Hanover 3201 Realty, LLC v. Village Supermarkets, Inc. ( 2015 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 14-4183
HANOVER 3201 REALTY, LLC,
Appellant
v.
VILLAGE SUPERMARKETS, INC.; ABC
CORPORATIONS 1-10 (names being fictitious and unknown
but described as those corporations associated with Village
that assisted with and promoted the use of sham litigations
and anti-competitive acts); JOHN DOES 1-10 (names being
fictitious and unknown but described as those individuals
associated with Village that assisted with and promoted the
use of sham litigations and anti-competitive acts);
HANOVER AND HORSEHILL DEVELOPMENT LLC
_____________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civ. No. 2-14-cv-01327)
District Judge: Honorable Stanley R. Chesler
_____________
Argued: June 18, 2015
Before: AMBRO, FUENTES, and GREENBERG, Circuit
Judges
(Opinion Filed: November 12, 2015)
John M. Agnello, Esq.
James E. Cecchi, Esq.
Lindsey H. Taylor, Esq. [ARGUED]
Carella Byrne Cecchi Olstein Brody & Agnello
5 Becker Farm Road
Roseland, NJ 07068
Attorneys for Appellant, Hanover 3201 Realty, LLC
Anthony Argiropoulos, Esq. [ARGUED]
Thomas Kane, Esq.
Epstein Becker & Green
One Gateway Center
Newark, NJ 07102
David W. Fassett, Esq.
Arseneault & Fassett
560 Main Street
Chatham, NJ 07928
Attorneys for Appellees, Village Supermarkets, Inc. and
Hanover and Horsehill Development LLC
OPINION OF THE COURT
FUENTES, Circuit Judge, with whom AMBRO, Circuit
Judge, joins as to Parts II.A.2, II.B, and II.C, and
GREENBERG, Circuit Judge, joins as to Part II.A.
2
Hanover 3201 Realty, LLC (“Hanover Realty”) signed
a contract with Wegmans to develop a supermarket on its
property in Hanover, New Jersey. The agreement required
Hanover Realty to secure all necessary governmental permits
and approvals prior to breaking ground. Village
Supermarkets, Inc. (“ShopRite”) owns the local ShopRite.
Once ShopRite and its subsidiary Hanover and Horsehill
Development LLC (“H&H Development”) (collectively,
“Defendants”) caught wind that Wegmans might be entering
the market, they filed numerous administrative and court
challenges to Hanover Realty’s permit applications.
Believing these filings were baseless and intended only to
frustrate the entry of a competitor, Hanover Realty sued
Defendants for antitrust violations. Hanover Realty alleged
that Defendants attempted to restrain the market for full-
service supermarkets as well as the market for full-service
supermarket rental space. The District Court dismissed the
suit, holding that Hanover Realty did not have antitrust
standing because it was the wrong plaintiff—it was not a
competitor, consumer, or participant in the restrained markets
and thus did not sustain the type of injury the antitrust laws
were intended to prevent. 1
We conclude that, with respect to the claim for
attempted monopolization of the market for full-service
supermarkets, the District Court took too narrow a view of
antitrust injury. Hanover Realty can establish that its injury
1
For the reasons set forth in Part III of Judge Ambro’s partial
concurrence, I agree with Judge Ambro’s decision to use an
“issue voting” approach to determine the outcome of the
judgment in this case.
3
was “inextricably intertwined” with Defendants’
anticompetitive conduct. However, as to the claim for
attempted monopolization of the market for rental space, the
District Court correctly found no standing because Hanover
Realty does not compete with Defendants in that market. We
also hold that Hanover Realty has sufficiently alleged that the
petitioning activity here was undertaken without regard to the
merits of the claims and for the purpose of using the
governmental process to restrain trade. As such, Hanover
Realty can demonstrate that Defendants are not protected by
Noerr-Pennington immunity because their conduct falls
within the exception for sham litigation. Accordingly, we
will affirm in part, vacate in part, and remand to the District
Court for further proceedings.
4
I. BACKGROUND
Plaintiff Hanover Realty is a real estate developer and
the owner of a plot of land in Hanover, New Jersey.2 In July
2012, Hanover Realty entered into a lease and site-
development agreement with Wegmans for the purpose of
constructing a “full-service supermarket.” App. 66. These
types of supermarkets, in contrast to their local grocery store
counterparts, provide customers with a “one-stop shopping”
experience. App. 67. Full-service supermarkets supply not
only traditional groceries, but also additional amenities,
including prepared foods to go, on-site dining options, wine
and liquor, specialty products, and other services such as
pharmacies, banks, and fitness centers. The site-development
agreement placed the burden on Hanover Realty to obtain all
necessary governmental permits prior to beginning
construction. If Hanover Realty was unable to secure the
required permits within two years of the agreement,
Wegmans could walk away from the deal.
Defendant ShopRite is the proprietor of 26 ShopRite
supermarkets in New Jersey, including a ShopRite in Hanover
that is about two miles away from the site of the proposed
Wegmans. The ShopRite opened in November 2013 and
replaced the previous one in Morris Plains, which has since
closed. Defendant H&H Development, a wholly-owned
subsidiary of ShopRite, owns the property on which the
Hanover ShopRite sits, and leases the land or building to
2
Unless otherwise indicated, the facts are taken from the
amended complaint, documents relied upon in that complaint,
and matters of public record. See Schmidt v. Skolas, 770 F.3d
241, 249 (3d Cir. 2014).
5
ShopRite. ShopRite and H&H Development have the same
decision makers. Hanover Realty alleges that the ShopRite in
Hanover is the only full-service supermarket operating in the
greater Morristown area.
Once news broke that Wegmans was coming to town,
Defendants launched a petitioning campaign designed to
block Hanover Realty from obtaining the permits and
approvals it needed to proceed with the project. We describe
these filings here.
First, Hanover Realty applied for a Flood Hazard Area
Permit (“Flood Permit”) from the New Jersey Department of
Environmental Protection (“Environmental Department”).
After Hanover Realty received the permit, ShopRite (on
behalf of itself and H&H Development) submitted an appeal
to the Environmental Department requesting an adjudicatory
hearing and seeking an order that would vacate the permit.
Defendants asserted that they had standing to bring the appeal
because the then-existing ShopRite in Morris Plains would be
“detrimentally impacted” by the competition from the
Wegmans. App. 74. Over the next five months, Defendants
submitted additional documents to the Environmental
Department, including an objection that Hanover Realty
failed to comply with relevant notice requirements and an
amended request for an adjudicatory hearing.
About a month after Hanover Realty filed its amended
complaint in this action, the Environmental Department
issued an order denying Defendants’ request for a hearing. It
first found that ShopRite had no standing, explaining that
“[c]ourts have consistently held that proximity or any type of
generalized property right shared with other property owners
such as recreational interests, traffic, views, quality of life,
6
and property values are insufficient to demonstrate a
particularized property right required to establish third party
standing for a hearing.” App. 157. ShopRite’s “generalized
property rights” and its claim of “greater competition” from
the proposed Wegmans were not enough to show that it was
an aggrieved party. The Environmental Department also
evaluated the substance of Defendants’ arguments and found
them without merit.
Second, Hanover Realty submitted a multi-permit
application to the Environmental Department seeking various
wetlands approvals (“Wetlands Permit”) for the Wegmans
project. An ecological consulting firm sent a letter to the
Environmental Department on behalf of Defendants raising
various challenges to this permit. One objection was that
Hanover Realty’s notice to neighboring landowners was
“technically deficient.” App. 77. In response to this
objection, and as “required” by the Environmental
Department, Hanover Realty corrected this “administrative
error” the next week and submitted a revised application.
App. 169. The ecological consultant also voiced its concern
that the site of the proposed Wegmans was a potentially
suitable habitat for certain endangered species, including the
Indiana bat.3 A few days later, Defendants submitted another
letter to the Environmental Department, this time requesting a
meeting to discuss the Wetlands Permit and “strongly
3
Indiana bats may be found over a broad swath of the United
States, including New Jersey. But true to name, half of this
bat population does, in fact, hibernate in Indiana. See Indiana
Bat Fact Sheet, U.S. Fish & Wildlife Service,
http://www.fws.gov/midwest/endangered/mammals/inba/inba
fctsht.html (last visited Aug. 13, 2015).
7
urg[ing]” it to “diligently and prudently” review the permit
and not act with “haste” in granting approval. App. 78. In
the following months, Defendants’ ecological consultant
complained to the United States Fish and Wildlife Service
about the Wetlands Permit. In one email to the Wildlife
Service, the consulting firm praised itself for “manag[ing] to
delay the issuance of the [Wetlands] approvals based on a
technicality” and said that its substantive objections “may
delay things a bit longer.” App. 80. Hanover Realty
responded to Defendants’ multifaceted challenge with its own
submissions, explaining why, in its view, each objection was
unsubstantiated. Moreover, Hanover Realty alleges that
Defendants knew the wetlands at issue are not federally
regulated waters, but nonetheless contacted the Wildlife
Service to add friction to the review process.
The Environmental Department issued Hanover Realty
its requested Wetlands Permit, subject to various conditions.
One such condition required Hanover Realty to conduct a
survey for the presence of Indiana bats prior to construction.4
After the Environmental Department issued the permit,
Defendants submitted a request for an adjudicatory hearing to
challenge the approval.5
Third, the tract of land owned by Hanover Realty has
been the subject of several contracts and sales over the years,
4
In its appellate brief, Hanover Realty informs us that it
conducted the Indiana bat survey and no bats were found.
5
In a supplemental letter filed with the Court, Hanover Realty
says that, in June 2015, the Environmental Department denied
Defendants’ request for a hearing.
8
including a four-phased developer’s agreement with the New
Jersey Department of Transportation that dates back to 1978.
Under that agreement, the owner of the land must make
certain road improvements as it reaches various phases of
development. Hanover Realty believed the Wegmans project
would trigger Phase III of the agreement. Consistent with
that understanding, Hanover Realty submitted an application
for a Major Street Intersection Permit (“Street Permit”) to the
Department of Transportation in which it proposed
improvements to a nearby intersection in connection with the
Wegmans project. Defendants submitted a letter objecting to
the application, and then proceeded to file a number of open
public records requests seeking additional information upon
which they could contest the application. Defendants then
sent another letter to the Department of Transportation
informing it that the Wegmans project would trigger Phase IV
of the developer’s agreement. As a result, Defendants said,
Hanover Realty was required to build an overpass over a
nearby highway before it could proceed any further. Hanover
Realty and its traffic engineering consultant submitted letters
of their own, explaining that the Phase IV requirements
(including the overpass) were not implicated by the Wegmans
project. Hanover Realty alleges that Defendants knew the
Phase IV obligations were not triggered because their counsel
had negotiated the developer’s agreement.
The Department of Transportation issued a letter
responding to the parties’ various submissions relating to the
Street Permit application. The letter began by acknowledging
that the Department of Transportation is “required to consider
any relevant data, analysis, and arguments submitted by third
parties.” App. 165. It then agreed with Defendants that the
proposed development would generate traffic at certain hours
that would exceed the level of traffic contemplated by Phases
9
I, II, and III of the developer’s agreement. Moreover,
although it did not specifically mention the overpass or
whether Phase IV obligations would be implicated, the
Department of Transportation said the Wegmans project
“would trigger the need for additional highway improvements
as stipulated in the [developer’s] agreement.” App. 167. It
noted, however, that the “improvements may no longer be
appropriate or feasible” and therefore recommended that
Hanover Realty negotiate a modification to the agreement
with the Department of Transportation. App. 167.6
Fourth, in mid-2012, Hanover Realty applied to the
Hanover Township Committee to rezone the property of the
proposed Wegmans so that it could be used for retail space.
The next summer, Hanover Realty received approval of its
final site plan and request for a bulk variance. Defendants did
not lodge any objections during that year-long process.
Instead, in August 2013, ShopRite (on behalf of itself and
H&H Development) filed an action in lieu of prerogative
writs in New Jersey state court seeking to nullify the
approval. Over the next several months, Defendants filed
three amended complaints, which Hanover Realty alleges
were filed for the purpose of delay.
In June 2014, after Hanover Realty had filed its
amended complaint in the present litigation, the Superior
Court of New Jersey issued an order dismissing the
prerogative writs action. The court found that ShopRite was
6
Hanover Realty informs us in a letter that, after
renegotiating the developer’s agreement and otherwise
revising its proposal, the Department of Transportation issued
the Street Permit in April 2015.
10
not an “interested party” because it failed to allege facts
suggesting its “right to use, acquire, or enjoy either of its
nearby properties” would be affected by the approval of
Hanover Realty’s site plan. App. 136. In addition, the court
rejected ShopRite’s argument that it had standing based on its
status as a local taxpayer. After ruling against ShopRite on
the standing issue, the court also addressed and disposed of
ShopRite’s arguments on the merits.
Frustrated by Defendants’ many legal challenges,
Hanover Realty sued Defendants in federal court. In its
amended complaint, Hanover Realty alleges that Defendants’
administrative objections and state-court suit were mere
anticompetitive shams designed to keep Wegmans out of the
market. Specifically, it asserts claims under Section 2 of the
Sherman Act for attempted monopolization of and conspiracy
to monopolize the greater Morristown full-service
supermarket market (Count One) and the greater Morristown
full-service supermarket shopping center market, which it
describes as the market for supermarket rental space (Count
Two). The amended complaint also contains five-state law
claims.
Defendants moved to dismiss the complaint for four
independent reasons. The District Court found the threshold
issue of antitrust standing dispositive and dismissed the
complaint on that ground. It observed that, as a general
matter, plaintiffs in antitrust suits must be either consumers or
competitors of the defendant in the restrained market—here,
the markets for supermarkets and supermarket rental space.
Hanover Realty was neither a consumer nor competitor of
Defendants in either market. The District Court
acknowledged the limited exception to the
consumer/competitor requirement for persons whose injuries
11
are “inextricably intertwined” with the harm caused by
defendants. But it found Hanover Realty did not fit within
that narrow exception either. As a result, Hanover Realty had
suffered no antitrust injury and thus had no antitrust standing
to pursue its Sherman Act claims.7 Without a federal claim in
play, the District Court declined to exercise supplemental
jurisdiction over the state-law claims. Hanover Realty
appealed.8
II. DISCUSSION
Defendants raise four arguments in support of the
District Court’s order: (1) Hanover Realty does not have
antitrust standing; (2) Defendants’ petitioning activity was
protected by the Noerr-Pennington doctrine; (3) Hanover
Realty has not sufficiently alleged that there is a dangerous
probability of Defendants achieving monopoly power; and
(4) Hanover Realty has failed to plead a specific intent to
monopolize.
7
The District Court also dismissed the parts of Counts One
and Two that assert a conspiracy to violate the Sherman Act
because Hanover Realty failed to allege the particulars of this
conspiracy. As Hanover Realty does not challenge this
finding on appeal, we affirm the dismissal of Counts One and
Two to the extent they contain conspiracy claims.
8
The District Court had jurisdiction under 15 U.S.C. § 15 and
28 U.S.C. §§ 1331 and 1367, and we have jurisdiction to
review the District Court’s final order under 28 U.S.C.
§ 1291. We review de novo a district court’s grant of a
motion to dismiss and construe all facts in the light most
favorable to the nonmoving party. See Rea v. Federated
Investors, 627 F.3d 937, 940 (3d Cir. 2010).
12
A. Antitrust Standing
We begin with antitrust standing. Section 2 of the
Sherman Act prohibits any attempt to monopolize. 15 U.S.C.
§ 2. Section 4 of the Clayton Act, in turn, defines the class of
persons who may bring a private antitrust suit as “any person”
who is injured “by reason of anything” prohibited by the
antitrust laws. Id. § 15(a). This extraordinarily broad
language reflects the Clayton Act’s remedial purpose and
Congress’s intent to “create a private enforcement mechanism
that would deter violators and deprive them of the fruits of
their illegal actions, and would provide ample compensation
to the victims of antitrust violations.” Blue Shield of Va. v.
McCready, 457 U.S. 465, 472 (1982). Emphasizing § 4’s
expansive reach, the Supreme Court has explained that the
“statute does not confine its protection to consumers, or to
purchasers, or to competitors, or to sellers. . . . The Act is
comprehensive in its terms and coverage, protecting all who
are made victims of the forbidden practices by whomever
they may be perpetrated.” Id. (quoting Mandeville Island
Farms, Inc. v. Am. Crystal Sugar Co., 334 U.S. 219, 236
(1948)).
Although a literal reading of § 4’s grant of authority to
sue arguably is limited only by the minimal requirements of
constitutional standing, the Supreme Court has interpreted
this provision more restrictively than that. See Hawaii v.
Standard Oil Co. of Cal., 405 U.S. 251, 262 n.14 (1972)
(“Congress did not intend the antitrust laws to provide a
remedy in damages for all injuries that might conceivably be
traced to an antitrust violation.”). Thus, even when there is a
clear violation of the antitrust laws, § 4 allows only a “proper
plaintiff” to bring a private suit to remedy that violation. See
13
Associated Gen. Contractors of Cal., Inc. v. Cal. State
Council of Carpenters, 459 U.S. 519, 544 (1983). In other
words, only certain plaintiffs have “antitrust standing.” Id. at
535 n.31. In describing how to undertake the antitrust
standing inquiry, the Supreme Court has warned that, because
of the “infinite variety of claims” that may arise under § 4, a
“black-letter rule” cannot dictate the result in every case. Id.
at 536. Instead, the Court has articulated several guideposts.
See id. at 536-57. We have distilled these antitrust standing
factors as follows:
(1) the causal connection between the antitrust
violation and the harm to the plaintiff and the
intent by the defendant to cause that harm, with
neither factor alone conferring standing; (2)
whether the plaintiff’s alleged injury is of the
type for which the antitrust laws were intended
to provide redress; (3) the directness of the
injury, which addresses the concerns that liberal
application of standing principles might
produce speculative claims; (4) the existence of
more direct victims of the alleged antitrust
violations; and (5) the potential for duplicative
recovery or complex apportionment of
damages.
