Cardtoonns v. Major League Baseball Ass'n

• Decision Date: 07 April 2000
• Docket Number: No. 98-5061,98-5061
• Citation: 208 F.3d 885
• Parties: (10th Cir. 2000) CARDTOONS, L.C., an Oklahoma Limited Liability Company, Plaintiff - Appellant, v. MAJOR LEAGUE BASEBALL PLAYERS ASSOCIATION, an unincorporated association, Defendant - Appellee
• Court: U.S. Court of Appeals — Tenth Circuit

Page 885

208 F.3d 885 (10th Cir. 2000)

CARDTOONS, L.C., an Oklahoma Limited Liability Company, Plaintiff - Appellant, v. MAJOR LEAGUE BASEBALL PLAYERS ASSOCIATION, an unincorporated association, Defendant - Appellee.

No. 98-5061

UNITED STATES COURT OF APPEALS TENTH CIRCUIT

April 7, 2000

ON REHEARING EN BANC APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA (D.C. No. CV-93-576-E)

James W. Tilly (and Craig A. Fitzgerald, with him on the briefs), Tilly & Fitzgerald, Tulsa, Oklahoma, for Plaintiff - Appellant.

Russell S. Jones, Jr. (and William E. Quirk, Shughart, Thomson & Kilroy, P.C., Kansas City, Missouri, and James W. Weger, Jones, Givens, Gotcher & Bogan, Tulsa, Oklahoma, with him on the briefs), for Defendant - Appellee.

Before SEYMOUR, Chief Judge, TACHA, BALDOCK, BRORBY, EBEL, KELLY, HENRY, BRISCOE, LUCERO, and MURPHY, Circuit Judges.

KELLY, Circuit Judge.

This case requires us to determine whether threats of litigation between purely private parties in a non-antitrust setting are immunized from liability under the Noerr-Pennington doctrine or under the right to petition clause of the First Amendment. Because purely private threats do not constitute a petition to the government, we hold that they are not constitutionally protected.

Background

The facts are undisputed. In 1992, Cardtoons, L.C. ("Cardtoons"), an Oklahoma limited liability company, took steps to produce parody baseball trading cards which contained the images of major league baseball players. After the cards were designed, Cardtoons contracted with Champs Marketing, Inc. ("Champs"), an Ohio corporation, to print the cards for a set fee.

Major League Baseball Players Association ("MLBPA") is the exclusive collective bargaining agent for all active major league baseball players and is responsible for enforcing the publicity rights of the players. In a June 18, 1993 letter to Cardtoons ("Cardtoons letter"), the MLBPA claimed that by producing and selling the cards, Cardtoons was "violat[ing] the valuable property rights of MLBPA and the players." I R. at 8. The MLBPA threatened to "pursue its full legal remedies to enforce its rights" if Cardtoons did not immediately cease production of the cards. Id. at 9.

On the same date, the MLBPA also sent a similar cease and desist letter to Champs (the Champs letter). It is this letter that is the source of the present controversy. In pertinent part, it stated:

We understand that you have and are in the process of printing color drawings of active Major League baseball players in baseball trading cards for individuals associated with Cardtoons. This is to notify you that we believe that the activities of those individuals violate the valuable property rights of publicity of the MLBPA and the players themselves. Further, we believe that by printing the baseball trading cards at the request of Cardtoons, you are participating in Cardtoons' illegal activities.

Accordingly, we request that you immediately cease and desist the printing of baseball trading cards of active Major League baseball players at the request of Cardtoons or others who are not authorized to use the likeness of active Major League baseball players.

If I do not hear from you immediately confirming that you will agree to this request, I will have no alternative but to take all necessary action to enforce the rights of the players and the MLBPA against infringement of their rights.

Id. at 10, 10A. Upon receiving the letter, Champs informed Cardtoons that it intended to stop printing the cards.

On June 22, 1993, Cardtoons filed suit in federal district court seeking a declaratory judgment that its cards did not violate MLBPA's publicity rights and also seeking damages based on alleged tortious interference with the Champs contract. MLBPA moved to dismiss for lack of subject matter jurisdiction and filed counterclaims seeking declaratory and injunctive relief, as well as damages for violation of its publicity rights. The court bifurcated the proceedings to first resolve Cardtoons' declaratory judgment request, finding that the damages issues were dependent upon the legality of the parody cards.

