Waugh Chapel South, LLC v. United Food & Commercial Workers Union, Local 27

PUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 12-1429

WAUGH CHAPEL SOUTH, LLC; WCS LLC; WCS PROPERTIES BUSINESS
TRUST; ELG INGLEWOOD LLC,

Plaintiffs – Appellants,

v.

UNITED FOOD AND COMMERCIAL WORKERS UNION LOCAL 27; UNITED
FOOD & COMMERCIAL WORKERS UNION, LOCAL 400; MID−ATLANTIC
RETAIL FOOD INDUSTRY JOINT LABOR MANAGEMENT FUND,

Defendants – Appellees.

Appeal from the United States District Court for the District of
Maryland, at Baltimore. William D. Quarles, Jr., District
Judge. (1:11-cv-00841-WDQ)

Argued: May 16, 2013 Decided: August 26, 2013

Before KING, DIAZ, and FLOYD, Circuit Judges.

Affirmed in part, vacated in part, and remanded by published
opinion. Judge Diaz wrote the opinion, in which Judge King and
Judge Floyd joined.

ARGUED: Ira Lee Oring, FEDDER & GARTEN, PA, Baltimore,
Maryland, for Appellants. Michael Timothy Anderson, MURPHY
ANDERSON PLLC, Washington, D.C., for Appellee United Food and
Commercial Workers Union Local 27; Sharon McNeilly Goodman,
SLEVIN & HART, P.C., Washington, D.C., for Appellee Mid−Atlantic
Retail Food Industry Joint Labor Management Fund. ON BRIEF:
Neil Dubovsky, FEDDER & GARTEN, PA, Baltimore, Maryland, for
Appellants. Arlus J. Stephens, Lorrie E. Bradley, MURPHY
ANDERSON PLLC, Washington, D.C., Joel A. Smith, David Gray
Wright, KAHN, SMITH & COLLINS, P.A., Baltimore, Maryland, for
Appellee UFCW Local 27; Carey R. Butsavage, John A. Durkalski,
BUTSAVAGE & ASSOCIATES, P.C., Washington, D.C., for Appellee
UFCW Local 400; Barry S. Slevin, Laura O. Aradi, SLEVIN & HART,
P.C., Washington, D.C., for Appellee MRFI JLM Fund.

2
DIAZ, Circuit Judge:

Waugh Chapel South, LLC, WCS LLC, WCS Properties Business

Trust (collectively “WCS”) sued the United Food and Commercial

Workers Union Locals 27 and 400 (“UFCW”) and the Mid-Atlantic

Retail Food Industry Joint Labor Management Fund (the “Fund”)

under the Labor Management Relations Act (the “LMRA”), 29 U.S.C.

§ 187, which provides a cause of action for victims of “unfair

labor practices” as defined by the National Labor Relations Act

(the “NLRA”), 29 U.S.C. § 158(b)(4). In its complaint, 1 WCS

alleges that the defendants orchestrated fourteen separate legal

challenges against their commercial real estate project in order

to force WCS to terminate their relationship with a non-

unionized supermarket--conduct that WCS alleged was an illicit

“secondary boycott” under § 158(b)(4)(ii)(B).

The defendants moved to dismiss the complaint under the

Noerr-Pennington 2 doctrine, claiming that their First Amendment

right to petition the courts insulated their litigation activity

from liability. Alternatively, the Fund moved to dismiss the

1
Plaintiff ELG Inglewood LLC (“ELG”) also sued the unions
(Count II), alleging similar actions with respect to a related
commercial real estate development. As discussed below, those
claims were dismissed in part, and ELG has since waived decision
on its appeal.
2
See United Mine Workers of Am. v. Pennington, 381 U.S. 657
(1965); E. R.R. Presidents Conference v. Noerr Motor Freight,
Inc., 365 U.S. 127 (1961).

3
complaint on the basis that it was not a “labor organization”

under the NLRA. The district court agreed with both arguments

and granted the motions to dismiss. This appeal followed.

We agree with the district court that the Fund is not a

“labor organization” under the NLRA, but conclude that the

Noerr-Pennington doctrine does not (at least at this stage)

spare the remaining defendants from the allegations of the

complaint. Although the courts are a medium by which citizens

may exercise their First Amendment right to petition their

government, the act of petitioning those courts may not serve as

the means to achieve illegal ends. Cal. Motor Transp. Co. v.

Trucking Unlimited, 404 U.S. 508, 515 (1972). Under this “sham

litigation” exception to the Noerr-Pennington doctrine, we hold

that the pleadings and the concomitant record evidence in this

case, if credited by a factfinder, are sufficient to show that

the unions have abused their right to petition the courts beyond

the point of constitutional protection. We therefore affirm in

part, vacate in part, and remand to the district court for a

determination of whether the unions waged a secondary boycott in

the manner alleged in the complaint.

I.