In re Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d
1144, 1165-66 (3d Cir. 1993) (citing Associated Gen., 459
U.S. at 545). Although we weigh these factors together on a
case-by-case basis, the second factor, antitrust injury, “is a
necessary but insufficient condition of antitrust standing.”
Barton & Pittinos, Inc. v. SmithKline Beecham Corp., 118
F.3d 178, 182 (3d Cir. 1997).
14
Antitrust injury has proven difficult to define and
apply. The Supreme Court has described it as “injury of the
type the antitrust laws were intended to prevent and that flows
from that which makes defendants’ acts unlawful.”
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477,
489 (1977). In evaluating the nature of a plaintiff’s injury,
the Supreme Court instructs us to keep in mind that “the
Sherman Act was enacted to assure customers the benefits of
price competition” and “protect[] the economic freedom of
participants in the relevant market.” Associated Gen., 459
U.S. at 538. Based on these principles, we have said that,
“[a]s a general matter, the class of plaintiffs capable of
satisfying the antitrust-injury requirement is limited to
consumers and competitors in the restrained market . . . and to
those whose injuries are the means by which the defendants
seek to achieve their anticompetitive ends.” W. Penn
Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 102 (3d
Cir. 2010) (citing cases). As Hanover Realty offers distinct
theories of injury for each of its attempted monopolization
claims—one for the market for full-service supermarkets
(Count One) and another for the market for full-service
supermarket rental space (Count Two)—we discuss these
claims separately.
1. Full-Service Supermarkets
Hanover Realty admits it is neither a competitor nor a
consumer in the market for full-service supermarkets; it is a
land owner and lessor of property, not a food retailer. It
instead argues that its injuries were “inextricably intertwined”
with Defendants’ attempt to monopolize that market.
The Supreme Court first recognized this form of
antitrust injury in McCready. McCready was an employee
covered by a group health plan purchased from the defendant
15
Blue Shield. McCready, 457 U.S. at 468. Under the plan,
Blue Shield agreed to reimburse subscribers such as
McCready for services provided by psychiatrists, but not by
psychologists. McCready was treated by a psychologist and
sought reimbursement for her bills, but Blue Shield denied
payment. She then filed suit against Blue Shield and a
psychiatric society alleging that the two had engaged in an
unlawful antitrust conspiracy to exclude psychologists from
receiving payment under the Blue Shield plan. Id. at 469.
The defendants argued that McCready had not suffered
antitrust injury because the alleged conspiracy was directed at
psychologists and not at subscribers of group health plans.
Id. at 478. The Supreme Court rejected the defendants’ view
of antitrust standing, explaining that the § 4 “remedy cannot
reasonably be restricted to those competitors whom the
conspirators hoped to eliminate from the market.” Id. at 479.
Although McCready was not a competitor of the defendants,
“the injury she suffered was inextricably intertwined with the
injury the conspirators sought to inflict on psychologists and
the psychotherapy market.” Id. at 483-84 (emphasis added).
And while McCready was a consumer in the market for
psychotherapy services, the Supreme Court’s explanation of
why she suffered antitrust injury emphasized not her status as
a market participant, but rather that she was directly targeted
for harm by parties ultimately wishing to inflict a derivative
harm on a competitor. As the Court noted, “[d]enying
reimbursement to subscribers for the cost of treatment was the
very means by which it is alleged that Blue Shield sought to
achieve its illegal ends.” Id. at 479. The harm to subscribers
like McCready was not only clearly foreseeable, “it was a
necessary step in effecting the ends of the alleged illegal
conspiracy.” Id.
16
Underscoring that its reasoning was not limited to
consumers, the Court offered the following hypothetical to
crystalize the nature of McCready’s injury: “If a group of
psychiatrists conspired to boycott a bank until the bank
ceased making loans to psychologists, the bank would no
doubt be able to recover the injuries suffered as a
consequence of the psychiatrists’ actions.” Id. at 484 n.21.
McCready and the bank “are in many respects similarly
situated,” the Court explained, even though the bank is not a
customer or consumer in the psychotherapy market. See id.
Both were used as conduits to harm the defendants’ actual
competitors. Because imposing harm on McCready was an
indispensable aspect of the scheme, the Court concluded that
the injury to McCready
“reflect[ed] Congress’ core concerns” in prohibiting the
defendants’ conduct. Id. at 481.
In contrast to McCready, where the alleged harm to the
plaintiff was the primary means of the defendants’
anticompetitive conduct, harm that is secondary to the
anticompetitive conduct cannot support antitrust injury. For
example, we have said that, “[a]lthough a supplier may lose
business when competition is restrained in the downstream
market in which it sells goods and services, such losses are
merely byproducts of the anticompetitive effects of the
restraint,” and do not qualify as antitrust injury. W. Penn
Allegheny, 627 F.3d at 102. To illustrate, in Ethypharm S.A.
France v. Abbott Laboratories, 707 F.3d 223, 225-26 (3d Cir.
2013), a foreign drug manufacturer, Ethypharm, used a
domestic distributor to sell one of its drugs in the United
States market. After Abbott, the distributor of another drug,
sued the domestic distributor for patent infringement,
Ethypharm sued Abbott for antitrust violations. We rejected
the notion that Ethypharm’s injury was inextricably
17
intertwined with the alleged scheme. See id. at 237. To
effectuate its conspiracy, Abbott needed only to place
restrictions on Ethypharm’s domestic distributor and thus any
harm suffered by Ethypharm was incidental, rather than
essential, to the restraint on trade. See id. at 233. Similarly,
in Broadcom Corp. v. Qualcomm, Inc., 501 F.3d 297, 319-20
(3d Cir. 2007), the plaintiff’s asserted basis for antitrust
standing was that the defendant’s restraint in one market
injured it by suppressing the demand of participants in the
restrained market for the plaintiff’s supply of goods in
another market. As in Ethypharm, we said the alleged injury
was not inextricably intertwined with the anticompetitive
scheme because it crossed markets and was attenuated from
the anticompetitive conduct. See id. at 320-21. Together,
Ethypharm and Broadcom support the proposition that
suppliers and other non-market participants generally do not
have antitrust standing unless their injuries were the very
means by which the defendants carried out their illegal ends.
As we said in West Penn Allegheny, “[a]s a general matter,
the class of plaintiffs capable of satisfying the antitrust-injury
requirement is limited to consumers and competitors in the
restrained market . . . and to those whose injuries are the
means by which the defendants seek to achieve their
anticompetitive ends.” 627 F.3d at 102 (emphasis added).
Because Hanover Realty alleges that its harm was the
essential component of Defendants’ anticompetitive scheme
as opposed to an ancillary byproduct of it, we conclude that
Hanover Realty has sufficiently pleaded antitrust injury under
McCready. The ultimate objective of the defendants in
McCready was to injure psychologists, not plan subscribers.
To achieve that goal, they refused to reimburse subscribers
for visits to psychologists, thereby encouraging subscribers to
visit psychiatrists. Without injuring those subscribers, there
18
was no conspiracy. Likewise, McCready’s hypothetical bank,
which was neither a consumer nor competitor in the
psychotherapy market, sustained actionable injury because it
was directly harmed as the means of injuring psychologists.
Similar reasoning applies here. The end goal of
Defendants’ alleged anticompetitive conduct was to injure
Wegmans, a prospective competitor. To keep Wegmans out
of the market, Defendants sought to impose costs not on their
competitor, but on Hanover Realty, the party tasked with
obtaining the necessary permits before construction could
begin. Absent this relationship between Hanover Realty and
Wegmans, Defendants’ conduct “would have been without
purpose or effect.” Steamfitters Local Union No. 420 Welfare
Fund v. Philips Morris, Inc., 171 F.3d 912, 923 (3d Cir.
1999). And Defendants would succeed in their scheme either
by inflicting such high costs on Hanover Realty that it was
forced to abandon the project or by delaying the project long
enough so that Wegmans would back out of the agreement.
In both scenarios, injuring Hanover Realty was the very
means by which Defendants could get to Wegmans; Hanover
Realty’s injury was necessary to Defendants’ plan.
Had Wegmans purchased the property from Hanover
Realty and itself applied for the permits, the costs imposed by
Defendants’ challenges would have qualified as antitrust
injuries. It should make no difference that the parties’ lease
shifted these costs to Hanover Realty. See McCready, 457
U.S. at 479 (observing that antitrust injury “cannot reasonably
be restricted to those competitors whom [defendants] hoped
to eliminate from the market”). Regardless of who bore these
costs, Defendants’ objective remained the same: to keep
Wegmans out of the relevant market.
19
Defendants seize on language from our precedent
saying “we have not extended the ‘inextricably intertwined
exception beyond cases in which both plaintiffs and
defendants are in the business of selling goods or services in
the same relevant market,’ though they may not directly
compete against each other.” See Ethypharm, 707 F.3d at 237
(quoting Broadcom, 501 F.3d at 320-21). According to
Defendants, because Hanover Realty and ShopRite do not
operate in the same market, “Hanover Realty cannot establish
antitrust injury unless the Court were to break with
Ethypharm and Broadcom and greatly expand the scope of
the ‘inextricably intertwined’ exception—an expansion that
would swallow the rule.” Appellees’ Br. at 19.
Defendants read too much into these statements.9 As
9
We pause to note that at least one of our cases discussing
antitrust injury contains language that is potentially
overstated. In Barton & Pittinos, without mentioning the
“inextricably intertwined” doctrine, we found no antitrust
injury because the plaintiff was “not a competitor or a
consumer in the market in which trade was allegedly
restrained.” 118 F.3d at 184. We later cast doubt on that
statement, clarifying that the conclusion in Barton, “if
construed as an absolute (which arguably it need not be), may
in some circumstances lead to results that conflict with
Supreme Court and other precedent.” Carpet Grp. Int’l v.
Oriental Rug Importers Ass’n, Inc., 227 F.3d 62, 76 (3d Cir.
2000), overruled on other grounds, Animal Science Prods.,
Inc. v. China Minmetals Corp., 654 F.3d 462 (3d Cir. 2011).
We, of course, agree with Carpet Group and our other cases
that have allowed for the possibility of antitrust injury based
on a showing of harm that is inextricably intertwined with the
20
an initial matter, just because we have not extended the
exception beyond parties that sell goods or services in the
same market by no means suggests we shouldn’t (or can’t )
do so. In fact, McCready suggests the opposite conclusion.
McCready did not sell goods or services in the psychotherapy
market—she was a subscriber to a health insurance plan. Nor
was the hypothetical bank in McCready even a participant in
the psychotherapy market. Nonetheless, both sustained harm
that was inextricably intertwined with the defendants’
misconduct. Because § 4 “does not confine its protection to
consumers, or to purchasers, or to competitors, or to sellers”
we must avoid placing artificial limits on who may bring suit
under the antitrust laws. McCready, 457 U.S. at 472(citations omitted). Moreover, our comments in Ethypharm
and Broadcom must be read in context. As we discussed, the
alleged injuries to the plaintiffs in those cases were
byproducts of anticompetitive restraints in separate markets.
In contrast, although Hanover Realty and ShopRite operate in
separate markets, the very essence of Defendants’ scheme
was to impose expense and delay on Hanover Realty as a
means of keeping Wegmans out of the relevant market.
Defendants’ final line of defense against a finding of
antitrust injury rests on cases from other jurisdictions. In an
industry notorious for low profit margins, perhaps it is not
surprising that this is just the latest in a series of cases in
which a supermarket allegedly employed anticompetitive
tactics to keep a competitor out of the market.10 Defendants
defendant’s wrongdoing, rather than harm just to competitors
or consumers.
10
See, e.g., Serfecz v. Jewel Food Stores, 67 F.3d 591 (7th
Cir. 1995); Southaven Land Co. v. Malone & Hyde, Inc., 715
21
rely mostly on the Sixth Circuit’s decision in Southaven Land
Co. v. Malone & Hyde, Inc., 715 F.2d 1079.
Southaven was an owner-lessor of commercial space
and Malone operated a number of grocery stores in the
neighborhood. Southaven, 715 F.2d at 1080. Malone
assumed a lease to premises owned by Southaven, but the
parties later agreed to cancel the agreement. However, upon
learning that Southaven intended to find a grocery store to fill
the vacancy, Malone refused to cancel the contract. Malone
continued to pay rent on the vacant lot and did not otherwise
breach any of its contractual obligations. Id. at 1087.
Southaven nonetheless sued for antitrust violations, alleging
that Malone intended to leave the space vacant so as to
destroy competition for its other grocery stores. The Sixth
Circuit rejected Southaven’s argument that its injury was
inextricably intertwined with the injury Malone sought to
inflict on the grocery market. Id. at 1086-87. It explained
that “Southaven [a real estate lessor] is not alleged to be a
member of a class of ‘consumers’ of grocery products or a
class otherwise manipulated or utilized by Malone as a
fulcrum, conduit or market force to injure competitors or
participants” in the relevant market. Id. at 1086. Rather,
Southaven’s injury was, at most, a “tangential by-product” of
the alleged monopolistic conduct. Id. at 1086-87.
We do not find Southaven persuasive here because it
addressed a different set of facts and a different kind of
F.2d 1079 (6th Cir. 1983); Acme Mkts., Inc. v. Wharton
Hardware & Supply Corp., 890 F. Supp. 1230 (D.N.J. 1995);
Rosenberg v. Cleary, Gottlieb, Steen & Hamilton, 598 F.
Supp. 642 (S.D.N.Y. 1984).
22
injury. Southaven’s only economic harm was the vague
allegation that Malone was “subvert[ing] [its] business and
financial interests.” Id. at 1087. This supposed subversion of
business interests was not the means by which Malone was
trying to achieve its illegal ends; it was an incidental effect in
the real estate rental market rather than the grocery market.
Indeed, by continuing to pay rent and honoring its contractual
obligations, Malone arguably did not intend to harm
Southaven at all. As in Ethypharm and Broadcom, the
alleged downstream harm was too attenuated to support
antitrust injury. In fact, Southaven supports the view that
there was antitrust injury here, for Hanover Realty was used
as the “fulcrum, conduit or market force” that was missing in
Southaven. Forcing Hanover Realty to pay thousands of
dollars in legal fees to defend itself against alleged
anticompetitive filings and imposing significant delays on the
project were the very means by which Defendants sought to
keep a competitor out of the market.11 For all these reasons,
we conclude that Hanover Realty has sufficiently alleged
antitrust injury in the market for full-service supermarkets
because its injury was inextricably intertwined with
Defendants’ monopolistic conduct.
11
Defendants also urge us to follow Rosenberg, a decades-old
district court decision from outside this circuit. Although
Rosenberg involved similar facts to those here—competitor
supermarkets filing a series of lawsuits to enjoin the
construction of a new supermarket—the court’s legal analysis
is not persuasive. See 598 F. Supp. at 643-44. The court
mechanically applied Southaven without even mentioning the
possibility of antitrust injury based on the “inextricably
intertwined” exception. Id. at 645.
23
In his dissent in part, Judge Ambro says that, in his
view, a “plaintiff has not suffered antitrust injury unless its
own harm stems from the anticompetitive consequences of
the defendant’s conduct.” Judge Ambro Op. at 3. According
to Judge Ambro, the plaintiff’s injury in McCready was
actionable because she was a consumer in the psychotherapy
market and Blue Shield “used a classic antitrust harm—
increased prices—as a fulcrum to distort” that market. Id. at
4. Judge Ambro believes that McCready was “injured
because of the anticompetitive effects” of Blue Shield’s
conduct, but that Hanover Realty did not sustain a similar
type of injury. Id. In our view, Judge Ambro’s analysis
resembles that espoused by then-Justice Rehnquist in his
dissent in McCready. Justice Rehnquist said that McCready
could not recover under the antitrust laws because she
“alleges no anticompetitive effect upon herself”—her harm
did not arise from an increase in price, decrease in availability
of services, or reduction in competition. McCready, 457 U.S.
at 489 (Rehnquist, J., dissenting).
The majority agreed that McCready did not suffer one
of these traditional forms of antitrust harm, but that did not
foreclose relief. See id. at 482-83. She suffered antitrust
injury because the harm imposed on her—denying
reimbursement for visits to her psychologist—was the very
means by which Blue Shield sought to harm psychologists.
Similarly, Hanover Realty does not allege a classic antitrust
harm, but it nonetheless sufficiently alleges antitrust injury
because its harm was the very means by which Defendants
sought to keep Wegmans out of the market. Indeed, Hanover
Realty was the immediate target and bore the costs of
Defendants’ scheme.
Moving to the other four factors of the antitrust
24
standing analysis, we first find that Hanover Realty
sufficiently alleges a causal connection between the antitrust
violation and its harm. Defendants’ alleged sham petitioning
caused Hanover Realty to pay thousands of dollars in
attorney’s fees and costs in filing its responses.
The next two factors are interrelated and go to the
directness of the injury and the existence of more direct
victims of the antitrust violations. These both favor Hanover
Realty as well. Under McCready, a plaintiff can suffer direct
injury even if the defendant’s anticompetitive conduct
ultimately targets a third party; although the defendants there
sought to harm competing psychologists and not the plaintiff
health plan subscriber, the Supreme Court declared that the
denial of reimbursement for those receiving treatment from
psychologists injured the plaintiff “directly.” 457 U.S. at 483.
Likewise, Defendants’ legal challenges directly injured
Hanover Realty. If Defendants’ attempt to prevent Wegmans
from leasing the property fails, then Hanover Realty will have
suffered the costs of responding to the legal challenges while
Wegmans may have experienced no loss at all. In addition, to
the extent Defendants succeed in obstructing the lease,
Hanover Realty’s loss of rent under the contract would result
directly and not through “several somewhat vaguely defined
links.” Associated Gen., 459 U.S. at 540. That Wegmans is
another possible direct victim “does not diminish the
directness of [Hanover Realty’s] injury.” Lower Lake Erie,
998 F.2d at 1168-69.
The final factor, the potential for duplicative recovery
or complex apportionment of damages, also supports
standing. Hanover Realty’s recovery of the costs of
responding to the legal challenges would not pose a risk “of
overlapping damages as no other [party has] suffered this
25
distinct type of injury.” Id. at 1164 n.11. Furthermore, any
damages awarded for the delay or obstruction of the lease
would not yield duplicative recovery as the lost rent to
Hanover Realty would have to be subtracted as a cost from
any subsequent claim by Wegmans for lost profits. See id. at
1169 n.22. Although this last scenario would require some
apportionment of damages, the calculation would not be
complex.
