On February 28, 2018, the Puerto Rico Telephone Company, Inc. (PRTC) filed a petition for a writ of certiorari after its antitrust claims against San Juan Cable LLC (OneLink) were dismissed by the First Circuit Court of Appeals at the summary judgment phase. In its petition, PRTC asks the Supreme Court to delineate a clearer boundary between the right to petition the government (whether through lobbying, litigation, or participation in administrative proceedings) and the antitrust laws’ imposition of liability on activity that unfairly restricts competition. Specifically, when does petitioning activity that is usually protected from antitrust liability under the Noerr-Pennington doctrine cross the line into illegal antitrust behavior?
In PRTC’s case, the parties do not dispute (on appeal) that (1) OneLink had monopoly power in cable TV service in San Juan; (2) when PRTC sought to apply for competing TV service, OneLink filed a series of petitions (allegedly 24 petitions) to impede PRTC’s efforts in order to avoid facing the competition; (3) none of the 24 petitions was objectively baseless; (4) none of the 24 petitions was meaningfully successful; but (5) OneLink succeeded in keeping PRTC out of the market for at least three years.
In its petition, PRTC argues that OneLink’s series of petitions was a “sham” designed solely with the intent to injure competition and thus should be subject to antitrust liability even if each of OneLink’s individual petitions was not objectively baseless. OneLink will likely argue in response that, because it did not file a single objectively baseless petition, its intent should not matter under the Court’s precedent in Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc. (PREI), which defined “sham litigation” using a two-part test. First, the lawsuit must be objectively baseless. Second, if the lawsuit is objectively baseless, only then can the court look to the “subjective motivation” of the litigant: if the purpose was to use the very pendency of the lawsuit (or other petitioning activity) rather than its hoped-for result to interfere with the competitor, then it could give rise to liability.
The First Circuit relied almost exclusively on PREI in granting summary judgment to OneLink. First, the court found that PRTC had not established antitrust liability because it failed “to argue that any one of OneLink’s petitions was objectively baseless” under PREI. However, the court also examined PRTC’s “contention that the serial nature of OneLink’s petitioning materially distinguishes [its] case from PREI” and found that argument unpersuasive because PREI made no distinction between the filing of one petition and the filing of a series of petitions.
In its petition, PRTC spends a great deal of effort distinguishing PREI. PRTC makes two arguments in particular. First, it notes that PREI did not overrule California Motor, in which the Court held that, where a “combination of entrepreneurs . . . harass[es] and deter[s] their competitors from having ‘free and unlimited access’ to the agencies and courts . . . by massive, concerted, and purposeful [petitioning] activities,” then an antitrust violation has been established and the activity will not be shielded from the antitrust laws.
Second, PRTC argues that the holding in PREI is limited to situations where the alleged antitrust violator only filed one petition. In doing so, PRTC asks the Court to resolve a circuit split. PRTC argues that the First Circuit’s decision allows a competitor to petition with impunity so long as none of its petitions is objectively baseless (under PREI). That is, a competitor’s petitioning activity is shielded from antitrust liability no matter the number of petitions filed, the amount of delay imposed, or the subjective intent of the petitioner so long as each petition is not objectively baseless. In the Second, Third, Fourth, and Ninth Circuits, however, the courts have held that the “objectively baseless” standard from PREI only applies in situations involving one petition. If there are a series of petitions, then the court may look to the subjective intent of the petitioner even if each petition is not baseless.
If the Court took this case, it could resolve the Circuit split and squarely tackle the question whether a multiplicity of petitioning acts can cause the forfeiture of Noerr-Pennington immunity absent a showing that any of the petitions was objectively baseless. To be sure, the Court recently denied review of a case from the Third Circuit, Hanover 3201 Realty, LLC v. Village Supermarkets, Inc., which presented nearly the same question: whether the Court’s “objectively baseless” standard “applies to a ‘series’ of underlying cases.” While the odds of the Supreme Court granting a cert petition are always low, here the rather extreme nature of PRTC’s facts (it is challenging a series of 24 petitions whereas in Hanover, the antitrust plaintiff challenged a series of 4 petitions) may give this cert petition a leg up.
In the end, resolution of this question raises both policy as well as pragmatic concerns. It is entirely possible that a dominant player in a market could initiate a proceeding heedless of its merits, expecting its mere pendency to thwart a rival whether by soaking up legal fees, scaring off investors, directly blocking entry, or otherwise. That player arguably gets a fortuitous free pass if the proceeding can later be justified as not objectively baseless, especially when the value of a potential favorable decision pales compared to the value of delaying the competitor’s entry. On the other hand, imposing a threshold screen that allows further scrutiny only of objectively baseless petitions gives deference to the principle that all parties are entitled to their day in court, and has the arguable benefit of being easier to assess, particularly on summary judgment, than an intent-based test. But resolving this tension doesn’t necessarily have anything to do with the number of litigations involved. Thus, the multiplicity question served up by PRTC may become merely a vehicle for revisiting the more fundamental core questions addressed in PREI and California Motor.