WCS and ELG are commercial real estate developers of two

respective shopping centers in Anne Arundel County, Maryland:

4
(1) the Village at Waugh Chapel South (“Waugh Chapel”); and (2)

the Woodmore Towne Centre (“Woodmore”). 3 Both companies planned

to lease a storefront unit in each of their shopping centers to

Wegmans Food Markets, Inc. Because the Wegmans supermarket

chain does not employ organized labor, both projects were

opposed by the defendant unions.

That opposition commenced in December 2006 when union

leadership “set[] its sights on Wegmans” to mount an

antagonistic campaign. J.A. 14. According to WCS, a union

executive threatened WCS that if Wegmans did not unionize, “we

will fight every project you develop where Wegmans is a tenant.”

J.A. 18. The unions thereafter directed and funded a barrage of

legal challenges at every stage of the projects’ development.

The first of these challenges occurred in August 2008, when

UFCW Secretary-Treasurer George Murphy, represented by his

attorney G. Macy Nelson, petitioned the Anne Arundel City

Council (the “Council”) to revoke its decision to rezone the

Waugh Chapel site from agricultural and residential to mixed-use

commercial. WCS argued that Murphy lacked standing. The day

3
We recite the facts here as a prelude to deciding whether
Noerr-Pennington warrants dismissal of the claims. For reasons
described below, we treat the district court’s dismissal as a
grant of summary judgment to the unions, and therefore consider
all facts and reasonable inferences therefrom in the light most
favorable to WCS, the non-moving party. Bonds v. Leavitt, 629
F.3d 369, 380 (4th Cir. 2011).

5
before a scheduled hearing on the merits, Murphy withdrew the

petition and effectively ceded that he was not an “aggrieved

party.” J.A. 441.

After this petition failed, the union employed surrogate

plaintiffs to pursue their legal challenges. For the next few

years, Nelson would represent plaintiffs in sixteen other

proceedings objecting to the development of the shopping

centers, with the unions allegedly directing the litigation.

Three of those challenges pertained to Woodmore and are not

before us on appeal. We summarize the thirteen other challenges

to Waugh Chapel below.

• In December 2009, Paul Gilliam, Tracee Gilliam, and the
environmental organization “Patuxent Riverkeeper” appealed
the Council’s decision to extend the time for WCS to post
fees and bonds for the project. WCS later posted the bonds
and fees, mooting the case.

• In March 2010, Robert Smith and Madonna Brennan sued in
Maryland state court to enjoin the Council’s approval of
“Tax Increment Financing” (“TIF”) bonds, arguing that the
Council did not conduct the requisite hearing. The Council
did indeed fail to conduct a hearing, a failure it remedied
by holding another hearing in May to reauthorize the TIF
bonds. The case was then dismissed as moot.

• In June 2010, Smith and Brennan sued several defendants
associated with the development project, including the
Council and the Maryland Department of Energy (“MDE”),
alleging the development had caused a nuisance. After a
brief period of discovery in which Smith and Brennan
proffered expert testimony, the parties moved for summary
judgment. The state court found that there was no nuisance
and dismissed the suit.

• In July 2010, Smith and Patuxent Riverkeeper filed a state
court petition to vacate the MDE’s issuance of a mining
6
 permit to WCS. They filed an identical petition in August
when the MDE issued an amended mining permit. The state
court dismissed the July petition as based only on the
“conjecture” and “speculation” of affidavits provided by
plaintiffs. J.A. 196-97. After this dismissal, the
plaintiffs voluntarily dismissed their August petition.

• From May to July 2011, Smith, Sandra Bowie, and Rosie
Shorter appealed the grant of nine separate building and
grading permits issued by the Council to WCS. They
withdrew the appeals after WCS subpoenaed the unions’
financial records.

On March 31, 2011, WCS and ELG sued the unions under the

LMRA, 29 U.S.C. § 187, alleging two counts of secondary boycott

activity under § 158(b)(4)(ii)(B). Count 1 of the complaint

pertained to the Waugh Chapel shopping center (WCS), while Count

2 pertained to the Woodmore Towne Center (ELG). As to Count 1,

the district court categorized the fourteen legal challenges

directed against Waugh Chapel as follows: (1) one “successful

petition” to appeal the issuance of the TIF bonds, J.A. 55, (2)

two environmental suits dismissed for lack of standing, and from

which the court would not infer baselessness, (3) ten grading

and building “petitions withdrawn to avoid subpoenas” from which

the court would not infer baselessness, J.A. 57, (4) one

petition appealing the extension of time for WCS to post bonds

and pay fees that became moot, and (5) one environmental suit

dismissed on the merits “after thoughtful consideration,” J.A.

58.

7
 The Fund successfully moved to dismiss the complaint under

Federal Rule of Civil Procedure 12(b)(6), arguing that it was

not a “labor organization” subject to the LMRA. And because the

district court concluded that none of the prior legal challenges

to the development of Waugh Chapel were objectively baseless, it

dismissed Count I on Noerr-Pennington grounds. While the court

allowed a portion of Count II to survive the unions’ motion to

dismiss, 4 a subsequent consent order also dismissed that count.

