In the
United States Court of Appeals
For the Seventh Circuit
No. 10-1665
M ERCATUS G ROUP, LLC,
Plaintiff-Appellant,
v.
L AKE F OREST H OSPITAL,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 07 cv 2042—Blanche M. Manning, Judge.
A RGUED N OVEMBER 4, 2010—D ECIDED M AY 26, 2011
Before B AUER, M ANION, and H AMILTON, Circuit Judges.
H AMILTON, Circuit Judge. The First Amendment of the
Constitution states that Congress shall make no law
abridging the “right of the people peaceably to assemble,
and to petition the Government for a redress of griev-
ances.” Under the Noerr-Pennington doctrine, federal
antitrust laws have been interpreted to protect these
First Amendment rights by immunizing petitioning
activity from liability. In this appeal from the district
2 No. 10-1665
court’s grant of summary judgment for defendant-
appellee Lake Forest Hospital, we must decide
whether that doctrine shelters from antitrust liability
one competitor’s alleged misrepresentations about
another made during and in relation to local zoning
proceedings. We conclude that it does. Because nothing
else in the record is sufficient to make out a claim
for liability under the antitrust laws, we affirm.
I. Background
In 2004, plaintiff-appellant Mercatus Group, LLC, began
plans to construct a physician center—essentially, a
medical office building from which physicians can provide
medical services—in the Village of Lake Bluff, Illinois.
Mercatus sought to build this center on a plat of land
occupied at that time by an automobile dealership (the
“Shepard Land”). Mercatus’ partner in this venture
was Evanston Northwestern Healthcare (“ENH”), with
which Mercatus planned to construct a number of such
physician centers.
Appellee Lake Forest Hospital (the “Hospital”) is
located in nearby Lake Forest, a short distance from
the Shepard Land. The Hospital recognized the “huge
threat” that the proposed Mercatus Lake Bluff center
posed to its ability to compete in the local market for
medical services. To protect itself from this threat, the
Hospital launched a multi-pronged campaign designed
to prevent Mercatus from opening the physician center.
First, the Hospital lobbied members of the Lake Bluff
Board of Village Trustees—both individually and at a
No. 10-1665 3
number of public Village Board meetings held on this
matter—to deny Mercatus the approvals necessary to
begin construction on the Shepard Land. Second,
the Hospital launched a public relations campaign en-
couraging Hospital employees and donors, as well as the
local community, to put political pressure on the Village
Board to oppose the Mercatus center. Third, the Hospital
told ENH to stay out of Lake Bluff and made a number
of derogatory statements about Mercatus to ENH and
other healthcare providers. Finally, the Hospital identi-
fied two Hospital-affiliated physician practice groups
that planned to move their practices to the new Mercatus
physician center and offered those groups various incen-
tives not to do so.
The Hospital’s efforts were successful. Both physician
practice groups pulled out of their conditional agree-
ments with Mercatus, the Village Board denied Mercatus
the approvals necessary to develop the Shepard Land,
and ENH terminated its business relationship with
Mercatus. Mercatus never opened a physician center
in Lake Bluff.
Mercatus brought this suit in federal district court,
alleging in relevant part that the Hospital had monopo-
lized and/or attempted to monopolize alleged markets
for “comprehensive physician services” and “diagnostic
imaging services” in eastern Lake County, Illinois,
in violation of the Sherman Act, 15 U.S.C. § 2.1 On the
1
Mercatus’ amended complaint defines “diagnostic imaging
services” as “magnetic resonance imaging, computerized
(continued...)
4 No. 10-1665
Hospital’s motion, the district court dismissed some of
Mercatus’ claims against the Hospital for failure to state
a claim. Mercatus Group LLC v. Lake Forest Hosp., 528
F. Supp. 2d 797 (N.D. Ill. 2007) (“Mercatus I”). Mercatus
filed an amended complaint and, following extensive
discovery, the district court granted the Hospital’s
motion for summary judgment on that amended com-
plaint. Mercatus Group LLC v. Lake Forest Hosp., 695 F. Supp.