Accordingly, Hanover Realty has adequately alleged
antitrust standing on its claim for attempted monopolization
of the market for full-service supermarkets.
2. Full-Service Supermarket Shopping
Centers
Hanover Realty does not rely on the “inextricably
intertwined” doctrine for its attempted monopolization claim
concerning the market for full-service supermarket shopping
centers. Instead, Hanover Realty argues that it directly
competes in this market for rental space with H&H
Development, which owns the land on which the ShopRite
resides.
Antitrust injury ordinarily is limited to consumers and
competitors in the restrained market. See Ethypharm, 707
F.3d at 233. If doubts arise as to whether the parties are
competitors, we look to see whether “there is a cross-
elasticity of demand between the plaintiffs’ offering and the
defendants’ offering.” Carpet Grp., 227 F.3d at 77. Such
cross-elasticity exists where customers of the defendant
would switch to the plaintiff if the defendant raised its prices.
Id. at 77 n.13.
Hanover Realty argues that both it and H&H
26
Development compete in the marketplace for supermarket
rental space because they “both operate an enterprise in it.”
Appellant’s Br. at 44. We are not persuaded. According to
Hanover Realty, H&H Development is a wholly-owned
subsidiary of ShopRite; the two have the same decision
makers; H&H Development owns no property other than the
land on which the ShopRite sits; and H&H Development
leases that property to its parent. Hanover Realty fails to
explain how it competes with H&H Development as a
supermarket landlord in any meaningful way. For example, it
does not argue there is any cross-elasticity between Hanover
Realty’s and H&H Development’s offerings. If a traditional
supermarket landlord raised rent to an excessive level, then
the supermarket presumably would move its business to
another property, such as Hanover Realty’s. But why would
H&H Development raise ShopRite’s rent given that they have
the same decision makers? As H&H Development’s sole
purpose is to own the ShopRite property, Hanover Realty
never alleges that H&H Development is competing for any
tenants other than its parent—to the extent one can even call
that “competing.” Because Hanover Realty cannot establish
antitrust injury in the market for full-service supermarket
shopping centers, it has no standing to bring its attempted
monopolization claim of this market. Therefore, we affirm
the dismissal of Count Two of the amended complaint.
B. Noerr-Pennington
Having survived (in part) the threshold issue of
antitrust standing, we proceed to Hanover Realty’s next major
27
obstacle: Noerr-Pennington immunity.12 The Noerr-
Pennington doctrine takes its name from a pair of Supreme
Court cases that placed a First Amendment limitation on the
reach of the Sherman Act. See E. R.R. Presidents Conference
v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961); United
Mine Workers of Am. v. Pennington, 381 U.S. 657 (1965).
Noerr-Pennington provides broad immunity from liability to
those who petition the government, including administrative
agencies and courts, for redress of their grievances. Cal.
Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 510
(1972). Although Noerr-Pennington is a powerful shield, it is
not absolute. Noerr itself recognized “[t]here may be
situations” in which a petition “is a mere sham to cover what
is actually nothing more than an attempt to interfere directly
with the business relationships of a competitor and the
application of the Sherman Act would be justified.” Noerr,
365 U.S. at 144. And so spawned the “sham” exception.
Two Supreme Court cases have explored the contours
of this exception. In California Motor, the respondents, a
group of highway carriers, alleged that the petitioners,
another group of highway carriers, engaged in
anticompetitive conduct by instituting state and federal
proceedings to defeat the respondents’ applications for
operating rights. 404 U.S. at 509. The Court held that the
12
Although the District Court did not discuss Noerr-
Pennington, we will address this issue in the first instance
because it raises questions of law over which we exercise
plenary review and has been fully briefed by the parties. See
Hudson United Bank v. LiTenda Mortg. Corp., 142 F.3d 151,
159 (3d Cir. 1998). The same goes for Defendants’ other
arguments for dismissal, which we discuss further below.
28
complaint demonstrated a sham because it contained
allegations that respondents “sought to bar their competitors
from meaningful access to adjudicatory tribunals and . . . to
usurp that decisionmaking process” by “institut[ing] the
proceedings and actions . . . with or without probable cause,
and regardless of the merits of the cases.” Id. at 512 (internal
quotation marks omitted). In other words, the allegations, if
proven, showed that the “administrative and judicial
processes have been abused.” Id. at 513.
The Court returned to the exception in Professional
Real Estate Investors, Inc. v. Columbia Pictures Industries,
Inc., 508 U.S. 49 (1993). There, after the respondents filed a
single copyright suit against the petitioners, the petitioners
responded with an antitrust action, dubbing the copyright suit
a sham. The Supreme Court outlined a two-part definition of
sham litigation. Id. at 60. First, “the lawsuit must be
objectively baseless in the sense that no reasonable litigant
could realistically expect success on the merits.” Id. The
existence of probable cause to institute the legal proceeding
irrefutably demonstrates that the antitrust plaintiff has not
proved the objective prong. Id. at 63. If the antitrust plaintiff
fails to satisfy the objective prong, the analysis ends and the
defendant is immune from suit. Only if the underlying
litigation is objectively meritless does the court address the
second factor: the litigant’s subjective motivations. Id. at 60.
Under this second part of the test, the court asks whether “the
baseless lawsuit conceals an attempt to interfere directly with
the business relationships of a competitor . . . through the use
[of] the governmental process—as opposed to the outcome of
that process—as an anticompetitive weapon.” Id. at 60-61(citations and internal quotation marks omitted).
29
Following California Motor and Professional Real
Estate, questions arise as to the relationship between these
two cases. Hanover Realty argues that, because Defendants
filed a series of petitions without regard to merit, its
allegations are in line with those from California Motor.
Defendants respond by pointing to the Supreme Court’s more
recent two-step analysis in Professional Real Estate, arguing
that we must find each petition objectively baseless before
assessing Defendants’ subjective motivations.13
Three other Courts of Appeals have reconciled
13
Defendants maintain that Hanover Realty waived its
argument regarding applying the California Motor analysis
because it never raised this issue before the District Court and
it did not raise the issue on appeal until its supplemental reply
brief. See Gardiner v. V.I. Water & Power Auth., 145 F.3d
635, 646-47 (3d Cir. 1998). Defendants argue that, before the
District Court, Hanover Realty agreed it had to satisfy the test
from Professional Real Estate. We disagree that Hanover
Realty has waived this argument. Throughout this litigation
Defendants have consistently argued for Noerr-Pennington
immunity and Hanover Realty has consistently responded that
the sham exception applies. Hanover Realty’s failure to cite
particular cases within its broader argument for the sham
exception does not amount to a waiver. Moreover, by
alleging an “illegal scheme” through a “series of sham
litigations,” Hanover Realty put Defendants on notice of the
relevant facts supporting its theory under California Motor.
App. 63. Finally, Defendants have not been prejudiced by
this argument because we exercise plenary review over this
issue and they have filed a supplemental brief responding to
Hanover Realty’s position.
30
California Motor and Professional Real Estate by concluding
that they apply to different situations: California Motor to a
series of sham petitions and Professional Real Estate to a
single sham petition.14 See Waugh Chapel S., LLC v. United
Food & Commercial Workers Union Local 27, 728 F.3d 354,
363-364 (4th Cir. 2013); Primetime 24 Joint Venture v. Nat’l
Broad. Co., 219 F.3d 92, 101 (2d Cir. 2000); USS-POSCO
Indus. v. Contra Costa Cnty. Bldg. & Constr. Trades Council,
AFL-CIO, 31 F.3d 800, 810-11 (9th Cir. 1994).
In the first case to tackle this issue, the Ninth Circuit
explained that, in its view, the two-step inquiry in
Professional Real Estate applies to the evaluation of a single
suit or legal proceeding. USS-POSCO, 31 F.3d at 810-11. In
such a case, the analysis is retrospective: if the alleged sham
petition is not objectively baseless, defendants are immune—
end of story. See id. at 811. California Motor, by contrast, is
concerned with a defendant who brings a series of legal
proceedings. The Supreme Court there “recognized that the
filing of a whole series of lawsuits and other legal actions
without regard to the merits has far more serious implications
than filing a single action.” Id. Thus, when faced with a
series or pattern of lawsuits, “the question is not whether any
one of them has merit—some may turn out to, just as a matter
14
A staff report from the Federal Trade Commission also
agrees with this view. See Federal Trade Commission,
Enforcement Perspectives on the Noerr-Pennington
Doctrine, at 28-38 (2006) (“FTC Report”), available at https:/
/www.ftc.gov/sites/default/files/documents/advocacy_docum
ents/ftc-staff-report-concerning-enforcement-perspectives-
noerr-pennington-doctrine/p013518enfperspectnoerr-
penningtondoctrine.pdf.
31
of chance—but whether they are brought pursuant to a policy
of starting legal proceedings without regard to the merits and
for the purpose of injuring a market rival.” Id. Unlike the
inquiry from Professional Real Estate, this inquiry is
prospective and asks whether the legal filings were made,
“not out of a genuine interest in redressing grievances, but as
part of a pattern or practice of successive filings undertaken
essentially for purposes of harassment.” Id.We agree with the approach to California Motor and
Professional Real Estate that has been adopted by the
Second, Fourth, and Ninth Circuits. As stated in Noerr itself,
the ultimate purpose of this inquiry is to determine whether
the petitioning activity is a “mere sham to cover what is
actually nothing more than an attempt to interfere directly
with the business relationships of a competitor.” Noerr, 365
U.S. at 144. The best way to make that determination
depends on whether there is a single filing or a series of
filings. Where there is only one alleged sham petition,
Professional Real Estate’s exacting two-step test properly
places a heavy thumb on the scale in favor of the defendant.
With only one “data point,” it is difficult to determine with
any precision whether the petition was anticompetitive. See
FTC Report at 35. Thus, Professional Real Estate requires a
showing of objective baselessness before looking into
subjective motivations in order to prevent any undue chilling
of First Amendment activity. In contrast, a more flexible
standard is appropriate when dealing with a pattern of
petitioning. Not only do pattern cases often involve more
complex fact sets and a greater risk of antitrust harm, but the
reviewing court sits in a much better position to assess
whether a defendant has misused the governmental process to
curtail competition. As a result, even if a small number of the
petitions turn out to have some objective merit, that should
32
not automatically immunize defendants from liability. See
USS-POSCO, 31 F.3d at 811 (“[E]ven a broken clock is right
twice a day.”).
Accordingly, when a party alleges a series of legal
proceedings, we conclude that the sham litigation standard
from California Motor should govern. This inquiry asks
whether a series of petitions were filed with or without regard
to merit and for the purpose of using the governmental
process (as opposed to the outcome of that process) to harm a
market rival and restrain trade. In deciding whether there was
such a policy of filing petitions with or without regard to
merit, a court should perform a holistic review that may
include looking at the defendant’s filing success—i.e., win-
loss percentage—as circumstantial evidence of the
defendant’s subjective motivations. Compare Waugh, 728
F.3d at 365 (finding sham where one of fourteen proceedings
was successful), with USS-POSCO, 31 F.3d at 811 (finding
no sham where fifteen of twenty-nine lawsuits were
successful), and Kaiser Found. Health Plan, Inc. v. Abbott
Labs., Inc., 552 F.3d 1033, 1046 (9th Cir. 2009) (finding no
sham where defendant “won seven of the seventeen suits” and
each of the ten remaining cases “had a plausible argument on
which it could have prevailed”). If more than an insignificant
number of filings have objective merit, a defendant likely did
not have a policy of filing “willy-nilly without regard to
success.” See USS-POSCO, 31 F.3d at 811. A high
percentage of meritless or objectively baseless proceedings,
on the other hand, will tend to support a finding that the
filings were not brought to redress any actual grievances. See
City of Columbia v. Omni Outdoor Adver., 499 U.S. 365, 380
(1991) (explaining that “the filing of frivolous objections . . .
simply in order to impose expense and delay” is the “classic
example” of a sham). Courts should also consider other
33
evidence of bad-faith as well as the magnitude and nature of
the collateral harm imposed on plaintiffs by defendants’
petitioning activity (e.g., abuses of the discovery process and
interference with access to governmental agencies). See
Professional Real Estate, 508 U.S. at 68 (Stevens, J.,
concurring).
Defendants argue as a threshold matter that the four
actions they filed against Hanover Realty are too few to even
qualify as a pattern or series. We are not convinced. In so
concluding, we do not set a minimum number requirement for
the applicability of California Motor or find that four sham
petitions will always support the use of California Motor. It
is sufficient for our purposes that four petitions were filed
against Hanover Realty and it alleges that Defendants filed
these sham proceedings at every opportunity to obstruct
Hanover Realty from “obtaining all necessary government
approvals.” App. 71.
Turning to Hanover Realty’s allegations, we conclude
it can establish that Defendants had a policy of filing
anticompetitive sham petitions. Defendants’ challenge to the
Flood Permit was objectively baseless. The Environmental
Department issued Hanover Realty its permit and found that
ShopRite had only a generalized property interest and its
claim of greater competition did not demonstrate it was an
aggrieved party. Courts have “consistently” rejected the
types of arguments offered by Defendants, the Environmental
Department explained. App. 157. In addition to the lack of
objective merit, Hanover Realty alleges indicia of bad faith.
For example, it alleges that, five months after they submitted
a request for an adjudicatory hearing, Defendants filed an
amended request with “new” proposed facts that were already
known to Defendants at the time they submitted their initial
34
request. The “only basis” for this filing, Hanover Realty
alleges, was to slow down the review process. App. 76.
Defendants’ alleged tactic suggests they were more interested
in delay than in redressing any grievances.
Similarly, with respect to the action in lieu of
prerogative writs, the New Jersey state court easily found that
ShopRite was not an interested party because it failed to show
how any of its rights would be affected by the approval of
Hanover Realty’s site plan. The court dismissed the
complaint. We agree that Defendants’ arguments for why
they had standing are objectively baseless. Hanover Realty
also alleges that Defendants filed three amended complaints
only for the purpose of delay. This allegation indicates that
Defendants’ complaint was not brought out of a genuine
desire to obtain relief, but rather to keep the suit pending as
long as possible.
Defendants claim two victorious moments with respect
to the Wetlands Permit. They first point to the fact that they
successfully identified a technical deficiency in the
application, and that the Environmental Department required
Hanover Realty to correct this administrative error. We liken
this to hitting a single in the second inning. Hanover Realty
submitted a new application within days and the problem was
resolved. See Waugh, 728 F.3d at 365 (“[T]he fact that there
may be moments of merit within a series of lawsuits is not
inconsistent with a campaign of sham litigation.”).
Defendants also remind us that the Environmental
Department required Hanover Realty to conduct a survey for
the presence of Indiana bats, as it had requested. But this also
does not qualify as success. The ostensible goal of
Defendants’ challenge was for the Environmental Department
to deny the Wetlands Permit. They were unsuccessful on that
35
front; Hanover Realty received the permit. Hanover Realty
also alleges subjective evidence of abusing the governmental
process. Defendants allegedly complained to the United
States Fish and Wildlife Service even though they knew the
wetlands at issue are not federally regulated waters.
Moreover, in an email, Defendants’ ecological consultant
touted its ability to delay the permit approval process.
Defendants arguably fared slightly better in connection
with their challenge to the Street Permit. They submitted
objections to the Department of Transportation arguing,
among other things, that Hanover Realty was required to
build an overpass over a highway before beginning
construction. In its letter responding to the parties, the
Department of Transportation did acknowledge that it was
required to consider any data or arguments submitted by third
parties. Defendants extract success from that statement, but
we do not. That the Department of Transportation was
required to consider Defendants’ challenge does not mean
that their arguments had any bite. Where Defendants did
have some success, however, was in the Department of
Transportation’s finding that the prior developer’s agreement
triggered the need for additional highway improvements.
But, rather than requiring Hanover Realty to make those
improvements, the letter recognized that such construction
might not be feasible or worthwhile. It therefore
recommended that Hanover Realty negotiate a modification
to the agreement with the Department of Transportation
before proceeding any further. This action was a partial
success because Defendants’ challenge did have some merit,
but it did not cause the Department of Transportation to
actually reject the permit application.
All in all, the allegations and the record show that
36
Hanover Realty received the Flood and Wetlands Permits, it
got the state-court action dismissed, and it avoided having to
make significant highway improvements. Defendants’
meager record on the merits supports Hanover Realty’s
allegation that that the filings were not brought to redress any
grievances. Nor have Defendants articulated any genuine
interest in flooding or traffic near the proposed Wegmans
(which is two miles away from the ShopRite), or in protecting
the Indiana bat. Rather, Hanover Realty sufficiently alleges
that Defendants brought these actions under a policy of
harassment with the effect of obstructing Hanover Realty’s
access to governmental bodies. The filings have imposed
significant expense on Hanover Realty, have continued to
delay the project, and threaten the viability of the project
altogether. That Defendants have had some insignificant
success along the way does not alter the analysis when
reviewing a pattern or series of proceedings. Accordingly,
Hanover Realty can establish that the sham exception to
Noerr-Pennington immunity applies because it sufficiently
alleges that Defendants “instituted the proceedings and
actions . . . with or without probable cause, and regardless of
the merits of the cases.” Cal. Motor, 404 U.S. at 516.15
C. Remaining Arguments
15
Defendants also argue that, because some of the
proceedings are ongoing, Hanover Realty’s suit is premature.
We reject this argument because the California Motor
analysis is prospective, not retrospective. See USS-POSCO,
31 F.3d at 810-11. If we were to agree with Defendants on
this point, they could keep filing petitions and avoid judicial
review indefinitely.
37
Defendants contend that Hanover Realty has failed to
allege facts showing that there is a “dangerous probability of
[Defendants] achieving monopoly power.” W. Penn
Allegheny, 627 F.3d at 108. In support of this position,
Defendants argue that Hanover Realty has not adequately
alleged a product or geographic market.16
According to Defendants, Hanover Realty has not
properly defined the alleged product market for full-service
supermarkets because it has not distinguished full-service
supermarkets from any other supermarkets or grocery stores.