II.

Before reaching the merits of this appeal, we first address

the procedural posture of this appeal and our jurisdiction to

decide it.

A.

Although the parties do not address it, we must determine

our appellate jurisdiction to entertain this appeal under 12

U.S.C. § 1291, as “we are bound in all cases to ascertain our

own appellate jurisdiction before reviewing a district court

4
As to ELG’s Count II, the district court concluded that
one of the three underlying legal proceedings allegedly
instigated by the unions was objectively baseless. Accordingly,
the court granted the unions’ motion to dismiss as to two of the
three alleged ‘sham’ suits, but allowed this one portion of
Count II to survive.

8
judgment.” Reid v. Angelone, 369 F.3d 363, 374 n.7 (4th Cir.

2004).

“With few narrow exceptions,” including certain

interlocutory and collateral orders, “our jurisdiction extends

only to appeals from all final decisions of the district courts

of the United States.” United States v. Myers, 593 F.3d 338,

344 (4th Cir. 2010). In this case, after the district court

dismissed WCS’s Count I and most of Count II with prejudice, ELG

and the unions entered into a consent order, which purported to

dismiss the remainder of Count II of the complaint “with

prejudice, but without prejudice to refiling in any other

proceeding.” J.A. 68. “This kind of split judgment ordinarily

would not be considered ‘final’ and therefore appealable under

28 U.S.C. § 1291 because it does not wind up the entire

litigation in the district court.” Palka v. City of Chicago,

662 F.3d 428, 433 (7th Cir. 2011); see also GO Computer, Inc. v.

Microsoft Corp., 508 F.3d 170, 175-76 (4th Cir. 2007).

Several of our sister circuits have held that litigants may

not use voluntary dismissals as a subterfuge to manufacture

jurisdiction for reviewing otherwise non-appealable,

interlocutory orders. See Gannon Int’l, Ltd. v. Blocker, 684

F.3d 785, 791-92 (8th Cir. 2012); Rabbi Jacob Joseph School v.

Province of Mendoza, 425 F.3d 207, 210 (2d Cir. 2005); LNC

Investments LLC v. Republic of Nicaragua, 396 F.3d 342, 346 (3d

9
Cir. 2005); Marshall v. Kansas City S. Ry. Co., 378 F.3d 495,

499-500 (5th Cir. 2004); James v. Price Stern Sloan, Inc., 283

F.3d 1064, 1070 (9th Cir. 2002); CSX Transp., Inc. v. City of

Garden City, 235 F.3d 1325, 1327 (11th Cir. 2000); ITOFCA, Inc.

v. MegaTrans Logistics, Inc., 235 F.3d 360, 365 (7th Cir. 2000);

Cook v. Rocky Mountain Bank Note Co., 974 F.2d 147, 148 (10th

Cir. 1992). “Tolerance of that practice would violate the long-

recognized policy against piecemeal appeals,” Rabbi Jacob Joseph

School, 425 F.3d at 210, and would allow “an end-run around the

final judgment rule.” Palmieri v. Defaria, 88 F.3d 136, 140 (2d

Cir. 1996).

ELG confesses that its Rule 41(a)(2) voluntary dismissal

was intended to allow appellate review of an otherwise

interlocutory order. See Appellants’ Br. at 3 n.1 (“The claims

relating to one of those actions was dismissed by the March 29,

2012 Consent Order to allow for a final judgment.”).

Under these circumstances, the question of remedy
looms. In most cases, the proper remedy will be to
reverse the Rule 41(a)(2) order and remand for
completion of the case, without considering the merits
of the earlier interlocutory order(s). We may also
deem the ambiguous voluntary dismissal of Count [II]
to be with prejudice and go on to consider the appeal
from the district court’s dismissal of all remaining
claims.

Madsen v. Audrain Health Care, Inc., 297 F.3d 694, 698 (8th Cir.

2002) (internal quotations omitted). As did the Eighth Circuit,

we choose the latter remedy here, as it polices the boundaries

10
of our appellate jurisdiction without punishing the litigants in

this appeal. Accordingly, we deem ELG’s voluntary dismissal of

Count II to be with prejudice and proceed to consider WSC’s

appeal of its remaining claims.

B.

We next address a procedural wrinkle regarding the district

court’s Rule 12(b)(6) dismissal. While we have since questioned

our decision to do so, see IGEN Int’l, Inc. v. Roche Diagnostics

GmbH, 335 F.3d 303, 311 (4th Cir. 2003), we have held that the

Noerr-Pennington doctrine is an affirmative defense, 5 N.C. Elec.