2d 811 (N.D. Ill. 2010) (“Mercatus II”). The district court
concluded that the Hospital’s efforts before the Village
Board were protected from antitrust liability by the
First Amendment right to petition the government for
the redress of grievances. Id. at 818-21. As for the Hospi-
tal’s other conduct, the court held that what it character-
ized as mere misrepresentations and disparaging com-
ments were, as a matter of law, insufficient to give rise
to antitrust liability. Id. at 823; see also Mercatus I, 528
F. Supp. 2d at 810 (dismissing part of original complaint
on similar grounds).
On appeal, Mercatus first argues that the Hospital’s
petitioning conduct relating to the Village Board meetings
1
(...continued)
tomography, nuclear medicine, radiography, and ultra-
sonography, sold to patients” and “comprehensive physician
services” as “business services such as billing assistance,
clinical services such as on-site diagnostic imaging services,
and real estate services, such as leasing space to physicians.”
We do not address in this appeal the viability of plaintiff’s
proposed product and geographic market definitions.
No. 10-1665 5
is not protected by the First Amendment because the
Hospital made a number of misrepresentations that
altered the outcome of those meetings. Mercatus argues
in the alternative that the Hospital’s other conduct—its
public relations campaign, its communications with
ENH and other healthcare providers, and its efforts to
convince the physician practice groups not to relocate
their practices to Mercatus’ physician center—violated
the Sherman Act even if the Village Board proceedings
are disregarded.
We affirm. Even if we assume that the Hospital made
material misrepresentations during and relating to the
Village Board proceedings concerning Mercatus’ physician
center, such misrepresentations are legally irrelevant
because those meetings were inherently political in
nature. The same is true of the Hospital’s public rela-
tions campaign, which was inextricably intertwined
with the Hospital’s efforts before the Board. As for
the Hospital’s contacts with ENH and other healthcare
providers, those contacts constituted mere speech that
was not actionable under the Sherman Act. Finally, no
reasonable trier of fact could conclude from this rec-
ord that the Hospital’s successful effort to convince
physicians not to relocate their practices to Mercatus’
proposed physician center constituted predatory con-
duct forbidden by the antitrust laws.
II. Standard of Review
We review de novo the district court’s grant of sum-
mary judgment. Omnicare, Inc. v. United Health Group,
6 No. 10-1665
Inc., 629 F.3d 697, 705 (7th Cir. 2011). Summary judgment
is appropriate when the pleadings and submissions in
the record indicate the absence of any genuine issues
of material fact, such that the moving party is entitled
to judgment as a matter of law. Midwest Imports, Ltd. v.
Coval, 71 F.3d 1311, 1317 (7th Cir. 1995). Because Mercatus
opposed summary judgment, we draw all reasonable
factual inferences from the record in Mercatus’ favor.
Jakubiec v. Cities Service Co., 844 F.2d 470, 471 (7th Cir.
1988). We will affirm only if, viewing the record in such
a favorable light to Mercatus, no reasonable jury could
have rendered a verdict in Mercatus’ favor on any of
its claims. Wilson v. Williams, 997 F.2d 348, 350 (7th Cir.
1993).
In evaluating multiple claims under these standards,
we recall that a plaintiff “should be given the full benefit
of [its] proof without tightly compartmentalizing the
various factual components and wiping the slate clean
after scrutiny of each.” Continental Ore Co. v. Union Carbide
& Carbon Corp., 370 U.S. 690, 699 (1962). That does not
mean, however, that we will aggregate the effects of
conduct immunized from antitrust liability with the
effects of conduct not so immunized. That approach
would nullify the immunity. For that reason, we must
first identify any conduct that is immunized. After
we do so, we consider the evidence of the remaining
challenged conduct in the aggregate to see if it is suf-
ficient to support antitrust liability.
