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Christopher Grengs, Jan 14, 2014
This article explains that only a person’s conduct that is in furtherance of a petition to obtain redress from government, and the effects that are incidental to such conduct, should be immune from liability under laws that would otherwise apply, such as the federal antitrust laws. Under the unidirectional furtherance standard of the Supreme Court’s Noerr-Pennington doctrine, a person’s conduct must be directed toward obtaining governmental action in order to obtain such immunity.
This unidirectional furtherance standard for petitioning immunity has important implications for situations where parties on opposing sides of litigation resolve their dispute by entering into a contract agreement that terminates the litigation as one of its mutually acceptable conditions. Under this standard, such a settlement between private parties should not be immune. By contrast, such a settlement between a private party and government should be immune.
The Supreme Court has not yet considered the specific question of whether Noerr-Pennington petitioning immunity applies to a settlement agreement. But a series of lower court cases involving litigation settlements have given rise to a debate over whether or not such agreements should be immune. Much of the confusion regarding this issue is a consequence of an imprecise reading of Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc. by some lower courts and commentators.
Most lower courts that have considered decisions by private parties on opposing sides of litigation to settle have correctly held that they do not constitute immune petitioning conduct. But the Ninth Circuit in Columbia Pictures Industries, Inc. v. Professional Real Estate Investors, Inc. (“PRE“), as part of its reasoning, mistakenly replaced Noerr‘s unidirectional furtherance standard with an over-broad, omnidirectional standard that extends in every direction to make immune from antitrust liability any conduct that is merely incidental to petitioning, including the settlement of litigation between private parties. A state district court has also incorrectly held that settlement agreements approved by a court are immune from antitrust liability, absent a sham.
Several lower courts that have considered the decision of a private party to settle with a government entity on the opposing side of litigation have correctly held that such a settlement constitutes the full realization of protected petitioning conduct. But some of these courts have incorrectly relied on a PRE-type incidental standard as part of their reasoning, thus creating additional confusion about the correct standard for immunity and how Noerr-Pennington should be applied in two distinct situations.
Section II of this article explains the Supreme Court’s Noerr-Pennington doctrine. Section III explains that, under Noerr‘s unidirectional standard for petitioning immunity, settlements between private parties should not be immune and settlements between a private party and government should be immune. Section IV analyzes lower court decisions on settlement agreements between private parties. Section V analyzes lower court decisions on settlement agreements between a private party and government. Section VI discusses the confusion among commentators on the issue of whether Noerr-Pennington should apply to settlements.
This article concludes that courts should resolve questions involving litigation settlements and the Noerr-Pennington doctrine using more careful language that is consistent with the original Noerr case. In particular, courts should clarify that the Noerr-Pennington doctrine articulates a unidirectional furtherance standard for petitioning immunity. Likewise, courts should clearly distinguish between situations involving settlements between private parties and settlements between a private party and government.