The district court initially adopted a magistrate judge's recommendations and ruled in favor of the MLBPA. See Cardtoons, L.C. v. Major League Baseball Players Ass'n, 838 F. Supp. 1501 (N.D. Okla. 1993). However, following the Supreme Court's decision in Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994), the district court concluded that the parody cards were protected under the First Amendment. Accordingly, the court vacated its initial decision and entered judgment in favor of Cardtoons. See Cardtoons, L.C. v. Major League Baseball Players Ass'n, 868 F. Supp. 1266 (N.D. Okla. 1994) ("Cardtoons I"). This court affirmed on appeal, determining that the cards were "an important form of entertainment and social commentary that deserve First Amendment protection." Cardtoons, L.C. v. Major League Baseball Players Ass'n, 95 F.3d 959, 976 (10th Cir. 1996) ("Cardtoons II").

Cardtoons returned to the district court to pursue its damages claims against the MLBPA. The court allowed Cardtoons to amend its complaint and assert new claims for prima facie tort, libel and negligence. All of Cardtoons' claims stemmed from the allegations contained in the Champs letter. The district court concluded that the MLBPA was immune from liability under the Noerr-Pennington doctrine and entered summary judgment for MLBPA on all of Cardtoons' claims. Cardtoons, L.C. v. Major League Baseball Players Ass'n, No. 93-C-576-E (N.D. Okla. Mar. 12, 1998) ("Cardtoons III").

On appeal, a panel of this court upheld the grant of summary judgment. Cardtoons, L.C. v. Major League Baseball Players Ass'n, 182 F.3d 1132 (10th Cir. 1999) ("Cardtoons IV"). The panel majority determined that the Noerr-Pennington doctrine applies apart from its roots in antitrust. In determining whether immunity for writing the letters was appropriate, the panel majority focused on the two part test enunciated in Professional Real Estate Investors, Inc. v. Columbia Pictures, Inc., 508 U.S. 49, 60-61 (1993) ("PRE").

In critical part, the panel majority held that Noerr-Pennington immunity covered threats of litigation as well as the actual litigation itself. "We adopt the legal and policy rationales that have informed other circuits' extension of Noerr-Pennington immunity to prelitigation threats, and hold that whether or not they are consummated, such threats enjoy the same level of protection from liability as litigation itself." Cardtoons IV, 182 F.3d at 1137. The panel majority went on to hold that the MLBPA had probable cause to threaten the lawsuit against Champs, thus satisfying the PRE test. "Accordingly, the Champs letter enjoyed Noerr-Pennington immunity as a threat of litigation." Cardtoons IV, 182 F.3d at 1139.

In dissent, Judge Ebel questioned whether Noerr-Pennington immunity should be extended to cover purely private threats. Rather than apply the two-part PRE test designed for litigation, Judge Ebel espoused a three part test for threats of litigation. A party seeking Noerr-Pennington immunity must show that the threat was (1) made in good faith; (2) was objectively reasonable; and (3) was a "proximate prologue to actual or imminent litigation." Cardtoons IV, 182 F.3d at 1142 (Ebel, J., dissenting).

Cardtoons sought rehearing en banc, arguing that the panel majority misapplied the Noerr-Pennington doctrine, and the case should be governed solely by the First Amendment right to petition. In particular, it pointed to the decisions in McDonald v. Smith, 472 U.S. 479 (1985) and Martin v. City of Del City, 179 F.3d 882 (10th Cir. 1999) as contrary to the panel opinion. We granted rehearing en banc. For the reasons stated below, we reverse the panel and remand.

I. Noerr-Pennington Immunity

The Noerr-Pennington doctrine was first recognized in two antitrust cases: Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961) and United Mine Workers v. Pennington, 381 U.S. 657 (1965). The present case does not involve antitrust claims, and therefore, we must first address the applicability of Noerr-Pennington outside the antitrust context.¹

Noerr involved an extensive publicity campaign by the railroad industry aimed at changing state law to place various restrictions on trucking in the long-distance freight business. The trucking industry brought suit in antitrust, alleging violations of 1 and 2 of the Sherman Act. The Court held that the railroads were immune from suit because "the Sherman Act does not apply to the activities of the railroads at least insofar as those activities comprised mere solicitation of governmental action with respect to the passage and enforcement of laws." Noerr, 365 U.S. at 138.²

This immunity was based upon two grounds. See City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 399 (1978) (noting the "two correlative principles" on which Noerr immunity was established); see also California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 510 (1972). The first was a statutory interpretation of the Sherman Act.

To hold that the government retains the power to act in [a] representative capacity and yet hold, at the same time, that the people cannot freely inform the government of their wishes would impute to the Sherman Act a purpose to regulate, not business activity, but political activity, a purpose which would have no basis whatever in the legislative history of that Act.

Noerr, 365 U.S. at 137. The second basis for immunity was predicated on the First Amendment right to petition.

Secondly, and of at least equal significance, such a construction of the Sherman Act would raise important constitutional questions. The right of petition is one of the freedoms protected by the Bill of Rights, and we cannot, of course, lightly impute to Congress an intent to invade these...