No. 10-1665 7
III. Lobbying the Village Board—the Noerr-Pennington Doc-
trine
Mercatus’ primary argument on appeal is that the
Hospital’s conduct in the Village Board proceedings
is not protected by the First Amendment. This, Mercatus
argues, is because the Hospital allegedly made numer-
ous misrepresentations and material omissions of fact
to the Village Board that ultimately caused the Board to
deny Mercatus permission to begin construction on the
Shepard Land.
A. Facts on Summary Judgment
Mercatus first appeared before the Village Board at
an April 2006 board meeting, at which time Mercatus
made an informal pre-filing presentation of its pre-
liminary plans for a physician center on the Shepard
Land. Mercatus representatives argued that the physician
center would be “a good project for the community
of Lake Bluff.” The Village Board also heard from the
Hospital’s outgoing president, Bill Ries, who claimed
that the Mercatus physician center would not be good
for the community because it would extract “the most
profitable outpatient services” from local hospitals. Ries
also questioned Mercatus’ commitment to charitable
medical care and claimed that the Hospital “commit-
ted over $25 million in subsidy and charity to the
people of Lake County,” representing “nearly 13 percent
of our net revenue.” Village Board trustee Michael
Peters, a physician at the Hospital, also expressed
8 No. 10-1665
concern that the Mercatus plan might jeopardize the
Hospital and could lead to higher healthcare prices.
In September 2006, the Lake Bluff Architectural Board
of Review reviewed the proposed site plan for the
Mercatus physician center. The Architectural Board
recommended approval of the site plan, which was
then taken under consideration by the Village Board.
According to Lake Bluff ordinances, only a vote by two-
thirds of the Village Board could overturn the Architec-
tural Board’s site plan approval. At the Village Board’s
October 2006 meeting, however, Lake Bluff’s attorney
informed the Village Board that, in addition to site
plan approval, Mercatus needed separate Village Board
approval even to develop the Shepard Land. As he ex-
plained, a special use ordinance had been applicable
to the Shepard Land since 1972. That ordinance
“specially classified” the Shepard Land “for usage as a
new retail automobile . . . facility.” Any “new uses or
different uses” were to be “submitted to the [Village
Board] for a public hearing to ascertain whether the
same will be approved.” The 1976 and 1979 amendments
to the ordinance reaffirmed that any proposed future
development or use of the Shepard Land required Village
Board approval. Mercatus’ attorney attempted to
convince the Board that the ordinance and its amend-
ments did not require a separate vote on development
approval, but to no avail. The Village Board elected
to consider the issue of development approval
separately before addressing the issue of site plan ap-
proval.
No. 10-1665 9
Representatives of Mercatus and the Hospital both
made statements to the Village Board regarding develop-
ment approval. On behalf of Mercatus, Bill Maggard
argued for approval because the physician center would
“provide[ ] new solutions to the healthcare crisis by
eliminating inefficiencies in healthcare.” He also argued
that the Hospital “doesn’t have a monopoly on pro-
viding healthcare services to the community” and
pointed out that the Mercatus agreement with ENH
obligated it to provide charity care.
In response, Hospital CEO Tom McAfee pointed out
that the Hospital is a not-for-profit charity and voiced
concern that Mercatus would “cherry pick the most
profitable services out of communities for for-profit
venture backed operations at the expense of community
healthcare providers.” If the Mercatus project went for-
ward, McAfee estimated, it would cost the Hospital “at
least $2 million a year in lost bottom line.” He added
that “millions of dollars [for] this hospital is nurses at
the bedside” and “literally [risked] the survival of the
institution.” McAfee also noted that Mercatus’ partner
ENH was being investigated by the FTC for anti-competi-
tive activities. In sum, he said, “enabling Mercatus to
develop a facility that will compete with the hospital . . .
will not advance the healthcare needs of this commu-
nity. It will definitely damage them.”