Defendants believe this supposed submarket is a contrivance.
We disagree. “Competing products are in the same market if
they are readily substitutable for one another; a market’s outer
boundaries are determined by the reasonable
interchangeability of use between a product and its substitute,
or by the cross-elasticity of demand.” Broadcom, 501 F.3d at307 (citing Brown Shoe Co. v. United States, 370 U.S. 294,
325 (1962)). Moreover, “in most cases, proper market
definition can be determined only after a factual inquiry into
the commercial realities faced by consumers.” Queen City
Pizza, Inc. v. Domino’s Pizza, Inc., 124 F.3d 430, 436 (3d
Cir. 1997). We cannot say, at this very early stage in the
litigation, that Hanover Realty’s product market is
implausible. Hanover Realty alleges that full-service
supermarkets are distinct from other grocery suppliers
because they provide customers with additional amenities,
16
Because we already found that Hanover Realty does not
have antitrust standing for its claim of attempted
monopolization of the full-service supermarket shopping
center market (Count Two), we address here only the claim
relating to full-service supermarkets (Count One).
38
including prepared foods to go, on-site dining options, wine
and liquor, specialty products, and other services such as
pharmacies, banks, and fitness centers. Hanover Realty
further alleges that consumers have come to enjoy full-service
supermarkets as a one-stop shopping experience that allows
them to avoid driving to different stores to check off the items
on their grocery lists. Because consumers plausibly treat full-
service supermarkets as a distinct submarket, the allegations
here support the position that the market for full-service
supermarkets “encompass[es] all interchangeable substitute
products.” Id. Through discovery, Hanover Realty may be
able to demonstrate that a price increase at the ShopRite
would not cause consumers to shop at other more traditional
grocery stores.
Defendants also argue that the proposed geographic
market—greater Morristown—is too imprecise. In
Defendants’ view, Hanover Realty has not alleged facts
suggesting that ShopRite could raise prices without causing
consumers to drive elsewhere. Again, we disagree. “[T]he
relevant geographic market is the area in which a potential
buyer may rationally look for the goods or services he or she
seeks.” Eichorn v. AT&T Corp., 248 F.3d 131, 147 (3d Cir.
2001) (internal quotation marks omitted). Hanover Realty
alleges that, when it comes to buying groceries, consumers
like to shop near their homes. Thus, it alleges, proximity to a
large upscale population is an important factor in determining
where to locate a full-service supermarket. We find it
plausible that greater Morristown, which includes Morristown
and its neighboring communities, is a distinct geographic
market. If the ShopRite in Morristown raised its prices, it is
plausible that only the most diligent and frugal customer
39
would move his or her grocery shopping to a more distant
supermarket.17
III. CONCLUSION
For the foregoing reasons, we will affirm in part,
vacate in part, and remand to the District Court for further
proceedings consistent with this opinion.
17
We have considered and rejected Defendants’ remaining
arguments. They argue there is no dangerous probability of
achieving a monopoly because there is another full-service
supermarket in the area—the Stop & Shop of Morris Plains.
Defendants maintain that Hanover Realty has admitted this
fact. But in making that argument, Defendants rely on
Hanover Realty’s initial complaint, not its amended
complaint, which is operative. In the amended complaint,
Hanover Realty alleges that the Stop & Shop is a “grocery
store,” App. 72, and that ShopRite is the “only full-service
supermarket” in Greater Morristown, App. 73. We must
accept those allegations as true. Defendants’ final argument
is that Hanover Realty has failed to allege a specific intent to
monopolize. For the reasons discussed above in connection
with the Noerr-Pennington doctrine, we conclude Hanover
Realty sufficiently alleges that Defendants filed a series of
sham proceedings with the intent to interfere with a
prospective competitor and restrain trade.
40
Hanover 3201 Realty LLC v. Village Supermarkets
No. 14-4183
AMBRO, Circuit Judge, dissenting in part and concurring in
part.
I respectfully disagree with my colleagues’ view that
Hanover 3201 Realty has suffered antitrust injury, a necessary
component of antitrust standing. In my view, because the
anticompetitive effects of Village Supermarkets’ actions (as
opposed to the damages sustained directly from any tort) do
not hurt Hanover, a landlord and not a player in the market
for full-service supermarkets, it lacks antitrust standing to
bring this suit.
However, I recognize that my colleagues’ view of
antitrust standing is, by virtue of their ruling, the holding of
our Court and now the law of this Circuit. In this context, I
believe I am obliged to consider the merits of Hanover’s suit.
Among other things, I agree with Judge Fuentes that Village’s
Noerr–Pennington immunity defense is a sham and hence
unavailing at this stage. Thus I vote to vacate the judgment of
the District Court and remand.
This sets the stage for a most interesting interplay of
whether to vote by issue (in which case Hanover wins, as,
while I lose on the issue of standing, I align with Judge
Fuentes on the lack of merit for Village’s claim of immunity
under Noerr-Pennington) or outcome (whereby Village wins,
as my outcome, though for different reasons, aligns with
Judge Greenberg’s). I opt for the former for the reasons
noted below.
I. Hanover Lacks Antitrust Standing
A. Law of Antitrust Injury
In order to state a claim for violation of the antitrust
laws, a plaintiff must show that it has suffered “antitrust
injury, which is to say injury of the type the antitrust laws
were intended to prevent and that flows from that which
makes [the] defendants’ acts unlawful.” Brunswick Corp. v.
Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977).
Antitrust injury is a necessary but not sufficient component of
antitrust standing, a prudential limitation on the Clayton Act’s
broad language concerning the right to sue. Barton &
Pittinos, Inc. v. SmithKline Beecham Corp., 118 F.3d 178,
182 (3d Cir. 1997).
We have held that a plaintiff ordinarily does not suffer
“antitrust injury” if it is “not a competitor or a consumer in
the market allegedly restrained,” id. at 181, unless “there
exists a ‘significant causal connection’ such that the harm to
the plaintiff . . . [is] ‘inextricably intertwined’ with the
antitrust conspiracy,” Gulfstream III Associates, Inc. v.
Gulfstream Aerospace Corp., 995 F.2d 425, 429 (3d Cir.
1993) (quoting Blue Shield v. McCready, 457 U.S. 465, 484
(1982)). This exception is narrow, and antitrust injury is
“almost exclusively suffered by consumers or competitors.”
Steamfitters Local Union No. 420 Welfare Fund v. Philip
Morris, Inc., 171 F.3d 912, 926 (3d Cir. 1999).1
1
Our law that a plaintiff ought to be a consumer or
competitor and that the “inextricably intertwined” injury
presents a limited “exception” to this “requirement” is not the
only way to read the relevant Supreme Court cases. The
leading case on antitrust standing treated consumer-or-
2
My principal disagreement with my colleagues
concerns how to read the “inextricably intertwined”
exception. As I understand their opinion, they hew closely to
the meaning of those two particular words and believe that a
plaintiff has suffered an antitrust injury if its injury is closely
related to a defendant’s actions that also amount to an
antitrust violation. By contrast, I believe the rule remains that
“antitrust injury should reflect the anticompetitive effect
either of the violation or of anticompetitive acts made
possible by the violation.” Brunswick, 429 U.S. at 489. In
my view, even if a plaintiff has suffered direct harm from a
defendant’s acts, and even if those acts violate the antitrust
laws, it has not suffered antitrust injury unless its own harm
stems from the anticompetitive consequences of the
defendant’s conduct.
As the majority notes, the “inextricably intertwined”
language comes from the Supreme Court’s decision in
McCready, a case with exceptionally broad dicta about
antitrust standing. In that case, the plaintiff, who was insured
by Blue Shield, saw a psychologist. McCready, 457 U.S. at
468. Blue Shield allegedly colluded with psychiatrists to
divert patients like McCready from psychologists by
declining to reimburse the latter’s services. Id. at 469–70. It
argued that McCready had not suffered antitrust injury
because neither psychiatrists’ nor psychologists’ prices
competitor status as one of several factors a court should
weigh in considering whether a plaintiff has antitrust
standing, Associated Gen. Contractors v. Cal. State Council
of Carpenters, 459 U.S. 519, 539 (1983), and in other circuits
consumer-or-competitor status is less strongly emphasized.
See, e.g., Novell, Inc. v. Microsoft Corp., 505 F.3d 302, 311
(4th Cir. 2007). However, it is the settled law of our Court.
3
increased as a result of its scheme (ignoring the de facto price
increase of the insurance company’s failure to reimburse the
insured), id. at 481–84, and that the point of the alleged
scheme was to harm psychologists, not their insured patients,
id. at 478–79.2 But the Supreme Court held that “[a]lthough
McCready was not a competitor of the conspirators
[psychiatrists and Blue Shield], the injury she suffered was
inextricably intertwined with the injury the conspirators
sought to inflict on psychologists and the psychotherapy
market.” 457 U.S. at 483–84.
The reason McCready’s injury was inextricably
intertwined with the harm inflicted on the psychotherapy
market was that she was a consumer in that market and her
“injuries [were] the essential means by which defendants’
illegal conduct brought about its ultimate injury to the
marketplace.” Ethypharm S.A. France v. Abbott Labs., 707
F.3d 223, 237 n.21 (3d Cir. 2013) (quoting IIA Philip E.
Areeda, et al., Antitrust Law ¶ 339, at 123 (3d ed. 2007)).
However, the term “essential means” does not mean that
anyone who suffers any injury in the context of an
anticompetitive scheme may sue under the antitrust laws. In
McCready, although the plaintiff was not the ultimate target
of the cartel’s activity, Blue Shield and the psychiatrists used
a classic antitrust harm—increased prices—as a fulcrum to
distort the psychotherapy market, specifically to the detriment
of psychologists. The McCready Court affirmed that a person
who suffers antitrust injury— i.e., who is injured because of
2
Blue Shield’s argument was based in part on a now-
outmoded theory that only the “target” of an antitrust
violation could bring suit. Id. at 478 n.14 & 479 n.15; see
also Associated Gen. Contractors, 459 U.S. at 536 n.33
(rejecting “target area” theory).
4
the anticompetitive effects of a cartel or monopolist’s
activity—may bring suit even if that person is not a consumer
from whom the defendant seeks to extract supracompetitive
rents or a competitor the defendant seeks to eliminate. See
IIA Areeda, supra, ¶ 339, at 144 (4th ed. 2014) (“[T]he result
of the alleged antitrust conspiracy would be higher prices in
the very market in which McCready was a purchaser. . . .
McCready is thus like a purchaser from a cartel at cartel
prices.”).
B. Hanover Has Not Suffered Antitrust
Injury
Here, Hanover alleges monopolization of two markets,
one for “full service supermarkets,” and one for “full service
supermarket shopping centers,” the latter defined as the
market for real property that can be used for full-service
supermarkets. It does not participate in the supermarket
business; it is a landlord and developer. It operates a
development enterprise in the real-estate market, but it does
not sell goods or provide consumer services the way Village
does. And although Hanover does participate in the market
for real property that can be used for full-service
supermarkets, Village’s actions have not affected that market.
In other words, Hanover does not participate in the market
that was allegedly restrained, and the market it does
participate in was not restrained. Hanover has thus not
suffered an antitrust injury.
1. Full-service Supermarket Market
Unlike the relationship in McCready between the
plaintiff and the market for psychotherapy services, whether
the market for full-service supermarkets is ultimately
restrained does not matter to Hanover. Its injuries flow from
Village’s alleged wrongful use of civil proceedings and from
5
Hanover’s contract with Wegmans that allocated to Hanover
some portion of the risk of failing to develop the parcel within
a certain period of time. Village’s alleged attempted
monopolization of the relevant markets hurts Wegmans, a
full-service supermarket, and it hurts consumers who would
prefer a choice among supermarkets, but as Village is not
alleged to have restrained the market for real estate in
Morristown or anywhere else, it is hard to see why Hanover is
a proper antitrust plaintiff even if it has valid tort claims
arising out of otherwise anticompetitive conduct. In short,
because the anticompetitive effects of Village’s allegedly
illegal activity have not caused any injury to Hanover, it does
not have an antitrust claim.
Several sources of authority support the notion that a
landlord is an improper antitrust plaintiff when it complains
of injury flowing from antitrust harm directed at a tenant.
The leading treatise deals with the situation in one terse
paragraph: “The landlord receiving a set rather than variable
rent is simply a supplier of an input . . . . Such landlords are
almost always denied standing for antitrust violations that
target their tenants or that occur in the product market.” IIA
Areeda, supra, ¶ 351c, at 286. We have also disposed of
claims brought by landlords without much analysis beyond
indicating that any injury the landlord suffered, even when its
rent was tied to the tenant’s revenue, was too remote from the
antitrust violation to allow the landlord to bring suit.
[A] non-operating lessor-owner of a motion
picture theatre who is entitled to rental based on
a percentage of receipts is nonetheless not a
“person . . . injured in his business or property”
within the meaning of section 4 of the Clayton
Act, 15 U.S.C. § 15, and, therefore, is not
entitled to bring suit under the Act for an
alleged conspiracy relating to the licensing of
6
pictures at the theatre by the lessee-operator.
Melrose Realty Co. v. Loew’s, Inc., 234 F.2d 518, 519 (3d
Cir. 1956) (per curiam); see also Harrison v. Paramount
Pictures, Inc., 211 F.2d 405, 405 (3d Cir. 1954) (affirming for
the reasons stated in the District Court’s opinion, see 115 F.
Supp. 312 (E.D. Pa. 1953), which held that a movie theater
lessor was too remote from antitrust harm directed at movie
distributors). More recently, we held that “[a] supplier does
not suffer an antitrust injury when competition is reduced in
the downstream market in which it sells goods or services.”
W. Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85,
102 (3d Cir. 2010). And a landlord is in the same shoes as a
supplier from an antitrust-injury perspective. IIA Areeda,
supra, ¶ 351c at 286.
Other courts of appeals that have faced facts similar to
our case have rejected the landlord’s standing. Most closely
on point is Serfecz v. Jewel Food Stores, 67 F.3d 591 (7th Cir.
1995), where owners and operators of a shopping mall sought
to recover damages from an anchor tenant, a grocery store.
The tenant opened another store nearby, vacated its old
premises, and would not sublease them to another grocery
store. The Seventh Circuit Court held that the “plaintiffs
d[id] not have the requisite direct injury to have standing to
assert that [the defendant] ha[d] monopolized, or conspired
with others to monopolize, the retail grocery market,” id. at
598–99, because plaintiffs were players in the shopping
center market, not the retail grocery business.
Similarly, in a Sixth Circuit case a grocery store
subleased to a competitor grocery store and then engaged in
anticompetitive conduct to ruin it. Southaven Land Co. v.
Malone & Hyde, Inc., 715 F.2d 1079, 1081 (6th Cir. 1983).
The plaintiff, a landlord that owned the rest of the shopping
center of which the grocery store was a part, found a
7
replacement grocery store, but the defendant would not
sublease to it, presumably lowering the value of the shopping
center. The Court noted that “Southaven’s [the land owner’s]
injury [was] charged to have accrued as a result of its contract
negotiations with the alleged antitrust violator. The
complaint noticeably fail[ed] to aver that Southaven sustained
any injury as a competitor, purchaser, consumer or other
economic actor in the grocery industry.” Id. at 1081.
Ultimately, the Court held that as “Southaven is not a
consumer, customer, competitor or participant in the relevant
market or otherwise inextricably intertwined with any such
entity[, i]ts injury [was] not sufficiently linked to the pro-
competitive policy of the antitrust laws” to confer standing on
it. Id. at 1087; accord Rosenberg v. Cleary, Gottlieb, Steen &
Hamilton, 598 F. Supp. 642, 645–46 (S.D.N.Y. 1984) (“No
matter how causal a relationship may exist between the
alleged violation and injury, the defendants’ actions were not
undertaken to interfere with the economic freedom of
participants in the construction business.”).
Because I read the Supreme Court’s and our cases on
antitrust standing to require a plaintiff’s harm to be at least
“inextricably intertwined” with whatever makes a defendant’s
conduct specifically an antitrust violation—e.g., higher prices
or reduced output—I believe Hanover lacks standing with
respect to the allegedly unlawful restraint of the full-service
supermarket market. Hence I respectfully dissent from the
decision of my colleagues to reverse on this issue.
2. Full-Service Supermarket
Shopping Center Market
Hanover also alleges that it competes directly with
H&H, the special purpose entity that owns the land for
Village’s supermarket, in the “full service supermarket
shopping center market” of greater Morristown. This title for
8
the market, besides being a mouthful, is confusing, as the
market players are said to be landowners “whose property is
or can be utilized by or rented to a full-service supermarket.”
Am. Compl. ¶ 32, J.A. 69. Thus the market is for certain real
property. The Serfecz plaintiffs, who lacked standing insofar
as they alleged monopolization of the retail grocery market,
nevertheless had standing with respect to the shopping center
market. 67 F.3d at 599. This was because they had
ownership interests in a mall, and the defendant (a former
anchor tenant and grocery store) allegedly colluded with a
different shopping center to drive Serfecz’s mall out of
business. Id. at 595, 599. Hanover argues that H&H and
Village are trying to keep Hanover out of the full-service
supermarket shopping center market in the same way that the
Serfecz defendants allegedly drove the plaintiffs out of the
mall business.
Unlike the plaintiffs in Serfecz, neither Hanover nor
H&H is specifically in the business of operating shopping
centers. Instead, they are owners and developers of real
property. Hanover does not allege, for example, that its
parcel’s value decreased following Village and H&H’s
attempts to exclude competitors from the market for owning
land on which supermarkets can be leased. And the
Complaint does not allege that Village’s efforts have affected
the market for real property in Morristown or anywhere else
to any significant degree. As Hanover has not plausibly
alleged that Village’s monopolistic conduct has injured it as a
landowner, it cannot be said that the frustration of its contract
with Wegmans “reflect[s] the anticompetitive effect . . . of the
violation.” Brunswick, 429 U.S. at 489; cf. IIA Areeda,
supra, ¶ 351b1, at 284 (“In the movies cases, for example, the
defendant’s conduct . . . depriv[ed] rival film producers,
distributors, or exhibitors of adequate access to markets or
supplies. The landlord is a stranger to those interests: the real
estate market as a whole is not significantly affected.”).
