectively baseless, nor fraudulent.
The appeal was not sham litigation. Although ultimately unsuccessful, the citizens' appeal raised bona fide legal issues, including (i) whether the citizens had standing to appeal, and (ii) whether the BMZA had used the appropriate legal standard in authorizing a zoning permit for the new shredder.
Nor do the defendants' actions add up to fraud. The errant fax unmasked the defendants' involvement in the litigation before the Circuit Court for Baltimore City had issued its final decision. Baltimore Scrap has not shown that the litigation would have been shorter had the courts known from the outset that the defendants were clandestinely financing and advising the appeal. Nor is there evidence that any judicial rulings were predicated upon the misassumption that the citizens, and the citizens alone, were pressing the appeal.
This Opinion is not meant to condone the defendants' tactics. The Court agrees with Attorney Wertheimer that the defendants' actions were unworthy of a legitimate business. At the same time, however, the Court finds that the defendants' actions fell short of violating the antitrust laws.
A. Litigation Timeline
The following summarizes the major events in the history of the zoning litigation:
July 1991: Baltimore Scrap Company leased Carbon Avenue
junk yard site
November 25, 1991: BMZA rejected BSC's application for a construction
permit. Vote was 3-1 in favor of
issuing the permit, but four votes were required
for approval
August 6, 1992: BMZA approved BSC's second application
for a construction permit. The Board found
the second application substantially different
from the first. The language of the Board's
decision appeared to classify the proposed
shredder as a material recovery facility
(MIRF). Such a classification would be incorrect
because a MIRF: (i) is not authorized
to accept certain types of metal which
the shredder was to process, and (ii) must be
contained in an enclosed facility
August 27, 1992: Citizens groups, represented by David Irwin
filed an appeal of the BMZA's decision in the
Circuit Court for Baltimore City
October 13, 1992: Gloria Sipes moved to intervene as a plaintiff
in the zoning appeal. Shortly thereafter,
BSC moved to dismiss the zoning appeal,
arguing the citizens groups lacked standing
and Sipes's Motion to Intervene was time-barred.
December 7, 1992: Hearing on procedural motions held before
Judge Thomas Ward. Judge Ward granted
Ms. Sipes's Motion to Intervene and denied
BSC's Motion to Dismiss.
January 7, 1993: Hearing on the merits of the zoning appeal
held before Chief Judge Robert I.H. Hammerman.
Chief Judge Hammerman approved
of Judge Ward's procedural rulings.
He further ruled that substantial evidence
supported the Board's conclusion that the
1992 application was substantially different
from the first. He remanded the case to the
BMZA, however, so that the Board could
explain why it had classified the shredder as
a MIRF.
February 25, 1993: Hearing before Chief Judge Hammerman on
Baltimore Scrap's motion to alter or amend
judgment. BSC produced the Gadhia affidavit.
The affidavit stated that: (i) the Board's
reference to the MIRF provisions was unintentional;
and (ii) the BMZA made a clerical
error in classifying the proposed shredder as
a MIRF. According to Gadhia, the shredder
should have been considered a structural alteration
to a junk yard conditional use. With
this correction, the BMZA's decision was now
internally consistent and correct, Gadhia explained.
March 1, 1993: Chief Judge Hammerman accepted the Gadhia
affidavit even though it was not part of
the administrative record, and was written
after the record had been transmitted to the
Circuit Court for Baltimore City. Chief
Judge Hammerman decided that the Gadhia
affidavit cured the inconsistencies in the
BMZA decision. Accordingly, he granted
BSC's motion to alter or amend judgment by
(i) not remanding the case to the BMZA, and
(ii) affirming the BMZA's decision.
March 24, 1993: The involvement of the defendants was first
exposed with the transmission of the errant
fax.
March 25, 1993: The citizens groups moved to stay enforcement
of Chief Judge Hammerman's ruling
pending appeal to Court of Special Appeals.
April 3, 1993: Irwin met with leaders of the citizens groups
and revealed the identity of their benefactors.
After discussion, the citizens
...To continue reading
Request your trial
-
People ex rel. Gallegos v. Pacific Lumber
...efforts, not its prior fraudulent submission, led to the adoption of the less restrictive plan. (See Baltimore Scrap Corp. v. David J. Joseph Co. (D.Md.2000) 81 F.Supp.2d 602, 619 [administrative proceedings were not deprived of legitimacy by the alleged fraud for purposes of Noerr-Penningt......
-
Virginia Vermiculite v. W.R. Grace & Co.-Conn.
...attendant upon effective litigation."); and concerted efforts to petition permitting boards, see Baltimore Scrap Corp. v. David J. Joseph Co., 81 F.Supp.2d 602, 603 (D.Md.2000) (holding that Noerr-Pennington immunity extends to anticompetitive, clandestine attempts to contest the granting o......
-
Eurotech v. Cosmos European Aktiengesellschaft
...(applying Noerr-Pennington protection to claims of tortious interference with business relationships); Baltimore Scrap Corp. v. David J. Joseph Co., 81 F.Supp.2d 602, 620 (D.Md.2000), aff'd, 237 F.3d 394 (4th Cir.2001) (holding that Noerr-Pennington immunity applies to common law claims); T......
-
Mikeron, Inc. v. Exxon Co., U.S.A.
...11-204 claim because summary judgment was granted on similar Robinson-Patman Act claim). See also Baltimore Scrap Corp. v. The David J. Joseph Co., 81 F.Supp.2d 602, 620 (D.Md.2000) (granting summary judgment on state law antitrust claim because claim under similar federal antitrust law fai......
-
Maryland
...the Gen. v. Anne Arundel County Sch. Bus Contractors Ass’n, 407 A.2d 749 (Md. 1979). 264. Balt. Scrap Corp. v. David J. Joseph Co., 81 F. Supp. 2d 602, 620 (D. Md. 2000), aff’d , 237 F.3d 394 (4th Cir. 2001). 265. Maryland v. Philip Morris, Inc., 934 F. Supp. 173 (D. Md. 1996). 266. Id. at ......
-
Maryland. Practice Text
...Att’y Gen. v. Anne Arundel County Sch. Bus Contractors Ass’n, 407 A.2d 749 (Md. 1979). 264. Balt. Scrap Corp. v. David J. Joseph Co., 81 F. Supp. 2d 602, 620 (D. Md. 2000), aff’d , 237 F.3d 394 (4th Cir. 2001). 265. Maryland v. Philip Morris, Inc., 934 F. Supp. 173 (D. Md. 1996). 266. Id. a......
-
General Exemptions and Immunities
...that dictum in Liberty Lake is “good law . . . at least where the fraud is intentional”); Baltimore Scrap Corp. v. David J. Joseph Co., 81 F. Supp. 2d 602, 617 (D. Md. 2000) (adopting Liberty Lake’s “core of a lawsuit’s legitimacy” standard), aff’d , 237 F.3d 394 (4th Cir. 2001). 195. See N......
-
Table of Cases
...States v. Bessemer & Lake Erie R.R., 717 F.2d 593 (D.C. Cir. 1983), 1098, 1099, 1665 Baltimore Scrap Corp. v. David J. Joseph Co., 81 F. Supp. 2d 602 (D. Md. 2000), aff ’ d, 237 F.3d 394 (4th Cir. 2001), 1431, 1439 Bamford v. Hobbs, 569 F. Supp. 160 (S.D. Tex. 1983), 1352, 1353 Bam; United ......