After further statements by the Hospital’s CEO and
a number of Hospital physicians who opposed the
Mercatus project, as well as from some local citizens
who spoke out in favor of the project, Village Board
10 No. 10-1665
trustee Dr. Peters again expressed concern that the
Mercatus physician center could have a negative
impact on the Hospital. Dr. Peters also speculated
that Mercatus would ultimately raise prices, noting that
the FTC had found Mercatus’ partner ENH “guilty of
raising prices” in 2005. The Board then voted to
approve the development of the Shepard Land but de-
ferred its vote on site plan approval to its November
meeting.
At the Board’s November meeting, however, the
Board voted to reconsider its grant of development ap-
proval. The Board then tabled the matter to its January
meeting. At that meeting, Hospital CEO McAfee again
voiced his belief that the Mercatus physician center
would “remove millions of dollars” from the Hospital,
which “simply [did not] have the resources to de-
fend [itself].” With Dr. Peters abstaining, the Board
then unanimously voted to deny development ap-
proval. The Board also denied site plan approval.
B. The Noerr-Pennington Doctrine
In its amended complaint, Mercatus claimed that the
Hospital should be held liable in antitrust because
it drastically misrepresented, among other things, the
extent to which the Mercatus physician center would
harm the Hospital. In its amended complaint, Mercatus
alleged that the Hospital lied when it claimed that the
Mercatus center would “cause a $2 million loss to [the
Hospital], drive the Hospital out of business, and
No. 10-1665 11
prevent [the Hospital] from providing charity care.” For
purposes of this decision only, we will assume that all of
the statements challenged by Mercatus were in fact false.2
In granting summary judgment against Mercatus
on this claim, the district court held that any misrepre-
sentations to the Board were immunized from antitrust
liability under the Noerr-Pennington doctrine. Mercatus II,
695 F. Supp. 2d at 818-21. This doctrine takes its name
from Eastern R.R. Presidents Conference v. Noerr Motor
Freight, Inc., 365 U.S. 127 (1961) (holding that railroads’
publicity campaign to promote support for laws harmful
to trucking interest was immune from antitrust liabil-
ity), and United Mine Workers of America v. Pennington,
381 U.S. 657 (1965) (joint efforts by miners’ union and
large coal companies to have federal agency impose
higher minimum wage for coal suppliers to TVA were
2
According to Mercatus, the falsity of the Hospital’s claim that
Mercatus posed a threat to the Hospital can be shown “by
simply observing [the Hospital’s] actual financial status”—the
fact that the Hospital had “substantial assets including
cash, stock, land[,] and buildings” as well as “substantial extra
capital capacity for expansion.” Mercatus also claims that the
Hospital’s internal notes reveal the falsity of the Hospital’s
claim that it provided $25 million in subsidy and charity to
the community. Because, as we explain below, the alleged
falsity of the Hospital’s statements to the Village Board is of
no legal significance in this case, we express no opinion on
whether Mercatus mustered sufficient evidence to prove the
falsity of the Hospital’s predictive statements to the Village
Board.
12 No. 10-1665
immune from antitrust liability). The doctrine extends
absolute immunity under the antitrust laws to “busi-
nesses and other associations when they join together to
petition legislative bodies, administrative agencies, or
courts for action that may have anticompetitive effects.”
Wilk v. American Medical Ass’n, 719 F.2d 207, 229 (7th Cir.
1983); see LaSalle Nat’l Bank of Chicago v. DuPage County,
777 F.2d 377, 384 n.6 (7th Cir. 1985) (Noerr-Pennington
doctrine “bars Sherman Act suits against persons
who associate for the purpose of restraining trade and
competition if they pursue this purpose through
legitimate political means”).