9
Thus, and for the reasons ably expressed in Part II.A.2
of Judge Fuentes’ opinion, I agree that Hanover lacks
antitrust standing with respect to what it calls the full-service
supermarket shopping center market.
II. Noerr–Pennington and Remaining Issues
I agree with Judge Fuentes’ views on Noerr–
Pennington and Village’s other objections to Hanover’s
Complaint. Hence I join Part II.B–C of his opinion.
III. How to Decide This Case?
This case presents what academic literature terms a
“voting paradox.” On the one hand, two judges (Judge
Greenberg and I) believe that the outcome should be that
Hanover’s suit not proceed, though we do so for different
reasons. However, one majority of this Court (Judges
Fuentes and Greenberg) believes that Hanover has antitrust
standing (I do not because I do not discern antitrust injury),
while another majority (Judge Fuentes and I) believes that
Hanover should survive Village’s motion to dismiss
(assuming it has antitrust standing). The paradox is that, if I
vote on the judgment of this case (affirm or reverse) based on
my individual views, a majority of the Court will have ruled
against the prevailing party on each relevant issue, meaning
that our Court’s reasoning would not support its judgment.
However, if I follow, despite my dissent, Judge Fuentes and
Greenberg on the antitrust standing issue, my individual vote
would be inconsistent with my view of who should win were
I alone ruling.
But to me it is significant that we are not acting alone.
Because we need to act as a Court, I think it is more
appropriate for me to be bound by the majority’s opinion on
antitrust standing despite my disagreement with it. Before I
10
explain my choice in detail, I shall survey the current state of
thinking on this issue.
A. Law and Scholarship on the Voting Paradox
Although I do not write on an entirely blank slate with
respect to this issue, there is surprisingly little discussion in
judicial opinions about how one ought to vote when facing
such a paradox. Where a majority agrees on the bottom-line
outcome in a case, shifting majorities with varied lines of
reasoning are more common; these variable groups
unquestionably describe the holdings of the relevant courts.
See, e.g., United States v. Booker, 543 U.S. 220 (2005)
(resolving whether there was a constitutional violation by one
majority per Justice Stevens over Justice Breyer’s dissent but
ordering remedy via a different majority per Justice Breyer
over Justice Stevens’ dissent); Blunt v. Lower Merion Sch.
Dist., 767 F.3d 247, 302 (3d Cir. 2014) (“Although a majority
of the Court thus does not accept the District Court’s ruling
that CBP did not have standing, this conclusion does not
change our outcome in light of a different majority’s
independent conclusion that the Court properly entered
summary judgment against the plaintiffs.”); United States v.
Aguila-Montes de Oca, 655 F.3d 915, 916 (9th Cir. 2011); O
Centro Espirita Beneficiente Uniao Do Vegetal v. Ashcroft,
389 F.3d 973 (10th Cir. 2004) (en banc); United States v.
Johnson, 256 F.3d 895, 897 (9th Cir. 2001) (en banc); Davis
v. U.S. Steel Corp., 779 F.2d 209, 210 (4th Cir. 1985).
It is thus commonplace that majorities composed of
different allotments of judges lay down the law, and it would
seem to follow that a judge may vote on a judgment based on
the relevant court’s legal conclusions even if the judge
disagrees with the court’s resolution of a dispositive issue.
However, it is quite rare that judges are actually faced with a
voting paradox where it is debatable whether the proper result
11
is to vote according to the judge’s personal preference or to
vote according to shifting majorities’ statements of the law.
In three Supreme Court cases, justices have noted that their
votes on the judgment were inconsistent with their individual
views of the proper outcome of the case. Arizona v.
Fulminante, 499 U.S. 279, 313 (1991) (Kennedy, J.,
concurring in the judgment); Pennsylvania v. Union Gas Co.,
491 U.S. 1, 45 (1989) (White, J., concurring in the judgment
in part and dissenting in part); United States v. Vuitch, 402
U.S. 62, 96 (1971) (Harlan, J., dissenting as to jurisdiction);
id. at 97 (opinion of Blackmun, J.).
Fulminante and Vuitch are especially relevant. In the
former case, the Arizona Supreme Court held that a
confession was coerced and thus inadmissible. State v.
Fulminante, 778 P.2d 602, 627 (Ariz. 1988), aff’d, 499 U.S.
279 (1991). In deciding whether to affirm or reverse, the U.S.
Supreme Court faced three issues: (1) whether the
defendant’s confession was coerced; (2) if so, whether
harmless error analysis applied; and (3) if so, whether the
admission of the confession was harmless error. Fulminante,
499 U.S. at 279, 282, 295. Five justices concluded the
confession was coerced, id. at 287; a different group of five
justices concluded harmless error applies to coerced
confessions, id. at 311–12; and still a third group of five held
that the admission there was not harmless, id. at 302. At the
same time, five justices thought the Arizona Supreme Court
should have been reversed, though for no consistent reason.
See id. at 306 (opinion of Rehnquist, C.J., that confession was
not coerced, joined by O’Connor, Kennedy & Souter, JJ.); id.
at 312 (opinion of Rehnquist, C.J., joined by Scalia, J., that
admission of confession was harmless). Justice Kennedy
yielded to the majority on the question of whether the
confession was coerced and thus reached the harmless-error
issue; he concluded the admission was not harmless and thus
supported the judgment affirming the Arizona Supreme
12
Court. Id. at 313–14. Likewise, in Vuitch Justices Harlan and
Blackmun acceded to a majority’s disposition as to
jurisdiction, but—together with other justices—formed a
separate majority on the merits. 402 U.S. at 96, 97.3
Similarly, in the panel opinion of United States v.
Andis, 277 F.3d 984, 985 (8th Cir. 2002), rev’d, 333 F.3d 886(8th Cir. 2003) (en banc), two judges held that the right to
3
Union Gas is less squarely on point because no majority
supported that judgment on every point. The issues were (1)
whether two Congressional statutes were intended to abrogate
state sovereign immunity and (2) whether Congress had that
power under the Commerce Clause. 491 U.S. at 5. Five
justices held the statutes purported to annul state sovereign
immunity and five that Congress had the power to do so. Id.
at 13. However, only four justices agreed on a rationale for
Congress’s constitutional power. Justice White’s cryptic
concurrence stated on the constitutional question only that “I
agree with the conclusion reached by Justice Brennan in Part
III of his opinion, that Congress has the authority under
Article I to abrogate the Eleventh Amendment immunity of
the States, although I do not agree with much of his
reasoning.” Union Gas Co., 491 U.S. at 57 (White, J.,
concurring in the judgment in part and dissenting in part). It
was this absence of reasoning—not, as Judge Greenberg’s
dissent suggests, Justice White’s yielding to his colleagues on
the statutory interpretation question—that caused the
“confusion” noted in Seminole Tribe of Florida v. Florida,
517 U.S. 44, 64 (1996) (“Justice White, who provided the
fifth vote for the result, wrote separately in order to indicate
his disagreement with the plurality’s rationale.”).
13
appeal an illegal sentence could not be waived, but a different
majority held that the sentence should be vacated. Two
judges, acting independently, would have affirmed the
sentence—one because he viewed the waiver as valid and
another because he thought the sentence was legal. Id.However, the judge who viewed the waiver as valid voted to
remand the case for further proceedings because on the
merits, assuming the issue was not waived, he believed the
sentence was illegal. Id. at 989 (Morris Sheppard Arnold, J.,
dissenting in part and concurring in the judgment). This vote
was made without much comment except that “otherwise the
court could not issue a mandate.” Id. (In fact, a mandate
could have just as easily issued if the two judges preferring
affirmance voted to affirm.) 4
At the same time, there have been cases where judges
or justices stick to their individual guns with the result that,
although a majority supports a given judgment, a careful
reading of all the opinions in the case reveals that no majority
supports the prevailing party on any issue logically necessary
4
There may also be some support for issue voting in our
decision in United States v. Bazzano, 712 F.2d 826 (3d Cir.
1983) (en banc) (per curiam). In that case, nine of the ten
judges would have voted to remand the case to the District
Court. But no majority could agree on what the District
Court should do on remand. Id. at 829 (noting that the
“differing grounds on which these various votes for remand
are rested cannot be reconciled so as to yield a majority vote
for a remand with consistent instructions to the district
court”). We thus affirmed the District Court’s judgment,
despite nine of the ten judges agreeing on the outcome,
because no majority could agree on rationale.
14
to its victory. For example, Miller v. Albright, 523 U.S. 420(1998), presented four questions, and shifting majorities of
the Supreme Court sided with Miller on each one; nonetheless
six justices, for differing reasons, thought Miller should lose,
which she did. Maxwell L. Stearns, Should Justices Ever
Switch Votes? Miller v. Albright in Social Choice
Perspective, 7 Sup. Ct. Econ. Rev. 87, 102 (1999). To muddy
the waters further, scholars believe that in other cases justices
or judges have cast votes in favor of analyses with which they
did not agree in order to mask voting paradoxes. See, e.g.,
Michael Abramowicz & Maxwell L. Stearns, Beyond
Counting Votes: The Political Economy of Bush v. Gore, 54
Vand. L. Rev. 1849, 1938–41 (2001).
Given this array of paradoxical (or potentially so)
cases and the striking absence of analysis of how to vote in
any of them, it is not surprising that there is no set rule on
how an appellate judge should vote. Generally, scholars who
analyze voting paradoxes (and there are several) discuss two
possibilities: “issue voting” and “outcome voting.” Broadly
speaking, the former occurs when a judge surveys the holding
on each question of law presented; a majority vote on any
given issue counts as a holding of the court, and the
remaining judge is bound by it as if it occurred in a prior
precedential case.5 The latter, and more common, scenario
5
This equation of precedent with an issue is problematic in a
court that has power to overrule its precedent, like the en banc
Third Circuit or the Supreme Court. Indeed, when a panel is
in a position to overrule prior precedent, a voting paradox
may be more likely. See David S. Cohen, The Precedent-
Based Voting Paradox, 90 B.U. L. Rev. 183, 184 (2010).
Luckily, that is not the case with a panel of this Court. See
Third Circuit I.O.P. 9.1 (“It is the tradition of this court that
15
occurs when a judge votes on the result of a case (affirm,
vacate, reverse, etc.) according to his or her view of the
proper outcome and without regard to the views of the other
judges on a panel. Even if a careful reading of the judges’
opinions in a case shows that a majority would rule for the
losing party on each relevant issue, an outcome-vote, as that
term is usually used in the relevant literature, results in a win
for the party the majority of judges think should win
regardless of reasoning.
Before discussing the pros and cons of each voting
protocol, I note that one thing is clear: as a formal matter,
judges vote on the result of a case, i.e., whether to affirm,
reverse, vacate, dismiss, remand, or some combination of
these; otherwise, the clerk of a court could not enter judgment
pursuant to Fed. R. App. P. 36. But even though “result” and
“outcome” are synonyms, it does not follow that my vote on
the disposition must be what I have just defined as an
“outcome vote.” I am aware of no source of law that tells me
whether my vote must be based on how I view our Court’s
holding on each relevant issue or on how I personally view
the best outcome of the case.
B. An Issue Vote is Preferable Here
There are two closely related reasons why I choose to
vote by issue in this case, and I will discuss them in turn: (1)
the execution of our dual responsibilities to resolve disputes
and declare the law; and (2) the role of a judge on a
multimember court.
the holding of a panel in a precedential opinion is binding on
subsequent panels. Thus, no subsequent panel overrules the
holding in a precedential opinion of a previous panel. Court
en banc consideration is required to do so.”).
16
1. Our Dual Responsibilities: Dispute
Resolution and Law Declaration
Those who sit on, appear before, or study federal
courts are familiar with the notion that we serve two primary
functions: dispute resolution and law declaration. The former
role is rooted in the limitation that courts only decide “cases”
and “controversies.” U.S. Const., art. III, § 2. To carry out
this role, a court issues judgments in the cases before it; in the
case of an appellate court, the judgment, as noted, will usually
be to affirm, reverse, vacate, dismiss, remand, or some
combination thereof.
A court’s second role is “to say what the law is.”
Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177 (1803).
This role flows directly from the first. “Those who apply the
rule to particular cases . . . must of necessity expound and
interpret that rule.” Id. To fulfill its law-declaration function,
a court often writes opinions explaining the law and reasoning
underlying its judgments. See also Jonathan Remy Nash, A
Context-Sensitive Voting Protocol Paradigm for
Multimember Courts, 56 Stan. L. Rev. 75, 86–87 (2003)
(“Courts function as arbiters of particular disputes between
litigants. Those litigants are concerned with the outcome of
the case as determined by the courts. But, in handing down
decisions, courts serve another important role: They announce
(or aid in the evolution and development of) generally
applicable rules of law.”).
To me, issue voting better accomplishes both roles by
deciding all necessary (including threshold) issues and
proceeding from that point to explain what the law is and
why. By voting on issues, a multimember court announces
discrete holdings that can be applied in later cases.
There is thus an obvious reason to vote on a case’s
17
disposition based on the Court’s resolution of each relevant
issue—to align rationale and outcome. A related reason to do
so is that voting paradoxes often arise because of the
operation of the final-judgment rule. Nash, supra, at 84-85.
Because legal rulings are usually not appealable before final
judgments in most jurisdictions, appeals are more likely to
present multiple issues that can create paradoxes, whereas if
we heard appeals piecemeal, far less opportunity for voting
problems would arise. The final-judgment rule is sound
because it supports efficient resolution of cases at little cost:
claims of reversible error can be preserved and, as a general
matter, the litigant who is right on the law will prevail.
But that is not true if we allow the final judgment rule
to affect our substantive resolution of the issues in a case.
Take this case. Imagine that the final-judgment rule did not
apply, and Hanover prevailed on antitrust standing in the
District Court. Village then appealed, and we affirmed (over
my dissent). Then, on remand, Village prevailed on the
Noerr–Pennington issue in the District Court, and Hanover
appealed and won (over Judge Greenberg’s dissent). There
would be no doubt in that case that Hanover would have
properly won its appeals even though two judges thought at
different phases of the litigation it should have lost, and no
justification for the final-judgment rule requires a contrary
bottom-line outcome in such a seriatim case. To generalize
from that example, the final-judgment rule helps create the
voting paradox without providing a satisfactory rationale for
the usual practice of outcome voting, thus posing the question
of why, other than habit, we typically vote by outcome.
Judge Greenberg points out that we could avoid the
voting paradox if I didn’t bother to reach the Noerr–
Pennington issue. If so, a majority would conclude that
Hanover had standing, and then a majority would conclude
that Hanover loses but without a majority supporting any
18
particular reason for its loss. This avoids the problem of an
incoherent precedent but replaces it with no opinion to
provide even the hint of a rationale. Arguably, no reasoning
is an improvement over reasoning that contradicts a
judgment, but, as Judge Greenberg notes, we never have to
issue an opinion. We could just issue judgment orders
without reasoning in every case and save everyone a lot of
time and paper. In my view, we issue judgments
accompanied by reasoned opinions because the rule of law
ought neither to be nor appear to be arbitrary. It follows that
judgments should be supported by reasoning, that the
reasoning should actually support the outcome in a particular
case, and that in this case I should yield to my colleagues on
antitrust standing and vote on the Noerr-Pennington issue that
follows.
2. A Multimember Court: Deliberative
Body or so Many Noses to Count?
The possibilities of issue and outcome voting expose a
tension between the independence of individual judges and
our membership on multimember panels of multimember
courts. As we are independent, it could be thought that a
litigant is entitled to the sum of independent votes in its favor
and that a judge should not change his or her vote out of
deference to colleagues’ shared views. The widely (though
not universally) accepted practice of writing separate opinions
when a judge disagrees with another’s analysis supports this
view of voting one’s views alone.
There are at least two reasons why appellate courts
should be deemed to act as an entity reasoning through the
case issue by issue rather than a collection of individual
judges with a judgment reflecting a vote tally divorced from
the reasoning of the majority of the court. The first is the
nature of multimember appellate courts as collegial, and not
19
just redundant, enterprises. Kornhauser and Sager explain
that redundant and collegial enterprises “aim to produce
performances that could in principle represent the unenhanced
effort of a single person, but to bring that performance closer
to the ideal.” Lewis A. Kornhauser & Lawrence G. Sager,
The One and the Many: Adjudication in Collegial Courts, 81
Calif. L. Rev. 1, 4 (1993). Redundant enterprises “rely on an
external structure of multiple independent efforts.” Id. For
example, in the case of gymnastics judges, “[e]ach judge
ranks the performance before her without consulting her
peers, and the rankings are aggregated by rule.” Id. By
contrast, collegial bodies “are like team enterprises in that
each participant must consider and respond to her colleagues
as she performs her tasks. Collaboration and deliberation are
the trademarks of collegial enterprise.” Id. “While
interaction and exchange are irrelevant or even antithetical to
redundant enterprises, they are crucial to collegial enterprises,
and the product of a collegial enterprise often belongs to that
enterprise in a uniquely collective way.” Id. at 4–5.
Appellate courts are collegial enterprises. Judges
collaborate on and deliberate about cases and issues at all
levels of the appeals process, from deciding whether to hold
oral argument to conferencing to circulating opinions. At the
end of the process a judgment of the Court typically emerges
supported by an opinion. In some sense that product is akin
to what a team produces. “Team enterprises do not merely
multiply product or amplify effort: they transform the
performance into something that only a group could have
produced.” Id. at 3. Put another way, while an individual
judge could do the job of an appellate court, the process of
multimember panels produces a product that is typically
better qualitatively than what an individual appellate judge
20
could do. The whole is greater than the sum of its parts.6
In some cases, then, outcome voting lessens the value
of an appellate court’s deliberative process. If judges engage
in issue voting, there are multiple deliberations and votes; that
is, there are deliberations and votes on each issue. A judge is
not effectively on the sideline for disagreeing with the
majority on a threshold issue. Applying issue voting in this
case, for example, I reach the Noerr–Pennington issue, even
though I perceive no standing, because my individual view on
the antitrust standing question is subsumed (despite my filing
a dissent) into that of the panel; we act as a single deliberative
body in a process that produces a judgment that depends on
the majority’s reasoning (whatever the composition of that
majority) at each step of the process. With outcome voting,
by contrast, though judges deliberate on separate issues
(unless they decide not to reach them), a judgment depends
not on reasoning but a tallying of who should win were each
judge to vote a result without reasons. There is, therefore,
less of an opportunity for synthesis or transformation of each
judge’s reasoning into the larger whole. This provides the
answer to Judge Greenberg’s lack of “understand[ing] why
the circumstance that we are all on the panel should lead to a
different result than that which would be reached individually
by a majority of the panel.” Greenberg Op. at 29. The result
should be different because we sit on a panel.
