Waugh Chapel S., LLC v. United Food & Commercial Workers Union Local 27

• Decision Date: 26 August 2013
• Parties: WAUGH CHAPEL SOUTH, LLC; WCS LLC; WCS PROPERTIES BUSINESS TRUST; ELG INGLEWOOD LLC, Plaintiffs - Appellants, v. UNITED FOOD AND COMMERCIAL WORKERS UNION LOCAL 27; UNITED FOOD & COMMERCIAL WORKERS UNION, LOCAL 400; MID-ATLANTIC RETAIL FOOD INDUSTRY JOINT LABOR MANAGEMENT FUND, Defendants - Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

WAUGH CHAPEL SOUTH, LLC; WCS LLC; WCS PROPERTIES BUSINESS TRUST;ELG INGLEWOOD LLC, Plaintiffs - Appellants, v. UNITED FOOD AND COMMERCIAL WORKERS UNION LOCAL 27;UNITED FOOD & COMMERCIAL WORKERS UNION, LOCAL 400;MID-ATLANTIC RETAIL FOOD INDUSTRY JOINT LABOR MANAGEMENT FUND, Defendants - Appellees.

No. 12-1429

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

Argued: May 16, 2013

Decided: August 26, 2013

PUBLISHED

Appeal from the United States District Court for the District of Maryland, at Baltimore. William D. Quarles, Jr., District Judge. (1:11-cv-00841-WDQ)

Before KING, DIAZ, and FLOYD, Circuit Judges.

Affirmed in part, vacated in part, and remanded by published opinion. Judge Diaz wrote the opinion, in which Judge King and Judge Floyd joined.

ARGUED: Ira Lee Oring, FEDDER & GARTEN, PA, Baltimore, Maryland, for Appellants. Michael Timothy Anderson, MURPHY ANDERSON PLLC, Washington, D.C., for Appellee United Food and Commercial Workers Union Local 27; Sharon McNeilly Goodman, SLEVIN & HART, P.C., Washington, D.C., for Appellee Mid-Atlantic Retail Food Industry Joint Labor Management Fund. ON BRIEF: Neil Dubovsky, FEDDER & GARTEN, PA, Baltimore, Maryland, for

Appellants. Arlus J. Stephens, Lorrie E. Bradley, MURPHY ANDERSON PLLC, Washington, D.C., Joel A. Smith, David Gray Wright, KAHN, SMITH & COLLINS, P.A., Baltimore, Maryland, for Appellee UFCW Local 27; Carey R. Butsavage, John A. Durkalski, BUTSAVAGE & ASSOCIATES, P.C., Washington, D.C., for Appellee UFCW Local 400; Barry S. Slevin, Laura O. Aradi, SLEVIN & HART, P.C., Washington, D.C., for Appellee MRFI JLM Fund.

DIAZ, Circuit Judge:

Waugh Chapel South, LLC, WCS LLC, WCS Properties Business Trust (collectively "WCS") sued the United Food and Commercial Workers Union Locals 27 and 400 ("UFCW") and the Mid-Atlantic Retail Food Industry Joint Labor Management Fund (the "Fund") under the Labor Management Relations Act (the "LMRA"), 29 U.S.C. § 187, which provides a cause of action for victims of "unfair labor practices" as defined by the National Labor Relations Act (the "NLRA"), 29 U.S.C. § 158(b)(4). In its complaint,¹ WCS alleges that the defendants orchestrated fourteen separate legal challenges against their commercial real estate project in order to force WCS to terminate their relationship with a non-unionized supermarket--conduct that WCS alleged was an illicit "secondary boycott" under § 158(b)(4)(ii)(B).

The defendants moved to dismiss the complaint under the Noerr-Pennington² doctrine, claiming that their First Amendment right to petition the courts insulated their litigation activity from liability. Alternatively, the Fund moved to dismiss thecomplaint on the basis that it was not a "labor organization" under the NLRA. The district court agreed with both arguments and granted the motions to dismiss. This appeal followed.

We agree with the district court that the Fund is not a "labor organization" under the NLRA, but conclude that the Noerr-Pennington doctrine does not (at least at this stage) spare the remaining defendants from the allegations of the complaint. Although the courts are a medium by which citizens may exercise their First Amendment right to petition their government, the act of petitioning those courts may not serve as the means to achieve illegal ends. Cal. Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 515 (1972). Under this "sham litigation" exception to the Noerr-Pennington doctrine, we hold that the pleadings and the concomitant record evidence in this case, if credited by a factfinder, are sufficient to show that the unions have abused their right to petition the courts beyond the point of constitutional protection. We therefore affirm in part, vacate in part, and remand to the district court for a determination of whether the unions waged a secondary boycott in the manner alleged in the complaint.

I.

WCS and ELG are commercial real estate developers of two respective shopping centers in Anne Arundel County, Maryland:(1) the Village at Waugh Chapel South ("Waugh Chapel"); and (2) the Woodmore Towne Centre ("Woodmore").³ Both companies planned to lease a storefront unit in each of their shopping centers to Wegmans Food Markets, Inc. Because the Wegmans supermarket chain does not employ organized labor, both projects were opposed by the defendant unions.

