Ad Visor, Inc. v. Pacific Telephone & Telegraph Co.

640 F.2d 1107
CourtCourt of Appeals for the Ninth Circuit
DecidedMarch 30, 1981
DocketNos. 80-5290, 80-5293
StatusPublished
Cited by8 cases

This text of 640 F.2d 1107 (Ad Visor, Inc. v. Pacific Telephone & Telegraph Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ad Visor, Inc. v. Pacific Telephone & Telegraph Co., 640 F.2d 1107 (9th Cir. 1981).

Opinion

MURPHY, District Judge:

L. M. Berry & Company (Berry) appeals from a temporary injunction in each of the above actions enjoining it from prosecuting 63 separate California collection actions against, in each case, a single advertiser and its advertising agency, either Ad Visor, Inc. (Ad Visor) or O’Connor Agency, Inc. (O’Connor), the appellees, as the other defendant.

Berry is a publisher and seller of nationally distributed telephone yellow pages advertising. Each plaintiff, appellee, is an advertising agency specializing in placing yellow pages advertising. These parties, Berry, Ad Visor and O’Connor, commenced business relations in September, 1977. Ad Visor and O’Connor would purchase and pay for nationally advertised yellow pages advertising for clients through Berry. This relationship continued uninterrupted from September, 1977 through 1978. Ad Visor and O’Connor paid for the advertising upon receipt of invoices and a tear sheet from Berry. No payments have been made to Berry since December, 1978.1

Each Berry action is for nonpayment of published advertising. The claims are for breach of contract, on common counts, and for unjust enrichment. Berry seeks $172,-137.76 from Ad Visor and its clients, and $414,484.09 from O’Connor and its clients, on outstanding but unpaid invoices. The record indicates that $70,000. additional has become due.

The Underlying Antitrust Litigation

In late November, 1977, Ad Visor filed an antitrust suit alleging violations of §§ 1 and 2 of the Sherman Act against all of the above named defendants except Berry. On April 20, 1979, O’Connor filed a duplicate of Ad Visor’s complaint against all of the above named defendants and added Berry as a defendant. Eight months later, on December 17, 1979, Ad Visor filed its second amended and supplemental complaint, also adding Berry as a defendant. Immediately on the heels of Berry filing its answer to Ad Visor’s amended complaint on January 4, 1980, both plaintiffs filed identical motions for preliminary injunctions on January 10, 1980. These motions were argued on April 1, 1980, and immediately thereafter the district court orally granted the motions, ruling: “With respect to the request for a preliminary injunction under the Inglis standard, that is granted as prayed.” Later, in its filed Memorandum, it ordered “an injunction may issue pursuant to Section 16 of the Clayton Act enjoining a multiplicity of state court proceedings which have been brought in furtherance of an anticompetitive scheme, and used as a bludgeon to retain a monopoly and to interfere with the business relationships of a competitor,” and fixed security for each plaintiff at $5,000.

The Questions Presented

1) Are Berry’s state court actions protected from injunction by the Noerr-Pennington doctrine?2

[1109]*11092) Was the district court barred from enjoining Berry’s state court actions by the Anti-Injunction Act, 28 U.S.C. § 2283?

3) Did the district court abuse its discretion in ordering the injunctions?

The legal and factual issues before the district court were not whether there was a genuine issue of fact in the underlying antitrust actions that would entitle plaintiffs-appellees, as a matter of law, to a judgment (Rule 56, F.R.Civ.P.), but whether Berry’s lawsuits in the state courts came under the aegis of Berry’s First Amendment right “to petition the government for redress of private grievances.”

This Court has only recently reiterated the Noerr-Pennington doctrine.3 Ernest W. Hahn, Inc. v. Codding, 615 F.2d 830, 834 n.1 (9th Cir. 1980). In Hahn, Judge Anderson succinctly summarized what Justices Black and Douglas had held those cases established, namely, “the general rule that lobbying or other efforts by businessmen to obtain legislative, executive, or judicial action will not violate the antitrust laws, even though the purpose of their efforts may be to eliminate competition or otherwise restrain trade.” Id. at 834 n.1. (emphasis ours).

The nub of the district court’s ruling, quoted above, is its conclusion that the 63 state court collection lawsuits “have been brought in furtherance of an anticompetitive scheme, and used as a bludgeon to retain a monopoly and to interfere with the business relationships of a competitor.” This reasoning has no support in any of the cases discussing the Noerr-Pennington doctrine. The Noerr-Pennington doctrine is subject to an exception for activities which are a “mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationships of a competitor.” Eastern Railroad Conference v. Noerr Motor Freight, 365 U.S. 127, 144, 81 S.Ct. 533, (1961). The eases following Noerr and Pennington show the “sham” exception to be a test of whether the efforts to obtain judicial or legislative action can be characterized as an abuse of process.

The district court relied heavily on California Motor Transport v. Trucking Unlimited, 404 U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972), wherein the Supreme Court found that a pattern of baseless, repetitive claims could be an exception to the Noerr-Pennington protection. The import of that decision, however, is that such a pattern could lead to a conclusion of abuse of process which would then be an exception to Noerr-Pennington.

“[A] pattern of baseless, repetitive claims may emerge which leads the factfinder to conclude that the administrative and judicial processes have been abused. That may be a difficult line to discern and draw. But once it is drawn, the case is established that abuse of those processes produced an illegal result, * * 404 U.S. at 513, 92 S.Ct. at 613.

Although baseless, repetitive and sham claims may be an abuse, multiplicity, by itself, does not vitiate the Noerr-Pennington protections. This view finds further expression in Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623, 97 S.Ct. 2881, 53 L.Ed.2d 1009 (1977), where Justice Blackmun, concurring, discussed Trucking Unlimited:

“Since I believe that federal courts should be hesitant indeed to enjoin ongoing state-court proceedings, I am of the opinion that a pattern of baseless, repetitive claims or some equivalent showing of grave abuse of the state courts must exist before an injunction would be proper.” 433 U.S. at 644, n.* 97 S.Ct. at 2894, n.* (emphasis ours).

No case can be found which finds multiple claims brought with the purpose of interfering with others’ business relationships to be unprotected by Noerr-Pennington. In each case of “sham,” an improper interference with administrative or judicial process is found.

[1110]

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Bluebook (online)
640 F.2d 1107, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ad-visor-inc-v-pacific-telephone-telegraph-co-ca9-1981.