Second, issue voting treats judges as
interchangeable—the premise of the black robe and an
assumption on which our legal system is based. In our case,
for example, Hanover prevails because two out of three
judges find antitrust standing for the plaintiff and two out of
6
This is not to say that judges should not dissent. In that
sense, courts are not fully team enterprises.
21
three judges find no immunity for the defendant. Voting by
issue better reflects our role as members of a single
deliberative body striving to craft a sensible corpus juris. As
noted above, if we voted by outcome, the precedential value
of this case would be unclear if the same set of facts came
before us (or a district court) a second time. For a body like a
court that has no means to enforce its mandate other than
persuasion, it is of great concern that “in cases where the
doctrinal paradox arises, judgment and reason are
immediately and inexorably pulled apart, to the potential
detriment of the orderly development of legal doctrine.”
Kornhauser & Sager, supra, at 5.
C. Arguments to the Contrary are Not Persuasive.
Thoughtful proponents of an outcome-based voting
protocol argue that it promotes principled (i.e., not strategic)
identification of issues and, at least in some cases, also
promotes principled resolution of those issues. See
Abramowicz & Stearns, supra, at 56–58; John M. Rogers,
“Issue Voting” by Multimember Appellate Courts: A
Response to Some Radical Proposals, 49 Vand. L. Rev. 997,
1002 (1996); Maxwell L. Stearns, How Outcome Voting
Promotes Principled Issue Identification: A Reply to
Professor John Rogers and Others, 49 Vand. L. Rev. 1045,
1050 (1996). In short, these scholars argue that if appellate
courts vote by issue, judges and litigants will have an
incentive to identify and sequence legal issues in
disingenuous ways to cobble together shifting majorities that
will eventually support their favored positions. By contrast, if
the only vote is on the outcome, each judge will present the
issues in the case as he or she actually views them without
regard to the potential gains from gamesmanship in framing
22
issues.7
There are a number of replies to this argument. First,
professional norms of the bench and bar go a long way in
preventing deceptive strategies in brief- and opinion-writing.
Second, it is unclear to me that the resolution of issues in an
outcome-vote is more principled than in an issue vote; indeed,
a principal problem with outcome voting is that occasionally
7
Judge Greenberg also relies on an article by then-Professor
Rogers, who concluded that “over 150 Supreme Court cases
involving plurality majority opinions indicate that a justice
should not [aggregate votes by issue and therefore] defer to a
majority that disagrees on a dispositive issue.” John M.
Rogers, “I Vote This Way Because I’m Wrong”: The Supreme
Court Justice as Epimenides, 79 Ky. L.J. 439, 459 (1990–91).
But not one of that large number of cases actually purports to
say how a judge “should” vote. Moreover, by Judge Rogers’
own count, only between fourteen and sixteen cases involved
situations where the justices voted by outcome when an issue-
vote would have yielded a different result. Id. at 448 & n.24.
In light of the three cases where justices voted by issue and
the Supreme Court’s silence in all cases on whether issue- or
outcome-based voting is preferable, I do not see how we can
fairly understand the Court to have settled the question of the
proper voting protocol. Kornhauser & Sager, supra, at 57
(“Current appellate practice with regard to paradoxical cases
is in shambles. The Supreme Court, in particular, has been
unmindful of the existence of the paradox, even when
confronted with cases whose dispositions turn on the choice
of alternative voting protocols.”).
23
issues are left entirely unresolved. For example, Wedderburn
v. I.N.S., 215 F.3d 795, 801 (7th Cir. 2000), applied Miller,
523 U.S. 420 (where, as noted above, majorities on every
issue undermined the judgment), to reject a similar challenge
to a different statute. In Wedderburn, the Court reasoned not
by legal analysis but by prediction about the votes of
individual justices. 215 F.3d at 801. Finally, each judge on a
multimember panel always has to vote ultimately on the
outcome of a case; what is debatable is whether that vote
should be based on the way majorities of judges resolve
individual issues or how the individual judge views the
preferred outcome. In some cases, like this one, where all
agree on what the issues are, each relevant one is dispositive,
and they all arise in an agreed-on logical sequence, issue-
voting strikes me as preferable. But I do not mean to promise
that I will always vote by issue, and I do not mean to suggest
that my colleagues should or must follow my lead. As we
have seen, Supreme Court justices are inconsistent in their
voting bases, and no source of law resolves the question of
how to vote. And in some cases, especially capital ones, the
practical implications of a judgment—life or death— may be
more important than the choice of one voting protocol over
another. See David Post & Steven C. Salop, Rowing Against
the Tidewater: A Theory of Voting by Multijudge Panels, 80
Geo. L.J. 743, 761 (1992).
D. The Next Case: Toward a Voting Protocol
Protocol
As we have seen, appellate judges have little to guide
their discretion in choosing a voting protocol. This case
prompts me to argue for one guidepost: when an appellant
raises “arguments that would constitute independent appeals
were interlocutory appeals permissible,” issue voting is
preferable. Nash, supra, at 147–48.
24
Because in this case I view a coherent precedent from
our Court as more valuable than a resolution in favor of the
party I would have sided with were I deciding this case by
myself, and because all agree the two issues presented here
are easily separated, I concur with Judge Fuentes in a
disposition that ultimately favors Hanover.
IV. Conclusion
Hanover should lack antitrust standing because it has
not suffered antitrust injury within the meaning of the
Supreme Court’s exposition of that term. However, I am
outvoted on this issue, which sets the precedent for our Court
and the predicate for addressing the remaining issue (Noerr–
Pennington). It has divided my colleagues, and thus my vote
is needed to resolve it. I agree with Judge Fuentes that
Noerr–Pennington poses no bar to relief at this stage in the
litigation. Although I would affirm the District Court on
antitrust standing grounds, I yield to my colleagues’
resolution of that issue and vote to vacate and remand on the
lack of a Noerr-Pennington defense to Village.
25
Re: Hanover 3201 Realty, LLC v. Village Supermarkets,
No. 14-4183
GREENBERG, Circuit Judge, dissenting.
I concur with and join in Sections I, the background
section, and II.A., the antitrust standing section, of Judge
Fuentes’s opinion. Thus, I agree with his conclusion in Section
II.A. that plaintiff, Hanover 3201 Realty, LLC (“3201 Realty”),
has antitrust standing in the full-service supermarket market but
not in the full-service supermarket rental space market. I cannot
agree, however, with Judge Fuentes’s opinion to the extent that I
believe it expands the sham exception to Noerr-Pennington
immunity. I decline to join in this aspect of Judge Fuentes’s
opinion because: (1) 3201 Realty has not properly preserved the
issue; (2) no court of which I am aware has applied the
expanded exception in circumstances comparable to those here;
and (3) the expansion of the sham exception comes with a
questionable pedigree. I therefore conclude that the legal
challenges to 3201 Realty’s development project that Village
Supermarkets, Inc. (“Village”) brought on behalf of itself and
Hanover and Horsehill Development LLC fall within the
antitrust immunity afforded to petitioning activity under the
Noerr-Pennington doctrine.1 In light of this conclusion and
Judge Ambro’s conclusion that 3201 Realty does not have
antitrust standing, two of the three members of this panel believe
that the District Court correctly dismissed the complaint.
In coming to my conclusion that the District Court
correctly dismissed the complaint I recognize that a majority of
1
I refer to Village and Hanover and Horsehill Development
LLC together as defendants.
the panel, Judge Fuentes and I, believe that the District Court in
part erred in concluding that 3201 Realty lacks antitrust
standing. But that error does not require us to reverse the
Court’s judgment because an appellate court may affirm an
order granting a motion to dismiss on “any ground supported by
the record.” Hildebrand v. Allegheny Cnty., 757 F.3d 99, 104
(3d Cir. 2014) (quoting Tourscher v. McCullough, 184 F.3d
236, 240 (3d Cir. 1999)), cert. denied, 135 S.Ct. 1398 (2015).
Here, the opinions of the members of the panel demonstrate that
a majority of the panel believe that there is such support in the
record because I accept defendants’ contention that the Noerr-
Pennington doctrine immunizes them from antitrust liability for
their allegedly anticompetitive judicial and administrative
challenges to 3201 Realty’s development project, and Judge
Ambro accepts defendants’ contention that 3201 Realty did not
have antitrust standing.2 Thus, I reiterate that Judge Ambro and
I believe that the District Court reached the correct result,
though in part on a basis that differs from that on which the
Court relied. Accordingly, though the panel is reversing, it
should be affirming.
I. THE NOERR-PENNINGTON DOCTRINE IMMUNIZES
2
Defendants raised this argument both in the District Court and
in their answering brief on appeal. 3201 Realty failed to address
the merits of the argument in its reply brief, but we afforded it
an opportunity to do so in a supplemental reply brief and it did
so.
2
DEFENDANTS’ CONDUCT FROM ANTRITRUST
LIABILITY.
A. Relevant Law
The Noerr-Pennington doctrine draws its name from the
Supreme Court’s opinions in Eastern Railroad Presidents
Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct.
523 (1961), and United Mine Workers of America v.
Pennington, 381 U.S. 657, 85 S.Ct. 1585 (1965). It derives in
part from the First Amendment right to petition the government.
Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct.
1749, 1757 (2014); BE & K Constr. Co. v. NLRB., 536 U.S.
516, 524-25, 122 S.Ct. 2390, 2395-96 (2002). Under the
doctrine, petitioners for “government . . . redress are generally
immune from antitrust liability” when defending against
antitrust claims predicated on this petitioning activity. Prof’l
Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508
U.S. 49, 56, 113 S.Ct. 1920, 1926 (1993) (“PRE”); see A.D.
Bedell Wholesale Co. v. Philip Morris Inc., 263 F.3d 239, 250
(3d Cir. 2001). The doctrine applies not only to lobbying
activity but also “to efforts to influence administrative agency
action and efforts to access the court system.” Santana Prods.
Inc. v. Bobrick Washroom Equip., Inc., 401 F.3d 123, 131 n.13
(3d Cir. 2005) (citation omitted); see Cal. Motor Transp. Co. v.
Trucking Unlimited, 404 U.S. 508, 510, 92 S.Ct. 609, 611-12
(1972); Cheminor Drugs, Ltd. v. Ethyl Corp., 168 F.3d 119, 122
(3d Cir. 1999). Indeed, “[c]alling concerns about a proposed
development to the attention of the responsible state agencies
[and courts] lies at the core of privileged activity.” Herr v.
Pequea Twp., 274 F.3d 109, 121 (3d Cir. 2001).
3
3201 Realty argues that the Noerr-Pennington doctrine
does not immunize defendants for their conduct because the
allegedly anticompetitive legal challenges to the development
project fall within the so-called “sham” exception to the
doctrine. In PRE, the Supreme Court established a two-prong
test for determining the applicability of this exception including
both objective and subjective components. See 508 U.S. at 60-
61, 113 S.Ct. at 1928. Under the objective prong, the plaintiff
must show that the defendant’s petitioning was “objectively
baseless in the sense that no reasonable litigant could
realistically expect success on the merits.” BE & K Constr., 536
U.S. at 526, 122 S.Ct. at 2396 (quoting PRE, 508 U.S. at 60, 113
S.Ct. at 1928). A plaintiff cannot make this showing if the
defendant’s petitioning activity has succeeded as “a successful
‘effort to influence governmental action . . . certainly cannot be
characterized as a sham.’” PRE, 508 U.S. at 58, 113 S.Ct. at
1927 (alteration in original) (quoting Allied Tube & Conduit
Corp. v. Indian Head, Inc., 486 U.S. 492, 502, 108 S.Ct. 1931,
1938 (1988)).
On the other hand, even if a defendant’s petitioning
activity was unsuccessful, that failure does not prove that it did
not have an objective basis for the activity. See id. at 60 n.5,
113 S.Ct. at 1928 n.5; Herr, 274 F.3d at 119. Moreover, “even
when the law or the facts appear questionable or unfavorable at
the outset, a party may have an entirely reasonable ground for
bringing suit.” PRE, 508 U.S. at 60 n.5, 113 S.Ct. at 1928 n.5
(quoting Christiansburg Garment Co. v. EEOC, 434 U.S. 412,
422, 98 S.Ct. 694, 701 (1978)). The second, subjective prong
for establishing the sham exception to Noerr-Pennington
immunity, comes into play only if the plaintiff first makes a
4
showing satisfying the exception’s objective prong. See PRE,
508 U.S. at 60, 113 S.Ct. at 1928; Cheminor, 168 F.3d at 123
n.10. Accordingly, a defendant’s anticompetitive intent in
engaging in petitioning activity is immaterial if it had probable
cause for its activity. See PRE, 508 U.S. at 62, 113 S.Ct. at
1929.
In an effort to avoid the need to satisfy PRE’s threshold
objective prong, 3201 Realty contends that the PRE test applies
only where the defendants institute a single legal action and not
where, as here, the defendants brought multiple legal challenges
to the plaintiff’s enterprise. 3201 Realty supports this position
by pointing to cases from other courts of appeals holding that
“where the defendant is accused of bringing a whole series of
legal proceedings,” “the question is not whether any one of them
has merit -- some may turn out to, just as a matter of chance --
but whether they are brought pursuant to a policy of starting
legal proceedings without regard to the merits and for the
purpose of injuring a market rival.” USS-POSCO Indus. v.
Contra Costa Cnty. Bldg. & Constr. Trades Council, AFL-CIO,
31 F.3d 800, 811 (9th Cir. 1994); accord Waugh Chapel S., LLC
v. United Food & Commercial Workers Union Local 27, 728
F.3d 354, 363-64 (4th Cir. 2013); Primetime 24 Joint Venture v.
Nat’l Broad., Co., 219 F.3d 92, 101 (2d Cir. 2000).
Judge Ambro and Judge Fuentes accept 3201 Realty’s
argument circumventing the need to satisfy the objective prong
of the dual-prong PRE test. I believe, however, that the
argument should fail for at least three independent reasons.
First, 3201 Realty did not raise this argument until it filed its
supplemental reply brief in this Court. Beyond a mere “failure
to cite particular cases within its broader argument for the sham
5
exception,” majority typescript at 30 n.12, 3201 Realty
conceded before the District Court that it had to satisfy PRE’s
two-prong test and first show that any allegedly anticompetitive
“lawsuit or other petitioning activity [was] objectively baseless,”
Pl.’s Br. in Opp’n to Mot. to Dismiss at 9 (citing PRE, 508 U.S.
at 60, 113 S.Ct. at 1928). I therefore would hold that 3201
Realty has waived any argument excusing it from having to
establish that defendants’ actions were objectively baseless. See
Erdman v. Nationwide Ins. Co., 582 F.3d 500, 507 n.2 (3d Cir.
2009) (holding that plaintiff waived argument by conceding the
point at issue on the appeal in the district court and explaining
that her discovery of the argument upon “‘further reading’ while
preparing [her] appeal” did not justify overlooking the waiver);
Bryant v. Military Dep’t of Miss., 597 F.3d 678, 694 (5th Cir.
2010) (holding that by not raising it before the district court,
plaintiff waived the argument that “the ‘objectively baseless’
standard ought to be applied in some different, and presumably
favorable way in this case because multiple lawsuits were filed
against him”).
Second, even putting aside the waiver problem, the very
case law applying the alternative test for which 3201 Realty
advocates, i.e., not applying the PRE two-prong test which
includes an objective component in situations in which a
defendant has instituted a series of legal actions, demonstrates
that the single lawsuit and three administrative challenges that
defendants initiated do not rise to the level of “a whole series of
legal proceedings” so as to trigger the applicability of the
alternative test. See In re Flonase Antitrust Litig., 795 F. Supp.
2d 300, 309 n.10 (E.D. Pa. 2011) (“No court has applied the
USS-POSCO test to a ‘series’ of five petitions . . . .”); see also
6
ERBE Elektromedizin GmbH v. Canady Tech. LLC, 629 F.3d
1278, 1291-92 (Fed. Cir. 2010) (even assuming alternative test
applied, no “series” based on defendant filing three lawsuits);
Amarel v. Connell, 102 F.3d 1494, 1519 (9th Cir. 1996) (no
“series” where defendants initiated two lawsuits and
administrative proceedings); Ludwig v. Superior Court, 43 Cal.
Rptr. 2d 350, 365 n.33 (Ct. App. 1995) (“[A] total of four
activities, two of which are not meritless as a matter of law,
cannot constitute such a pattern [of baseless opposition].”).
Thus, while Judge Ambro and Judge Fuentes adopt the test of
other courts of appeals limiting this application of PRE, it seems
to me that they do not correctly apply the case law based on that
test, declaring instead that in the present circumstances, though
not in others, four actions qualify as a “series.”3 Majority
typescript at 33-34. In reality, the four legal challenges that
defendants initiated pale in comparison to the 29 in USS-
POSCO, 31 F.3d at 811; the 14 in Waugh Chapel, 728 F.3d at
365; and the thousands in Primetime 24, 219 F.3d at 101.
Third, even overlooking both 3201 Realty’s waiver of a
challenge to the applicability of the two-prong PRE test and the
consideration that the courts that have adopted the alternative
intent-based test would not apply it in the circumstances we
face, I harbor doubts about whether the courts limiting the
applicability of PRE have identified a proper exception to that
case’s two-part test. This purported exception rests on a case on
which Judge Ambro and Judge Fuentes heavily rely decided
3
As I explain below there now is an additional case that Village
has initiated to consider. See infra note 5. But the addition of
this case does not change my conclusion.