Membership Corp. v. Carolina Power & Light, 666 F.2d 50, 52 (4th

Cir. 1981). The district court, however, purported to

adjudicate the merits of the unions’ Noerr-Pennington defense

under Rule 12(b)(6), which is a procedure that tests only the

sufficiency of a complaint and “cannot reach the merits of an

5
In IGEN Int’l, the defendant Roche Diagnostics GmbH failed
to raise the Noerr-Pennington doctrine until after the district
court denied its motion to dismiss. 335 F.3d at 308-10. On
appeal, Roche challenged the district court’s decision to deny
its Noerr-Pennington argument as untimely. While conceding that
“[t]his circuit has previously characterized Noerr-Pennington as
an affirmative defense,” the panel nonetheless stated in dicta
that “Roche was not required to plead [Noerr-Pennington] as an
affirmative defense.” Id. at 311.

We, however, remain bound by our earlier precedent that the
Noerr-Pennington doctrine is an affirmative defense. See
McMellon v. United States, 387 F.3d 329, 333 (4th Cir. 2004).

11
affirmative defense . . . . [unless] all facts necessary to the

affirmative defense clearly appear on the face of the

complaint.” Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th

Cir. 2007) (en banc) (internal quotations omitted).

While WCS’s complaint alleges that the unions directed a

series of adverse lawsuits in order to wage a secondary boycott,

the mere reference to the purportedly sham proceedings does not

show--on the face of the complaint--whether Noerr-Pennington

bars WCS’s claims as a matter of law. In fact, much of the

relevant evidence that the district court considered on the

point consisted of materials 6 the parties appended as part of

the “Rule 12(b)(6) motion to dismiss, which is not a pleading.”

Mellon Bank, N.A. v. Ternisky, 999 F.2d 791, 795 (4th Cir.

1993).

We also note that when “matters outside the pleadings are

presented to and not excluded by the court, the [Rule 12(b)(6)]

motion must be treated as one for summary judgment under Rule

56,” and “[a]ll parties must be given a reasonable opportunity

to present all the material that is pertinent to the motion.”

6
These documents principally concerned the underlying
administrative and state court proceedings and consisted of
permit applications, legal filings, administrative hearings,
judicial orders, deposition excerpts, and affidavits. The unions
attached these materials to their motion to dismiss, as did WCS
to their response to that motion.

12
Fed. R. Civ. P. 12(d). Here, the district court did not

formally convert the unions’ motion to dismiss to one for

summary judgment, believing instead that it could adjudicate the

unions’ motion under Rule 12(b)(6) by considering documents

incorporated into the complaint by reference, and taking

judicial notice of the purported sham proceedings.

It is not obvious to us that incorporation by reference is

appropriate in this context given our holding in Goodman that a

district court may consider only “the face of the complaint.”

Goodman, 494 F.3d at 464. Nor should “judicial notice” be used

as an expedient for courts to consider “matters beyond the

pleadings” and thereby upset the procedural rights of litigants

to present evidence on disputed matters. Greater Balt. Ctr. for

Pregnancy Concerns, Inc. v. Mayor & City Council of Baltimore,

___ F.3d ___, 2013 WL 3336884, slip op. at 10 (4th Cir. July 3,

2013) (en banc) (internal quotations omitted); see Haavistola v.

Cmty. Fire Co. of Rising Sun, Inc. 6 F.3d 211, 218 (4th Cir.

1993).

But the bottom line is that the district court did allow

the parties to supplement the record before ruling on the motion

to dismiss. Moreover, the parties did not request discovery or

otherwise object to the court’s procedural management of the

unions’ motion to dismiss. As we have stated before,

13
 we are not bound by the label that the district court
places upon its disposition of the case. Whenever
outside matters are presented to and not excluded by
the trial court, the motion to dismiss should be
considered on appeal as one for summary judgment even
though the trial court characterized its action as a
dismissal of the case for failure of plaintiffs to
state a claim upon which relief can be granted. The
record in this case shows that both parties were given
a reasonable opportunity to present evidence upon
which the trial court could properly determine whether
summary judgment should be entered. Therefore, it is
proper for this court on appeal to consider this as a
motion for summary judgment.

Dean v. Pilgrim’s Pride Corp., 395 F.3d 471, 474 (4th Cir. 2005)

(internal quotations omitted). We conclude that the principle

announced in Dean applies directly here, and so we too will

consider the unions’ motion to dismiss based on the Noerr-

Pennington doctrine as one for summary judgment.

As to the dismissal of the Fund under Rule 12(b)(6),

therefore, we will “review the district court’s grant of a

motion to dismiss de novo,” McCauley v. Home Loan Inv. Bank,

F.S.B., 710 F.3d 551, 554 (4th Cir. 2013), accepting the

allegations of WCS’s complaint as true, Trail v. Local 2850 UAW

United Def. Workers of Am., 710 F.3d 541, 543 (4th Cir. 2013).

But because we have refashioned the district court’s dismissal

of the claim against the remaining defendants as a grant of

summary judgment, we review de novo whether there are any

genuine issues of material fact for the trier of fact to resolve

and, if not, whether the unions were entitled to dismissal as a

14
matter of law. Reynolds v. Am. Nat’l Red Cross, 701 F.3d 143,

149 (4th Cir. 2012).