That opposition commenced in December 2006 when union leadership "set[] its sights on Wegmans" to mount an antagonistic campaign. J.A. 14. According to WCS, a union executive threatened WCS that if Wegmans did not unionize, "we will fight every project you develop where Wegmans is a tenant." J.A. 18. The unions thereafter directed and funded a barrage of legal challenges at every stage of the projects' development.

The first of these challenges occurred in August 2008, when UFCW Secretary-Treasurer George Murphy, represented by his attorney G. Macy Nelson, petitioned the Anne Arundel City Council (the "Council") to revoke its decision to rezone the Waugh Chapel site from agricultural and residential to mixed-use commercial. WCS argued that Murphy lacked standing. The daybefore a scheduled hearing on the merits, Murphy withdrew the petition and effectively ceded that he was not an "aggrieved party." J.A. 441.

After this petition failed, the union employed surrogate plaintiffs to pursue their legal challenges. For the next few years, Nelson would represent plaintiffs in sixteen other proceedings objecting to the development of the shopping centers, with the unions allegedly directing the litigation. Three of those challenges pertained to Woodmore and are not before us on appeal. We summarize the thirteen other challenges to Waugh Chapel below.

• In December 2009, Paul Gilliam, Tracee Gilliam, and the environmental organization "Patuxent Riverkeeper" appealed the Council's decision to extend the time for WCS to post fees and bonds for the project. WCS later posted the bonds and fees, mooting the case.

• In March 2010, Robert Smith and Madonna Brennan sued in Maryland state court to enjoin the Council's approval of "Tax Increment Financing" ("TIF") bonds, arguing that the Council did not conduct the requisite hearing. The Council did indeed fail to conduct a hearing, a failure it remedied by holding another hearing in May to reauthorize the TIF bonds. The case was then dismissed as moot.

• In June 2010, Smith and Brennan sued several defendants associated with the development project, including the Council and the Maryland Department of Energy ("MDE"), alleging the development had caused a nuisance. After a brief period of discovery in which Smith and Brennan proffered expert testimony, the parties moved for summary judgment. The state court found that there was no nuisance and dismissed the suit.

• In July 2010, Smith and Patuxent Riverkeeper filed a state court petition to vacate the MDE's issuance of a miningpermit to WCS. They filed an identical petition in August when the MDE issued an amended mining permit. The state court dismissed the July petition as based only on the "conjecture" and "speculation" of affidavits provided by plaintiffs. J.A. 196-97. After this dismissal, the plaintiffs voluntarily dismissed their August petition.

• From May to July 2011, Smith, Sandra Bowie, and Rosie Shorter appealed the grant of nine separate building and grading permits issued by the Council to WCS. They withdrew the appeals after WCS subpoenaed the unions' financial records.

On March 31, 2011, WCS and ELG sued the unions under the LMRA, 29 U.S.C. § 187, alleging two counts of secondary boycott activity under § 158(b)(4)(ii)(B). Count 1 of the complaint pertained to the Waugh Chapel shopping center (WCS), while Count 2 pertained to the Woodmore Towne Center (ELG). As to Count 1, the district court categorized the fourteen legal challenges directed against Waugh Chapel as follows: (1) one "successful petition" to appeal the issuance of the TIF bonds, J.A. 55, (2) two environmental suits dismissed for lack of standing, and from which the court would not infer baselessness, (3) ten grading and building "petitions withdrawn to avoid subpoenas" from which the court would not infer baselessness, J.A. 57, (4) one petition appealing the extension of time for WCS to post bonds and pay fees that became moot, and (5) one environmental suit dismissed on the merits "after thoughtful consideration," J.A. 58.

The Fund successfully moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6), arguing that it was not a "labor organization" subject to the LMRA. And because the district court concluded that none of the prior legal challenges to the development of Waugh Chapel were objectively baseless, it dismissed Count I on Noerr-Pennington grounds. While the court allowed a portion of Count II to survive the unions' motion to dismiss,⁴ a subsequent consent order also dismissed that count.

II.

Before reaching the merits of this appeal, we first address the procedural posture of this appeal and our jurisdiction to decide it.

A.

Although the parties do not address it, we must determine our appellate jurisdiction to entertain this appeal under 12 U.S.C. § 1291, as "we are bound in all cases to ascertain our own appellate jurisdiction before reviewing a district courtjudgment." Reid v. Angelone, 369 F.3d 363, 374 n.7 (4th Cir. 2004).

"With few narrow exceptions," including certain interlocutory and collateral orders, "our jurisdiction extends only to appeals from all final decisions of the district courts of the United States." United States v. Myers, 593 F.3d 338, 344 (4th Cir. 2010). In this case, after the district court dismissed WCS's Count I and most of Count II with prejudice, ELG and the unions entered into a consent order, which purported to dismiss the remainder of Count II of the complaint "with prejudice, but without prejudice to refiling in any other proceeding." J.A. 68. "This kind of split judgment ordinarily would not be considered 'final' and therefore appealable under 28...