7
prior to PRE in which the Supreme Court explained: “One
claim, which a court or agency may think baseless, may go
unnoticed; but a pattern of baseless, repetitive claims may
emerge which leads the factfinder to conclude that the
administrative and judicial processes have been abused.” Cal.
Motor Transp., 404 U.S. at 513, 92 S.Ct. at 613. Yet it seems to
me that the Court’s reference to “a pattern of baseless, repetitive
claims” makes clear that this language comes into play only
where a plaintiff first can satisfy what ultimately became PRE’s
first prong; otherwise, the Court’s use of the word “baseless”
would serve no purpose. But the use of “baseless” did serve a
purpose because the Court in PRE pointed to this very language
as demonstrating that “[n]othing in California Motor Transport
retreated” from “an indispensable objective component” in
establishing the sham exception. 508 U.S. at 58, 113 S.Ct. at
1927.
In a ruling employing the understanding of PRE that I
think is appropriate, we applied the objective prong to uphold a
claim of Noerr-Pennington immunity in a case similar to this
one where the defendants challenged a plaintiff’s land
development project in multiple judicial and administrative
proceedings. See Herr, 274 F.3d at 115-16, 118-19. Other
courts also have rejected the proposed exception to the PRE test
advanced here that would dispense with the need to show that
the defendant’s activity lacked an objectively reasonable basis.
See Travelers Express Co. v. Am. Express Integrated Payment
Sys. Inc., 80 F. Supp. 2d 1033, 1042 (D. Minn. 1999) (applying
PRE rather than Court of Appeals for the Ninth Circuit’s test
even though defendant filed “a series of allegedly meritless
suits”); Christian Mem’l Cultural Ctr., Inc. v. Mich. Funeral
8
Dirs. Ass’n, 998 F. Supp. 772, 777 n.2 (E.D. Mich. 1998)
(“[T]he courts in this circuit that have confronted similar issues
[of whether an exception to PRE exists where the defendant
initiated multiple lawsuits] have declined to read [PRE] so
narrowly.” (citation omitted)).
I appreciate the animating concern of other courts of
appeals that an antitrust defendant’s fortuitous success in a small
number of lawsuits should not automatically immunize the
defendant from the antitrust consequences of initiating a whole
series of anticompetitive legal challenges. See Waugh Chapel,
728 F.3d at 365; Primetime 24, 219 F.3d at 101; USS-POSCO,
31 F.3d at 811. But we should not alleviate this concern by
excusing a plaintiff from having to show the objective
baselessness of even a single action brought by the defendant.
After all, if Noerr-Pennington immunity shields objectively
reasonable actions when considered individually, it should
continue to shield them when they are aggregated. Cf.
Pennington, 381 U.S. at 670, 85 S.Ct. at 1593 (holding that
immunity extends to petitioning conduct “either standing alone
or as part of a broader scheme”).
Judge Ambro and Judge Fuentes reason that the
alternative test makes more sense when dealing with multiple
legal challenges because having a larger sample of challenges
than a single challenge enables the court to better “assess
whether a defendant has misused the governmental process to
curtail competition.” Majority typescript at 32. Yet this
approach treats PRE’s objective prong as more akin to an
evidentiary rule of thumb for determining whether the defendant
possessed an anticompetitive purpose, rather than the
independent and threshold requirement that it unmistakably
9
represents. See 508 U.S. at 57, 113 S.Ct. at 1926 (“[A]n
objectively reasonable effort to litigate cannot be sham
regardless of subjective intent.”); id. at 59-60; 113 S.Ct. at 1928(“We [earlier] dispelled the notion that an antitrust plaintiff
could prove a sham merely by showing that its competitor’s
‘purposes were to delay [the plaintiff’s] entry into the market
and even to deny it a meaningful access to the appropriate . . .
administrative and legislative fora.’” (second and third
alterations in original) (quoting Columbia v. Omni Outdoor
Adver., Inc., 499 U.S. 365, 381, 111 S.Ct. 1344, 1354 (1991)).
Perhaps for this reason, some courts applying an approach
similar to that of Judge Ambro and Judge Fuentes have
preserved the need for showing the objective baselessness of the
defendant’s action as a prerequisite for establishing the sham
exception. See, e.g., In re Terazosin Hydrochloride Antitrust
Litig., 335 F. Supp. 2d 1336, 1367 (S.D. Fla. 2004) (rejecting
claim of sham litigation because “none of the lawsuits,
individually, can be considered objectively baseless”); Gen-
Probe, Inc. v. Amoco Corp., 926 F. Supp. 948, 959 (S.D. Cal.
1996) (“[U]nder either the PRE or the USS-POSCO test, [the
plaintiff’s] claims against [the defendants] must demonstrate
objective baselessness.”).
When I consider these questions regarding the legal
support for abandoning a threshold objective baselessness
requirement, I cannot acquiesce in the adoption of a test where
the argument supporting the adoption has not been advanced
properly and the test is being applied in circumstances beyond
those recognized by other courts that have adopted the test
abandoning the objective component of PRE. I therefore would
hold that 3201 Realty cannot circumvent a Noerr-Pennington
10
immunity defense without first showing that defendants’ legal
challenges were objectively baseless.4
4
I agree with Judge Ambro and Judge Fuentes that the
circumstance that some of defendants’ legal actions are ongoing
does not preclude application of the sham exception, although I
do so based on Supreme Court precedent and not based on the
“prospective” character of the alternative test. Majority
typescript at 37 n.14. In Vendo Co. v. Lektro-Vend Corp., 433
U.S. 623, 97 S.Ct. 2881 (1977), the Court faced the question of
whether a district court could enjoin an ongoing state court
proceeding that allegedly violated federal antitrust law. The
Court fractured into three opinions, none of which obtained a
majority. See id. at 626, 97 S.Ct. at 2885 (plurality opinion of
Rehnquist, J.); id. at 643, 97 S.Ct. at 2893 (Blackmun, J.,
concurring in result); id. at 645, 97 S.Ct. at 2894 (Stevens, J.,
dissenting). Nevertheless, although a majority of the Court
concluded that the Anti-Injunction Act barred the district court
from enjoining the state court proceeding at issue, all nine
justices either explicitly or implicitly acknowledged that
plaintiffs can seek some form of relief, such as damages or
injunctions against future legal actions, based on ongoing sham
proceedings brought in violation of the antitrust laws. See id. at
635 n.6, 637 n.8, 97 S.Ct. at 2889 n.6, 2890 n.8 (plurality
opinion of Rehnquist, J.); id. at 644, 97 S.Ct. at 2894
(Blackmun, J., concurring in result); id. at 653-54, 97 S.Ct. at
2899 (Stevens, J., dissenting). Indeed, six of the justices
declared that, in appropriate circumstances, such antitrust relief
could include an injunction against the ongoing sham
proceedings themselves. See id. at 644, 97 S.Ct. at 2894
(Blackmun, J., concurring in result); id. at 654, 660, 97 S.Ct. at
11
B. Application of PRE to Present Case
I now turn to the question of whether 3201 Realty can
show that defendants’ activities were objectively baseless. I
initially point out that 3201 Realty arguably has waived this
issue, which is distinct from the question of whether to apply the
alternative test that does not require objective baselessness, by
not adequately arguing it on appeal. 3201 Realty’s
supplemental reply brief starts from the premise that the
alternative test to PRE applies but does not assert that
defendants’ legal challenges lacked an objectively reasonable
basis, and only briefly suggests that defendants did not have
standing to bring these challenges or that the challenges
otherwise lacked merit. See, e.g., John Wyeth & Bro. Ltd. v.
CIGNA Int’l Corp., 119 F.3d 1070, 1076 n.6 (3d Cir. 1997)
2899, 2902 (Stevens, J., dissenting). Subsequently, in a case
arising under federal labor law, the Court drew on the sham
exception to Noerr-Pennington to hold that an ongoing baseless
lawsuit may be enjoined if it was brought for an improper
purpose. See Bill Johnson’s Rests., Inc. v. NLRB, 461 U.S.
731, 744, 103 S.Ct. 2161, 2170 (1983).
These Supreme Court cases illustrate that a plaintiff can
bring an antitrust claim circumventing Noerr-Pennington
immunity by relying on the sham exception even if the allegedly
sham legal actions remain pending. This conclusion is logical
given that a determination of whether anticompetitive legal
actions fall within the sham exception turns not on their ultimate
outcomes but on the existence of a reasonable basis (or a proper
motive) for instituting and pursuing them in the first place. See
PRE, 508 U.S. at 60 n.5, 113 S.Ct. at 1928 n.5.
12
(“[A]rguments raised in passing . . . , but not squarely argued,
are considered waived.”). Nevertheless, I will give 3201 Realty
the benefit of the doubt and consider the arguments that
defendants’ actions were objectively baselessness to which it
alluded in its supplemental reply brief. 3201 Realty simply
cannot meet the objective baselessness standard that PRE
recognized.
Where the complaint fails at least to raise a question of
fact on a sham petitioning issue, a court may reject the claim by
granting a motion to dismiss. See PRE, 508 U.S. at 63, 113
S.Ct. at 1930 (“Where, as here, there is no dispute over the
predicate facts of the underlying legal proceeding, a court may
decide probable cause as a matter of law.”); A.D. Bedell, 263
F.3d at 241 (affirming dismissal under Fed. R. Civ. P. 12(b)(6)
of antitrust claims based on Noerr-Pennington doctrine).
In arguing that defendants’ legal challenges were
objectively baseless, 3201 Realty primarily contends that they
lacked standing when they made these challenges. For support,
3201 Realty points to the decisions of the New Jersey Superior
Court and the New Jersey Department of Environmental
Protection (“NJDEP”) respectively concluding that Village
lacked standing in its prerogative writs action and flood hazard
area (“FHA”) permit challenges. But as I already have noted,
the ultimate failure of an underlying action does not establish its
objective baselessness. See PRE, 508 U.S. at 60 n.5, 113 S.Ct.
at 1928 n.5 (“[W]hen the antitrust defendant has lost the
underlying litigation, a court must ‘resist the understandable
temptation to engage in post hoc reasoning by concluding’ that
an ultimately unsuccessful ‘action must have been unreasonable
or without foundation.’” (quoting Christiansburg, 434 U.S. at
13
421-22, 98 S.Ct. at 700)); Herr, 274 F.3d at 119 (rejecting
plaintiff’s claim of sham litigation where opinions in underlying
actions demonstrated that courts analyzed relevant issues “with
care and some detail” and did not consider them “frivolous”);
Balt. Scrap Corp. v. David J. Joseph Co., 237 F.3d 394, 400 (4th
Cir. 2001) (rejecting antitrust plaintiff’s claim of sham litigation
notwithstanding that state court had dismissed underlying suit
for lack of standing).
3201 Realty has not shown that a reasonable litigant in
Village’s position would have perceived that it did not have a
realistic possibility of establishing standing in the relevant
actions. To the contrary, the New Jersey Superior Court’s
decision in the prerogative writs action demonstrates that a
reasonable litigant could have perceived such a possibility in
that case. In particular, Village cited several cases before that
court in support of its claim that it had standing based on its
status as a local taxpayer. For example, the court had stated in
one of those cases that “[t]here is some support for the
proposition that any local taxpayer has standing to object to a
variance application, although the question has not clearly been
resolved.” Vill. Supermarket, Inc. v. Mayfair Supermarkets,
Inc., 634 A.2d 1381, 1385 (N.J. Super. Ct. Law Div. 1993)
(citing Booth v. Bd. of Adjustment of Rockaway Twp., 234
A.2d 681, 682 (N.J. 1967)). The Superior Court ultimately
decided this issue against Village, but “[i]n light of the unsettled
condition of the law,” Village had a reasonable basis for its
position. PRE, 508 U.S. at 65, 113 S.Ct. at 1930.
Similarly, in the FHA permit challenge, Village argued
that its expected loss of business as a direct competitor of the
proposed supermarket qualified as a sufficiently particularized
14
property interest to establish standing. But I need look no
further than the discussion of antitrust standing in Judge
Fuentes’s opinion to see that status as a direct competitor
sometimes can demonstrate a unique property interest in filing a
legal challenge. See, e.g., majority typescript at 26 (“Antitrust
injury ordinarily is limited to consumers and competitors in the
restrained market.”). Although the NJDEP ultimately decided to
treat Village’s business interests as equivalent to other
generalized interests that do not support standing, the cases on
which it relied did not involve challenges brought by
competitors and therefore did not foreclose Village’s argument.
Village therefore had a reasonable basis for its position in this
action as well. See id., 113 S.Ct. at 1931 (“Even in the absence
of supporting authority, [the antitrust defendant] would have
been entitled to press a novel . . . claim as long as a similarly
situated reasonable litigant could have perceived some
likelihood of success.”).
Furthermore, 3201 Realty has not demonstrated that
Village’s argument for standing in its wetlands permit challenge
was any weaker than the foregoing arguments for standing.
Finally, as to the major street intersection (“MSI”) permit
challenge, the New Jersey Department of Transportation
(“NJDOT”) affirmatively acknowledged Village’s standing to
raise its objections, noting that the department was “required to
consider any relevant data, analysis, and arguments submitted
by third parties in reaching its decisions concerning the approval
of access permits.” J.A. 165. I therefore reject 3201 Realty’s
argument that defendants’ legal challenges should be regarded
as objectively baseless because defendants lacked standing to
make the challenges. See Balt. Scrap Corp., 237 F.3d at 400;
15
Liberty Lake Invs., Inc. v. Magnuson, 12 F.3d 155, 157 (9th Cir.
1993).
Nor has 3201 Realty demonstrated that defendants’
challenges were objectively baseless on their merits. Indeed, the
relevant adjudicators upheld some of Village’s objections in two
of these challenges. In the MSI permit challenge, the NJDOT
agreed with Village that a prior development agreement required
3201 Realty either to construct certain highway improvements
or negotiate a new agreement before it could proceed with its
project. Likewise, in the wetlands permit challenge, the NJDEP
first “required” 3201 Realty to re-notice its application due to a
defect that Village identified in the original application. J.A.
169. Then, based on another objection raised by Village, the
NJDEP required 3201 Realty to conduct a wildlife survey for
the presence of an endangered species of bats before beginning
work on the property. Although Village did not prevail in its
other two challenges, the Superior Court’s and the NJDEP’s
opinions in those proceedings each addressed Village’s
contentions “with care and some detail” and without indicating
that those reviewing bodies considered Village’s positions
“frivolous.” See Herr, 274 F.3d at 119.
In these circumstances, 3201 Realty has not shown that
defendants’ petitioning activity was objectively baseless.
Defendants’ conduct therefore falls within the immunity
afforded by the Noerr-Pennington doctrine, and 3201 Realty’s
antitrust claims must fail. Therefore, we should affirm the
District Court’s order dismissing the complaint. Inasmuch as I
have reached this conclusion, I do not address the other
arguments that defendants raise in support of the District Court’s
16
order dismissing the complaint.5
II. JUDGE AMBRO’S AND MY AGREEMENT THAT THE
DISTRICT COURT ENTERED THE CORRECT JUDGMENT
MANDATES AN AFFIRMANCE.
As I stated at the outset of this opinion, Judge Ambro and
I agree that the District Court correctly dismissed the complaint.
Judge Ambro reaches this conclusion because he believes that
3201 Realty did not have the antitrust standing necessary to
bring this action, and I do so because I believe that defendants
were immune under the Noerr-Pennington doctrine. A
reasonable observer might think it is obvious that the
inescapable consequence of this agreement is that we must
affirm the District Court’s judgment dismissing the complaint.
But Judge Ambro avoids this outcome by regarding himself as
“bound by the majority’s [Judge Fuentes’s and Judge
Greenberg’s] opinion on antitrust standing despite [his]
disagreement with it,” Ambro typescript at 11, an application of
the principle of stare decisis. He therefore effectively switches
5
On September 10, 2015, 3201 Realty’s attorneys filed a letter
with attachments pursuant to Fed. R. App. P. 28(j) indicating
that Village’s chief operating officer on August 12, 2015, filed a
complaint in the Superior Court of New Jersey seeking an
injunction stopping the clearing work on 3201 Realty’s property
on the ground that 3201 Realty obtained its wetland permit by
fraud. To the best of my knowledge this case has not been
resolved so I do not take it into account as I do not know if the
suit is objectively baseless.
17
what should be his vote from an affirmance of the Court’s order
to a reversal. As a result a majority of the panel consisting of
Judge Fuentes and Judge Ambro announce the Court’s judgment
based on the following shifting majorities as to individual
issues: (1) Judge Fuentes’s and my view that 3201 Realty has
antitrust standing and (2) Judge Fuentes’s and Judge Ambro’s
view that 3201 Realty’s complaint overcomes a Noerr-
Pennington defense. I regard it as ironical that even though I
believe we should affirm the judgment of the District Court, my
view on an issue on which I would not decide the case is a factor
leading to its reversal. Indeed, if I only stated my views on the
Noerr-Pennington issue, then for certain we would be affirming
because Judge Ambro surely would not have seen himself as
bound by Judge Fuentes’s views if they stood alone. But I took
a position on standing because courts usually if not always
decide whether a plaintiff has standing before they consider the
merits of a case.
Although it is not my place to tell Judge Ambro how and
on what issues to vote, I write here to express my view that a
multimember panel should reach the result that follows from the
independent views of its members. Judge Ambro’s willingness
to be bound by the Fuentes-Greenberg majority’s position on
antitrust standing trumps his own conclusion on the standing
issue and runs counter to the longstanding and widespread
practice of the federal courts of appeals of counting judges’
views as to outcome and not as to individual issues. Although
some scholars have criticized this prevailing practice, critics and
proponents alike acknowledge its acceptance among the courts.
See David S. Cohen, The Precedent-Based Voting Paradox, 90
B.U. L. Rev. 183, 222 (2010) (“[T]he [Supreme] Court currently
18
uses outcome voting to reach a result, as it votes on the outcome
and then the Justices write their opinions to support the
outcome.”); Lewis A. Kornhauser & Lawrence G. Sager, The
One and the Many: Adjudication in Collegial Courts, 81 Cal. L.