III.

We first consider the district court’s decision to dismiss

the claim against the Fund on the basis that it is not a “labor

organization” under the NLRA subject to the secondary boycott

prohibitions of the LMRA. The NLRA defines a “labor

organization” as “any organization of any kind, or any agency or

employee representation committee or plan, in which employees

participate and which exists for the purpose, in whole or in

part, of dealing with employers concerning grievances, labor

disputes, wages, rates of pay, hours of employment, or

conditions of work.” 29 U.S.C. § 152(5).

We have “given a broad interpretation to the ‘dealing with’

requirement.” NLRB v. Peninsula Gen. Hosp. Med. Ctr., 36 F.3d

1262, 1270 (4th Cir. 1994). But we have also explained that the

“dealing with” phraseology denotes a “bilateral mechanism”

through which an employee entity and management reciprocally

interact:

As we understand this “bilateral mechanism” analysis,
several general principles are readily
apparent. . . : (1) while the term “dealing with”
connotes activity which is broader than collective
bargaining, an employer does not necessarily “deal
with” its employees merely by communicating with them,
even if the matters addressed concern working

15
 conditions; (2) “dealing” occurs only if there is a
“pattern or practice” over time of employee proposals
concerning working conditions, coupled with management
consideration thereof; [and] (3) isolated instances of
the conduct described in number two do not constitute
“dealing[.]”

Id. at 1271-72.

An employee entity may be a “labor organization” if its

purpose or activity involves “dealing with” employers. Id. at

1270 n.6. Yet the Fund satisfies neither of these criteria.

First, WCS’s own complaint alleges that the Fund is prohibited

under its charter from “participating directly or

indirectly . . . in union collective activities.” J.A. 13.

Second, while the “question of whether an organization is a

‘labor organization’ is primarily one of fact,” Peninsula Gen.,

36 F.3d at 1269, the only fact suggesting any interactions

between the Fund and an employer concerns the alleged secondary

boycott. There is plainly no “bilateral mechanism” when the

only alleged contact between an employee entity and management

is an unfair labor practice directed against an employer.

Although the Fund has designated itself as a “labor

organization” for purposes of tax liability, this is not

sufficient to render it a “labor organization” for the purposes

of labor law. The Internal Revenue Code (“I.R.C.”) has a

distinct definition of “labor organization.” See 26 U.S.C.

§ 501(c)(5); 26 C.F.R. § 1.501(c)(5)-1(a). The First Circuit

16
has refused to borrow the NLRA definition of “labor

organization” to determine the meaning of that term under the

I.R.C. Tupper v. United States, 134 F.3d 444, 446 n.1 (1st Cir.

1998). We agree with our sister circuit that the “I.R.C. and

the NLRA have very different objectives,” and we similarly

decline “to import definitions from statutes with unrelated or

cross-purposes.” Id.

Because Plaintiffs fail to allege that the Fund has engaged

in a pattern or practice of “dealing with” employers, it is not

a “labor organization” under the NLRA and is not subject to the

conditions of the LMRA. We therefore affirm the district

court’s decision to dismiss the complaint against the Fund.

IV.

A.

We next consider whether the district court correctly

dismissed the claim against the remaining defendants.

Plaintiffs allege that the unions’ various legal challenges to

the Waugh Chapel development violated the secondary boycott

provision of the NLRA, which extends to efforts to “exert

pressure on an unrelated, secondary or neutral employer in order

to coerce the secondary employer to cease dealing with the

primary employer, thereby advancing the union’s goals

indirectly.” R.L. Coolsaet Constr. Co. v. Local 150, Int’l

17
Union of Operating Eng’rs, AFL-CIO, 177 F.3d 648, 655 (7th Cir.

1999) (internal quotations omitted).

The unions counter that their litigation activity is

protected by the Noerr-Pennington doctrine, which safeguards the

First Amendment right to “petition the government for a redress

of grievances,” U.S. Const. amend. I, by immunizing citizens

from the liability that may attend the exercise of that right.

See Noerr, 365 U.S. at 136-39; Pennington, 381 U.S. at 669.

The principle originated from Noerr, where the Supreme

Court extended First Amendment protection to lobbying efforts

for anti-competitive legislation, explaining that “mere attempts

to influence the passage or enforcement of laws” cannot comprise

a violation of antitrust law. Noerr, 365 U.S. at 135.

The Court has since expanded Noerr-Pennington immunity to

alleged labor law violations, BE & K Constr. Co. v. NLRB, 536

U.S. 516, 526 (2002), and to “the approach of citizens or groups

of them to administrative agencies . . . and to courts, the

third branch of Government.” Cal. Motor, 404 U.S. at 510.

However, the First Amendment offers no protection when

“petitioning activity ostensibly directed toward influencing

governmental action, is a mere sham to cover . . . an attempt”

to violate federal law. Prof’l Real Estate Investors, Inc. v.

