The Appellate Division Addresses the Noerr-Pennington Doctrine

Main Street at Woolwich, LLC v. Ammons Supermarket, Inc., ___ N.J. Super. ___ (App.  Div. 2017).  The Noerr-Pennington doctrine, which originated in two cases from the Supreme Court of the United States, holds that those who “petition the government [for] redress are generally immune from antitrust liability when defending against antitrust claims predicated on this petitioning activity.”  The immunity was thereafter expanded to cover common law torts such as malicious prosecution and abuse of process.  But Noerr-Pennington protection is stripped away when the petitioning conduct, such as objecting to a land use application, “is a mere sham to cover … an attempt to interfere directly with the business relationships of a competitor.”  This “sham litigation” exception was the subject of this opinion by Judge Guadagno.

Plaintiffs in this case had sought to develop a shopping center in Woolwich.  When they announced that Wal-Mart would be one occupant of that shopping center, Ammons Supermarket, Inc. and its principal sued to challenge the site plan approval that plaintiffs had obtained.  That case failed, and the approval was upheld, with the Appellate Division ultimately ruling that the Ammons lawsuit was untimely and that most of its arguments were without any merit.  Plaintiffs then turned around and sued the Ammons parties, their attorney, and his law firm for abuse of process, tortious interference, and civil conspiracy, asserting that the lawsuit attacking the development approval was sham litigation that was filed in order to protect Shop-rite from competition by Wal-Mart.

The trial court granted a motion to dismiss, finding that the prior litigation was protected by Noerr-Pennington immunity.  On appeal, however, the Appellate Division reversed and reinstated the case.

The standard of review of rulings on motions to dismiss is favorable to plaintiffs.  Such motions “should be granted only in the rarest of instances,” plaintiffs must receive “every reasonable inference of fact,” and the courts must search the complaint for even an “obscure statement” of a valid claim.  Judge Guadagno found that plaintiffs met that test here.

Litigation is sham when it is “[1] objectively baseless in the sense that no reasonable litigant could reasonably expect success on the merits, and [2] is brought with the specific intent to further wrongful conduct through the use of the governmental process– as opposed to the outcome of that process.”  Sham litigation may be “evidenced by repetitive lawsuits carrying the hallmark of insubstantial claims.”  Judge Guadagno found persuasive the decision in Hanover 3201 Realty, LLC v. Village Supermarkets, Inc., 806 F.3d 162 (3d Cir. 2015), another case in which Shop-Rite had allegedly pursued sham litigation to block competition.  That ruling stated that courts should determine whether the alleged sham litigation was a single event or “a series of filings,” and if there was a series, a “holistic review” that may include the litigant’s won-loss record in such cases.  A Fourth Circuit case, Waugh Chapel South, LLC v. United Food & Commercial Workers Union Local 27, 728 F.3d 354 (4th Cir. 2013), which held similarly, was also persuasive to the panel here.

Here, plaintiffs alleged a lengthy list of other litigation in which Shop-Rite or its agents sued to block competitors’ developments.  But the trial court here did not look beyond the merits of the Woolwich litigation itself.  That court did not consider the existence of the other lawsuits or the decisions of the trial and appellate courts in the Woolwich litigation that resoundingly rejected the Ammons parties’ arguments.  Had the trial court considered the full scope of facts relevant to the sham litigation exception, that court might have reached a different result.  The panel reinstated the complaint and remanded for further consideration.

It is interesting that Noerr-Pennington cases often involve supermarkets.  A case in which I participated, Village Supermarkets, Inc. v. Mayfair Super Market, 269 N.J. Super. 224 (Law Div. 1993), not cited in Judge Guadagno’s opinion, was another such example.  There, Shop-Rite was the plaintiff, asserting that Mayfair, a competitor for whom I was one of the counsel, had wrongfully funded objectors to a proposed Shop-Rtie supermarket.  Judge Wecker discussed Noerr-Pennington at length and ruled in favor of Mayfair.

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