Rev. 1, 31 (1993) (“[T]he case-by-case protocol has been the
encompassing norm of the Court throughout its existence.”);
Jonathan Remy Nash, A Context-Sensitive Voting Protocol
Paradigm for Multimember Courts, 56 Stan. L. Rev. 75, 86
(2003) (“[T]he standard voting protocol is generally to
determine the ultimate outcome in a case . . . based upon each
judge’s views as to the outcome in the case.”); David Post &
Steven C. Salop, Rowing Against the Tidewater: A Theory of
Voting by Multijudge Panels, 80 Geo. L.J. 743, 750 (1992) (“It
is clear that courts most frequently utilize outcome-voting.”);
John M. Rogers, “Issue Voting” by Multimember Appellate
Courts: A Response to Some Radical Proposals, 49 Vand. L.
Rev. 997, 998 (1996) (“[T]he overwhelming practice of the
justices on the Court has been to vote for the consequence of the
individual justice’s own reasoning.”); Maxwell L. Stearns,
Standing and Social Choice: Historical Evidence, 144 U. Pa. L.
Rev. 309, 313-14 (1995) (“Within particular cases, the Court --
along with virtually all appellate courts -- employs case-by-case,
rather than issue-by-issue, decisionmaking.”).
This practice of outcome voting comports with the
general primacy that our law affords to judgments over
opinions. See Jennings v. Stephens, 135 S.Ct. 793, 799 (2015);
Edward A. Hartnett, A Matter of Judgment, Not a Matter of
Opinion, 74 N.Y.U. L. Rev. 123, 127-34 (1999). It is well
established that we review a district court’s judgment, not its
opinion. See Jennings, 135 S.Ct. at 799; Blunt v. Lower Merion
19
Sch. Dist., 767 F.3d 247, 303 n.73 (3d Cir. 2014), cert. denied,
135 S.Ct. 1738 (2015). Just as this principle requires us to
affirm a district court’s judgment even if that court’s reasoning
differs from our own, it also should lead us to affirm even if our
respective grounds for doing so diverge. See Blunt, 767 F.3d at
303 n.73 (affirming district court’s order even though only
Judge Greenberg agreed with that court’s rationale because
Judge Ambro reached same disposition on other grounds).
In view of the primacy of judgments over opinions, we
may enter judgments without even issuing opinions. See, e.g.,
Quaciari v. Allstate Ins. Co., 172 F.3d 860 (3d Cir. 1998);
Hoover v. Watson, 74 F.3d 1226 (3d Cir. 1995); see also Fed. R.
App. P. 36. In fact, until some years ago this Court regularly
disposed of appeals by issuing judgment orders without
accompanying opinions, sometimes even in complex cases.
Indeed, our internal operating procedures still authorize the use
of judgment orders to announce the outcome of a case though
the practice of using judgment orders has fallen into disuse. 3d
Cir. I.O.P. 6.1. And in cases that do result in the issuance of
opinions, both the Supreme Court and this Court issue the
judgment supported by the independent views of a majority of
the judges even if a majority does not coalesce around a single
rationale. See, e.g., Kerry v. Din, 135 S.Ct. 2128, 2131 (2015)
(plurality opinion); United States v. Dupree, 617 F.3d 724, 726
(3d Cir. 2010); Cruz v. Chesapeake Shipping, Inc., 932 F.2d
218, 220 (3d Cir. 1991) (Rosenn, J., announcing the judgment of
the court); cf. Michael v. Horn, 459 F.3d 411, 429 n.18 (3d Cir.
2006) (Greenberg, J., concurring) (“[I]t is always true that even
though judges agree on the appropriate outcome of a case, they
would not write identical opinions.”). “That the court is able to
20
issue any judgment at all in such cases clearly demonstrates that
outcome-voting has been utilized.” Post & Salop, Rowing
Against the Tidewater, supra, at 750. Accordingly, “the
outcome of a case in a multimember court depends on the tally
of votes concerning the judgment even if the tally of votes
concerning each issue resolved by opinion would logically
produce a different conclusion.” Hartnett, supra, at 134.
Judge Ambro declines to follow this accepted practice of
independent outcome voting because of the “voting paradox”
that arises if issue-by-issue resolution of a case would lead to a
conclusion that is opposite to that reached based on outcome
voting. But in the absence of the voting paradox it would not
matter if a court decided a case on an issue-by-issue or outcome
basis. Moreover, the Supreme Court repeatedly and consistently
has utilized outcome voting even in cases implicating the voting
paradox. See, e.g., Miller v. Albright, 523 U.S. 420, 118 S.Ct.
1428 (1998); Am. Trucking Ass’ns, Inc. v. Smith, 496 U.S. 167,
110 S.Ct. 2323 (1990); Nat’l Mut. Ins. Co. of D.C. v. Tidewater
Transfer Co., 337 U.S. 582, 69 S.Ct. 1173 (1949); see also
Cohen, supra, at 183-84 (noting existence of more than 30 such
cases in Supreme Court history). Moreover, as Judge (then
Professor) Rogers has pointed out “[O]ver 150 Supreme Court
cases involving plurality majority opinions indicate that a justice
should not [aggregate votes by issue and therefore] defer to a
majority that disagrees on a dispositive issue.” John M. Rogers,
“I Vote This Way Because I’m Wrong”: The Supreme Court
Justice as Epimenides, 79 Ky. L.J. 439, 459 (1990-91).
So far as I can ascertain the only support in Supreme
Court cases for Judge Ambro’s vote which leads to a result on a
controlling issue in the case different from that which should
21
follow from his view of the case comes from three cases in
which justices deferred to a majority on an issue that they would
have resolved differently and therefore provided the decisive
vote or votes in favor of a judgment that contradicted their own
reasoning. See Arizona v. Fulminante, 499 U.S. 279, 313-14,
111 S.Ct. 1246, 1267 (1991) (Kennedy, J., concurring in the
judgment); Pennsylvania v. Union Gas Co., 491 U.S. 1, 56-57,
109 S.Ct. 2273, 2295-96 (1989) (White, J., concurring in the
judgment in part and dissenting in part); United States v. Vuitch,
402 U.S. 62, 96, 91 S.Ct. 1294, 1311 (1971) (Harlan, J.,
dissenting); id. at 97-98, 91 S.Ct. at 1312 (separate opinion of
Blackmun, J.). Significantly, each of the other justices in these
cases maintained the normal practice of voting for the judgment
supported by the justice’s own reasoning. See Hartnett, supra, at
137; Kornhauser & Sager, supra, at 18-19, 24. Moreover, the
justices who gave the “structurally aberrant” votes did not offer
any explanation for their divergence from accepted practice.
Kornhauser & Sager, supra, at 2; see Nash, supra, at 84 (noting
that judges who have employed issue-based voting have “simply
do[ne] so by fiat”); Rogers, “Issue Voting”, supra, at 998
(“There was no tenable justification given for the anomalous
votes in each case . . . .”). These few deviations, “supported by
simple ipse dixit, are pretty meager authority compared to the
overwhelming precedent against” the majority’s approach.
Rogers, “I Vote This Way Because I’m Wrong”, supra, at 463.
Judge Ambro explains his use of issue voting and his
consequent vote that results in an outcome that as an individual
judge he rejects as a consequence of Judge Fuentes’s and my
view on “the scope of the law of antitrust standing [which is]
now the law of this Circuit . . . I am obliged to consider the
22
merits of [3201 Realty’s] suit.” Id. at 1. Thus, to Judge Ambro
the principal of stare decisis applied on an internal basis within a
case controls the outcome of this appeal even though he does not
use the term stare decisis in explaining his view of how to
decide the case. I believe, however, that this reasoning is
incorrect. To start, at the time that Judge Ambro wrote these
words, and even now, the panel had not yet filed an opinion in
this case, so Judge Fuentes’s opinion cannot be the law of this
Circuit. This point cannot be dismissed as a mere timing
technicality because the draft opinion must be circulated to all
the active judges of the Court who then have an opportunity to
vote for initial en banc consideration of the case before the
opinion is filed. 3d Cir. I.O.P. 5.5.
Nor does Judge Ambro’s decision to defer in this case to
a majority’s view on the standing issue present an apt analogy to
the application of the principle of stare decisis. Deferring to a
majority resolution of an issue within the same case does not
serve the policies underlying stare decisis, including the
protection of individuals’ reliance on earlier cases, the need to
maintain consistency with earlier cases, the judicial efficiency of
not revisiting issues that already have been decided, and the idea
that the collective wisdom of courts over the years should
supersede the limited insights of a court hearing a single case.
See Rogers, “I Vote This Way Because I’m Wrong”, supra, at
463-65. Furthermore, if a judge had an obligation to follow a
panel majority’s conclusion there never should be a dissent.
Yet as discussed, rather than following a rule of
deference to a majority within the same case, judges nearly
invariably vote for the result supported by their individual
reasoning, whether the case involves a voting paradox or not. It
23
is obvious that each instance in which a judge dissents reflects
an example of a judge declining to defer to a majority view.
Accordingly, Judge Ambro’s use of the principle of stare decisis
to support his vote runs “contrary to the overwhelming weight
of precedent.” Rogers, “I Vote This Way Because I’m Wrong”,
supra, at 440. Such rare and selective deference constitutes little
deference at all, let alone a proper analogue to the rule of stare
decisis, which serves very different purposes.
I recognize that in voting-paradox cases, outcome voting
does produce an apparently odd result when compared with the
outcome that results when a case is decided on the basis of the
judges’ individual reasoning regarding each underlying issue.
But, contrary to Judge Ambro’s suggestion, outcome voting
does not render the precedential value of such cases “unclear.”
Ambro typescript at 22.
Outcoming voting in this case would yield the following
straightforward body of law for district courts in this Circuit to
apply: (1) if a case arises that only implicates the standing issue,
then, if the facts of that case cannot be distinguished from those
here, the court should hold that the plaintiff has antitrust
standing based on Judge Fuentes’s and my resolution of that
issue; (2) if a case arises that implicates the Noerr-Pennington
issue in a situation that factually cannot be distinguished from
that in this case, the court should hold that the defendant lacks
such immunity based on Judge Fuentes’s and Judge Ambro’s
resolution of that issue; but (3) if a case arises presenting both
issues, then, again, if the facts of that case cannot be
distinguished from the facts here, the court should dismiss the
case. See, e.g., Greene v. Teffeteller, 90 F. Supp. 387, 388
(E.D. Tenn. 1950) (applying Supreme Court case that involved
24
voting paradox and emphasizing that “precedent is established
by the votes of the justices, not by the reasons given for their
votes.”). Although no judge would reach all of these three
conclusions if acting alone, district courts could apply this
tripartite rule both “easily” and “consistently.” Rogers, “Issue
Voting”, supra, at 1013. Hence, outcome voting would produce
“clear” guidance to district courts. Id. at 1009.
Moreover, issue voting does not offer a panacea to the
problem of voting paradoxes. Rather, issue voting raises its own
set of potential difficulties, including indeterminacy in how to
identify the relevant issues, the prospect of a judge strategically
flipping the judgment by dividing an issue into deeper sub-
issues where a majority of the judges agree as to the meta-issue
but not as to the sub-issues, the possible inability of the court to
issue a judgment due to cycling in how a majority would prefer
to resolve the relevant issues, and the thwarting of a majority’s
view as to the correct judgment. See Cohen, supra, at 223-24;
Michael I. Meyerson, The Irrational Supreme Court, 84 Neb. L.
Rev. 895, 947-49 (2006); Rogers, “Issue Voting”, supra, at
1002-06; Maxwell L. Stearns, How Outcome Voting Promotes
Principled Issue Identification: A Reply to Professor John
Rogers and Others, 49 Vand. L. Rev. 1045, 1063-65 (1996);
Maxwell L. Stearns, The Misguided Renaissance of Social
Choice, 103 Yale L.J. 1219, 1267 n.177 (1994). Thus, even
proponents of issue voting concede that “there is potential
incoherence in an issue voting system” as well. David G. Post
& Steven C. Salop, Issues and Outcomes, Guidance, and
Indeterminacy: A Reply to Professor John Rogers and Others,
49 Vand. L. Rev. 1069, 1083 (1996).
The difficulties introduced by issue voting even may
25
undermine the clarity and usability of precedents, the very
problem that Judge Ambro identifies as a consequence of
outcome voting. See Rogers, “Issue Voting”, supra, at 1009-11.
After all, just seven years after Justice White employed issue
voting to change the outcome in Union Gas, the Supreme Court
overruled that case partly because of the “confusion” it had
created “among the lower courts that ha[d] sought to understand
and apply the deeply fractured decision.” Seminole Tribe of
Fla. v. Florida, 517 U.S. 44, 64, 116 S.Ct. 1114, 1127 (1996).
The Court’s about-face can be viewed as “a criticism of the
practice of vote switching” and may “stand[] for the proposition
that holdings produced as a result of a vote switch will have
only limited stare decisis value.” Maxwell L. Stearns, Should
Justices Ever Switch Votes?: Miller v. Albright in Social Choice
Perspective, 7 Sup. Ct. Econ. Rev. 87, 155 (1999). Problems
therefore attend to either voting protocol. “Rather than rail at
the dilemma wrought by the imperfections of our system [of
outcome voting], . . . we should recognize that these
imperfections are simply part of the inherent limitations of
humanity.” Meyerson, supra, at 952.
To the extent that judges find the voting paradox
dissatisfying, instead of abandoning the longstanding and
widespread practice of independent outcome voting, they can
avoid the paradox by not considering issues after addressing an
issue that would for them resolve the case. See id. at 951; Post
& Salop, Issues and Outcomes, supra, at 1072 (noting that the
paradox can only occur if “the judges reveal their views on each
of the underlying issues presented by the case”). Unlike issue
voting, the decision not to reach unnecessary questions, even
when that decision involves not deferring to a majority on an
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issue and results in a judgment not supported by a single
majority rationale, has firm roots within our appellate court
practice. See, e.g., Cruz, 932 F.2d at 233 (Cowen, J., concurring
in the judgment only); Lowry v. Balt. & Ohio R.R. Co., 707
F.2d 721, 723 (3d Cir. 1983) (en banc) (per curiam); see also
Rogers, “I Vote This Way Because I’m Wrong”, supra, at 449
n.27 (collecting more than two dozen such Supreme Court
cases). Indeed, the voting paradox may so seldom appear in
appellate court opinions because the judges in the majority as to
outcome “typically do not reveal their views on issues that they
‘do not need to reach’ in order to vote for” that outcome. Post &
Salop, Rowing Against the Tidewater, supra, at 748.
Again, it surely is not for me to tell another judge how to
vote. Yet I cannot help being aware that there would not be a
voting paradox here if Judge Ambro had gone no further after
concluding that the District Court’s dismissal of the complaint
should be affirmed on the ground that 3201 Realty lacks
antitrust standing. There is no doubt that if Judge Ambro had
followed this approach, we would affirm based on his and my
independent reasoning. See Hartnett, supra, at 142-43 (“In
[Union Gas and Fulminante], not only did the judgment
ultimately entered fail to reflect how a majority of Justices
believed the case should have been decided, but worse,
unnecessary statements in opinions altered the judgment in the
case. . . . That is not a result we should welcome . . . .”).
In fact, if Judge Ambro had gone no further after
concluding that the District Court’s judgment should be
affirmed because 3201 Realty lacks antitrust standing, we
inescapably would affirm regardless of whether we used
outcome or issue voting. If we used outcome voting, then two
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judges, Judge Ambro and I, would be voting to affirm. If we
used issue voting, then the vote on the Noerr-Pennington issue
would have been equally divided, with Judge Fuentes rejecting
the defense of immunity and with me accepting it. The
consequence of that even split is that the District Court’s order
of dismissal would have been affirmed by an equally divided
vote. See Exxon Shipping Co. v. Baker, 554 U.S. 471, 484, 128
S.Ct. 2605, 2616 (2008); In re Mkt. Square Inn, Inc., 978 F.2d
116, 121 (3d Cir. 1992). Though the District Court did not
address the Noerr-Pennington issue as it had no need to do so
because 3201 Realty did not convince the Court that it had
antitrust standing, still defendants advanced the defense in that
Court so that the claim of Noerr-Pennington immunity was
preserved and thus defendants properly could raise it on this
appeal. Accordingly, the usual rule that an equally divided
appellate court leads to an affirmance of the trial court’s
judgment would apply.
Judge Ambro contends that if 3201 Realty had prevailed
on the standing issue in the District Court and if the defendants
were not barred from appealing by the final judgment rule and
had appealed, we would have affirmed on the standing appeal.
Then if defendants prevailed on the Noerr-Pennington issue in
the District Court and 3201 Realty appealed we would have
reversed. Thus, 3201 Realty would win the case even though a
majority of the panel thought it should lose. While Judge
Ambro may be correct on this point this hypothetical set of facts
did not happen.
Furthermore, a different hypothetical supports the use of
outcome voting. Suppose this appeal had been decided by a
single judge. If I had been that judge, then the District Court’s
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order would be affirmed. If Judge Ambro had been that judge,
once again the District Court’s order would be affirmed. Only if
Judge Fuentes had been that judge, would the District Court’s
order have been reversed. I cannot understand why the
circumstance that we are all on the panel should lead to a
different result than that which would have been reached
individually by a majority of the panel.
Issue voting “is in considerable tension with the
traditional emphasis, rooted in Article III, on courts as case
deciders.” Hartnett, supra, at 134 n.58. As has long been true,
“[t]he question before [us as] an appellate Court is, was the
judgment correct, not the ground on which the judgment
professes to proceed.” McClung v. Silliman, 19 U.S. (6 Wheat.)
598, 603 (1821). Although almost two centuries have passed
since the Supreme Court decided McClung, the law that the
Court stated there remains good law and no court has better
expressed the principle that it recognized. Inasmuch as two of
the three members of the panel agree that the judgment was
correct, though for different reasons, surely we are constrained
to affirm.6 Because the Court does not reach this result and
because I believe that defendants have a Noerr-Pennington
defense, I respectfully dissent from the outcome the Court
reaches even though I agree with Judge Fuentes on his
resolution of the standing issue.
6
In my view, this case can be resolved by making simple
mathematical calculations that do not require that we use a super
computer: (1) one and one make two, and (2) two out of three is
a majority.
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