Columbia Pictures Indus. (“PREI”), 508 U.S. 49, 56 (1993)

(internal quotations omitted).

18
 The Supreme Court’s first engagement with this exception

occurred in California Motor, where highway carriers instituted

a slew of “state and federal proceedings to resist and defeat

applications by respondents to acquire operating rights or to

transfer or register those rights.” 404 U.S. at 509.

Respondents, a group of rival highway carriers, filed an

antitrust suit claiming this litigation activity constituted

anti-competitive conduct. The Court concluded that the facts

alleged came within the “sham” exception to the Noerr-Pennington

doctrine, explaining that sham litigation occurs where “a

pattern of baseless, repetitive claims . . . emerge[s] which

leads the factfinder to conclude that the administrative and

judicial processes have been abused.” Id. at 513.

The Supreme Court revisited the sham litigation standard in

PREI, which involved a defendant’s counterclaim that the

copyright action it was defending was a sham suit designed to

violate antitrust law. In examining the applicability of Noerr-

Pennington, the Court set forth a “two-part definition of ‘sham

litigation.’ First, the lawsuit must be objectively baseless in

the sense that no reasonable litigant could realistically expect

success on the merits.” PREI, 508 U.S. at 60. The second

inquiry focuses on the “litigant’s subjective

motivation . . . [and] whether the baseless lawsuit conceals an

attempt to” violate federal law “through the use of the

19
governmental process.” Id. at 60-61. Because “the sham

exception contains an indispensable objective component,” id. at

58, “even an improperly motivated lawsuit may not be

enjoined . . . as an unfair labor practice unless such

litigation is baseless,” id. at 59.

It is unclear whether PREI distinguished or displaced the

sham litigation test first propounded in California Motor. Two

of our sister circuits, however, “reconcile” the two cases “by

reading them as applying to different situations. Professional

Real Estate Investors provides a strict two-step analysis to

assess whether a single action constitutes sham

petitioning. . . . California Motor Transport deals with the

case where the defendant is accused of bringing a whole series

of legal proceedings.” USS–POSCO Indus. v. Contra Costa Cnty.

Bldg. & Const. Trades Council, AFL-CIO (“POSCO”), 31 F.3d 800,

810-11 (9th Cir. 1994); accord Primetime 24 Joint Vent. v. Nat’l

Broad. Co., 219 F.3d 92, 101 (2d Cir. 2000).

We have not had occasion to confront this issue, as our

precedent has applied PREI only where a party has alleged a

single sham proceeding. See IGEN Int’l, 335 F.3d at 307-08;

Baltimore Scrap Corp. v. David J. Joseph Co., 237 F.3d 394, 397-

98 (4th Cir. 2001). Nevertheless, we agree with the distinction

adopted by our sister circuits. In the absence of any express

statement that the sham litigation standard in PREI supplanted

20
California Motor, we are obligated to “follow the case which

directly controls, leaving to th[e] [Supreme Court] the

prerogative of overruling its own decisions.” Rodriguez de

Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477, 484 (1989). 7

We distinguish PREI because it is ill-fitted to test

whether a series of legal proceedings is sham litigation. When

a party contends that it is defending a sham lawsuit, it is

relatively simple for a judge to decide whether the singular

claim it is presiding over is objectively baseless. See PREI,

508 U.S. at 59-61. But it is an entirely different undertaking

to collaterally review--as here--fourteen state and

administrative lawsuits for baselessness. It is especially

difficult to do so where the presiding tribunal in those cases

had no occasion to measure the baselessness of the suit because

7
While the parties fully briefed and argued this issue in
the court below, WCS has not pressed for a different sham
litigation standard on appeal. Nevertheless, “we possess the
discretion under appropriate circumstances to disregard the
parties’ inattention to a particular argument or issue.” United
States v. Ashford, ___ F.3d ___, 2013 WL 3069778, slip op. at 2
(4th Cir. June 20, 2013) (internal quotations omitted). In
order to properly assess whether WCS’s complaint should be
dismissed because of the Noerr-Pennington doctrine, we believe
it is necessary to apply the correct sham litigation standard,
and we exercise our discretion to do so.

At oral argument, the unions sensed our inclination to sua
sponte address this question, and requested that we allow
supplemental briefing on this point. We deny this request, as
we have reviewed the parties’ briefing at the district court on
this issue and find it more than sufficient.

21
(1) it had no inkling that the action comprised a possible

campaign of sham litigation, and (2) the plaintiffs preempted an

assessment of frivolity by prematurely withdrawing some of their

suits.

Accordingly, when purported sham litigation encompasses a

series of legal proceedings rather than a singular legal action,

we conclude the sham litigation standard of California Motor

should govern. In this context, the focus is not on any single

case. Rather a district court should conduct a holistic

evaluation of whether “the administrative and judicial processes

have been abused.” Cal. Motor, 404 U.S. at 513. The pattern of

the legal proceedings, not their individual merits, centers this

analysis:

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. That may be a
difficult line to discern and draw. But once it is
drawn, the case is established that abuse of those
processes produced an illegal result, viz.,
effectively barring respondents from access to the
agencies and courts. Insofar as the administrative or
judicial processes are involved, actions of that kind
cannot acquire immunity by seeking refuge under the
umbrella of “political expression.”

Id. Of course, the subjective motive of the litigant and the

objective merits of the suits are relevant, but other signs of

bad-faith litigation--including those present in this case--may

also be probative of an abuse of the adjudicatory process.

22
 B.

We now review the unions’ motion to dismiss under this

test. 8 Accordingly, we ask whether the record evidence presents

a genuine issue of material fact as to whether the unions

indiscriminately filed (or directed) a series of legal

proceedings without regard for the merits and for the purpose of

violating federal law. We conclude that it does.

In our view, the vast majority of the legal challenges

failed demonstrably. In fact, it appears that only the March

2010 suit to enjoin the approval of TIF bonds could be called

successful.

The plaintiffs objectively lacked standing in the

proceedings to rescind the rezoning decision by the Council, as

Maryland law requires a party to attend the public hearing of an

administrative body in order to have standing as an aggrieved

party. See, e.g., Cnty. Council v. Billings, 21 A.3d 1065, 1075

(Md. 2011).

Two additional suits regarding the MDE issuance of surface

mining permits were dismissed as “based in critical part only on

8
“Although we could remand to the district court for
reconsideration under the appropriate standard of review, doing
so would serve no useful purpose. . . . The validity vel non of
a summary judgment entails a pure question of law and,
therefore, we are fully equipped to resolve the question as a
matter of first-instance appellate review.” Piccicuto v. Dwyer,
39 F.3d 37, 40 (1st Cir. 1994).

23
conjecture,” J.A. 196, as the petitioners supplied only their

own conclusory affidavits of environmental harm with no

scientific data or expert testimony. Finally, collateral

estoppel would have barred the nine appeals of the building and

grading permits, as the petitioners simply repeated the

substance of their nuisance claim--dismissed weeks earlier--that

the developments caused environmental harm to their property.

While there is no particular win-loss percentage that a

litigant must achieve to secure the protection of the First

Amendment, a one-out-of-fourteen batting average at least

suggests “a policy of starting legal proceedings without regard

to the merits and for the purpose of [violating the law].”

POSCO, 31 F.3d at 811; cf. Kaiser Found. Health Plan, Inc. v.

Abbott Lab. Inc., 552 F.3d 1033, 1046-47 (9th Cir. 2009) (no

sham litigation where plaintiffs “won seven of the seventeen

suits” and eight of the ten defeats concerned novel or close

questions of law); POSCO, 31 F.3d at 811 (no sham litigation

where fifteen out of twenty-nine suits succeeded); Twin City

Bakery Workers & Welfare Fund v. Astra Aktiebolag, 207 F. Supp.

2d 221, 224 (S.D.N.Y. 2002) (no sham litigation where the court

allowed “four of the six asserted patents to proceed beyond

summary judgment.”).

Of course, some of the legal challenges directed by the

unions may have been justifiable in one sense or another. For

24
example, the petition appealing the issuance of TIF bonds could

be characterized as successful. Nevertheless, the fact that

there may be moments of merit within a series of lawsuits is not

inconsistent with a campaign of sham litigation, for “even a

broken clock is right twice a day.” POSCO, 31 F.3d at 811.

We note some other indicia of bad-faith litigation. First,

there was a perverse nature to the environmental litigation

directed by the unions to enjoin the commercial development.

Because WCS and MDE entered into a consent decree to remediate

preexisting environmental contamination, an injunction would

have terminated the consent decree and prevented any

environmental remediation from actually occurring.

Second, plaintiffs withdrew ten of the fourteen suits under

suspicious circumstances. UFCW Secretary-Treasurer Murphy’s

eleventh-hour withdrawal of the August 2008 petition occurred a

day before a hearing on the merits and after WCS had expended

significant resources opposing the petition. And in the nine

appeals of the building and grading permits, plaintiffs

voluntarily dismissed their suits--according to WCS--to avoid

complying with subpoenas of financial records that would have

revealed that the unions were directing and paying for the

litigation. While third-party financing of legal proceedings

does not itself demonstrate an illegal purpose or render those

suits sham, see Balt. Scrap, 237 F.3d at 400-01, a reasonable

25
factfinder could credit this evidence in deciding whether “the

administrative and judicial processes have been abused.” Cal.

Motor, 404 U.S. at 513.

The unions’ post hoc justifications for these suits, as

well as their alternative theories for why the sham litigation

exception should not apply, fail to persuade us that dismissal

of WCS’s complaint is appropriate. We first reject the notion

that because no attorney or union member faced liability for

sanctions or an abuse of process tort under Maryland law,

imposing federal liability for sham litigation “[u]ndermines

[f]ederalism” and the autonomy of states to regulate access to

their courts. Appellee’s Br. at 32. Maryland courts have the

authority to police litigation abuses, Felder v. Casey, 487 U.S.

131, 138 (1988), but no state may dictate the terms of a

litigant’s First Amendment right to petition its courts by the

operation of this power. See Harman v. Forssenius, 380 U.S.

528, 540 (1965) (“State[s] may not impose a penalty upon those

who exercise a right guaranteed by the Constitution.”).

Just as we do not trespass on the prerogative of Maryland

to police access to its courts, a state court’s decision of

whether or not to penalize sham litigation cannot control our

determination of whether we should afford it constitutional

protection. It would make little sense to cede that federal

question to state law proceedings that involve issues that are

26
distinct from our inquiry under California Motor. See Keller v.

State Bar of Cal., 496 U.S. 1, 11 (1990) (“Of course the Supreme

Court of California is the final authority on the ‘governmental’

status of the State Bar of California for purposes of state law.

But its determination . . . is not binding on us when such a

determination is essential to the decision of a federal

question.”).

In any event, while a state court’s appraisal of the merits

of litigation aids the sham exception inquiry, see Balt. Scrap,

237 F.3d at 399-400, the plaintiffs in the majority of the cases

withdrew their suits before an adjudication. Moreover, WCS

could not pursue sanctions against the unions, as they were not

parties to the litigation. And even in the cases that reached

an adjudication, we accord slight significance to the absence of

a formal declaration of baselessness by the presiding tribunal

where--as here--the defendants and the court did not have reason

to suspect an improper motive behind the suits. Cf. PREI, 508

U.S. at 51-55.

The unions also emphasize that sham litigation must

“effectively bar[] [WCS] from access to the agencies and

courts.” Cal. Motor, 404 U.S. at 513. But this “access-

barring” language cannot mean that litigation must reach such a

crescendo as to literally incapacitate the legal system and

27
prevent another litigant from receiving their day in court. 9

Instead, legal challenges need only “harass and deter

[litigants] in their use of administrative and judicial

proceedings so as to deny them ‘free and unlimited’ access to

those tribunals.” Id. at 511 (emphasis added). It is enough

that WCS alleged that the series of legal challenges threatened

their $260 million commercial development with substantially

increased risk and costs. If any of those suits had succeeded

in staying the project, even momentarily, WCS may have succumbed

to the boycott and replaced Wegmans with a unionized tenant.

For this reason, we reject the unions’ final argument that

their series of legal challenges was not access-barring as a

matter of law because it did not block development of the

shopping centers. If anything, the ineffectiveness of the

lawsuits in this case tends to prove, not dispel, the charge of

9
We disagree with the unions that either Racetrac
Petroleum, Inc. v. Prince George’s County, 601 F. Supp. 892 (D.
Md. 1985), aff’d on its reasoning, 786 F.2d 202 (4th Cir. 1986),
or Pendleton Construction Corp. v. Rockbridge County, Virginia,
652 F. Supp. 312 (W.D. Va. 1987), aff’d on its reasoning, 837
F.2d 178 (4th Cir. 1988), stand for such a proposition. These
cases neither involved a pattern of litigation nor adopted the
suggestion that litigation cannot be sham where a litigant
ultimately received a fair adjudication. In fact, we rejected
such a literal conception of access-barring in Hosp. Building
Co. v. Trs. of Rex Hosp., concluding that access-barring occurs
“if the proof establishes . . . intent to delay approval of
HBC’s application for a certificate of need and thereby delay
its entrance into the Raleigh market.” 691 F.2d 678, 687 (4th
Cir. 1982) (emphasis added).

28
sham litigation. Because successfully halting the project would

defeat any sham litigation argument in the first place, see

Balt. Scrap, 237 F.3d at 399 (“By definition, a winning lawsuit

is a reasonable effort at petitioning for redress and therefore

not a sham.” (internal quotations omitted)), this “heads I win,

tails you lose” theory of access-barring would nullify the sham

litigation exception altogether.

We conclude that there remains a genuine issue of material

fact as to whether the pattern of litigation alleged in WCS’s

complaint derived from “a policy of starting legal proceedings

without regard to the merits and for the purpose of” waging a

secondary boycott. POSCO, 31 F.3d at 811. In light of the poor

litigation record and the signs of bad-faith petitioning, a

factfinder could reasonably conclude that the unions have abused

their right to petition the courts and, as a result, have

forfeited the protection of the First Amendment. Therefore, the

district court erred in dismissing WCS’s claims against the

unions.

V.

For the foregoing reasons, we affirm the district court’s

dismissal of WCS’s complaint as to the Fund, vacate the

29
dismissal of WCS’s complaint as to the remaining union

defendants, and remand for further proceedings.

AFFIRMED IN PART,
VACATED IN PART,
AND REMANDED

30