This immunity is extended “in part because the
original purposes of the Sherman Act did not include
regulating political activity and in part because it is
questionable whether the first amendment allows such
regulation.” Premier Elec. Constr. Co. v. Nat’l Elec. Contrac-
tors Ass’n, Inc., 814 F.2d 358, 371 (7th Cir. 1987). The Noerr-
Pennington doctrine recognizes that our democratic
system of government derives its very vitality from
its citizens’ ability to reject the status quo and to
advocate for changes in the law. “The Sherman Act ex-
presses one policy; people are free to try to persuade
their representatives that monopoly is preferable. . . .
The first amendment protects the right of the people to
ask for this boon.” Id.
1. The Sham Exception to Noerr-Pennington
Mercatus concedes that the Noerr-Pennington doctrine
would immunize truthful statements made to the Village
No. 10-1665 13
Board. Rather, it argues that, because a number of the
Hospital’s statements to the Board were false (or were
so materially incomplete as to be considered false), the
“sham” exception to Noerr-Pennington immunity should
apply. The sham exception was first mentioned in
Noerr itself, which speculated: “There may be situations
in which a publicity campaign, ostensibly directed
toward influencing governmental action, 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.” 365 U.S. at 144. In the years since,
courts have recognized two specific kinds of conduct that
can trigger the sham exception: (1) sham lawsuits; and
(2) fraudulent misrepresentations. See Kottle v. Northwest
Kidney Centers, 146 F.3d 1056, 1060-62 (9th Cir. 1998).3
Mercatus relies on the fraud branch of the sham excep-
tion to Noerr-Pennington. This exception traces its origins
3
The Ninth Circuit has said in dicta that the sham exception
can also apply if a party brings a series of lawsuits without
regard to their merits, even if a few have some merit as a
matter of chance. See Kottle, 146 F.3d at 1060. We have not
faced that issue. See Professional Real Estate Investors, Inc. v.
Columbia Pictures Indus., 508 U.S. 49, 60 n.5 (1993) (“A winning
lawsuit is by definition a reasonable effort at petitioning for
redress and therefore not a sham.”); California Motor Transport
Co. v. Trucking Unlimited, 404 U.S. 508, 513 (1972) (“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 ad-
ministrative and judicial processes have been abused.”).
14 No. 10-1665
back to the Supreme Court’s hint that “[t]here are many . . .
forms of illegal and reprehensible practice which may
corrupt the administrative or judicial processes and which
may result in antitrust violations. Misrepresentations,
condoned in the political arena, are not immunized
when used in the adjudicatory process.” California Motor
Transp., 404 U.S. at 513 (emphases added); see id. at 512
(“[U]nethical conduct in the setting of the adjudicatory
process often results in sanctions. Perjury of witnesses
is one example.”). The Court later added that “unethical
and deceptive practices can constitute abuses of admin-
istrative or judicial processes that may result in
antitrust violations.” Allied Tube & Conduit Corp. v. Indian
Head, Inc., 486 U.S. 492, 500 (1988) (citation omitted).
Although these statements were technically dicta—
neither California Motor Transport nor Allied Tube involved
perjury or false statements before an adjudicative or
administrative body—there is little doubt that fraudulent
misrepresentations may render purported petitioning
activity a sham not protected from antitrust liability. See
Cheminor Drugs, Ltd. v. Ethyl Corp., 168 F.3d 119, 124 (3d
Cir. 1999); Kottle, 146 F.3d at 1060; Potters Medical Center
v. City Hosp. Ass’n, 800 F.2d 568, 580-81 (6th Cir. 1986);
St. Joseph’s Hospital, Inc. v. Hospital Corp. of America, 795
F.2d 948, 955 (11th Cir. 1986); Ottensmeyer v. Chesapeake &
Potomac Tel. Co. of Md., 756 F.2d 986, 994 (4th Cir. 1985);
Israel v. Baxter Labs., Inc., 466 F.2d 272, 278 (D.C. Cir. 1972).
But see Armstrong Surgical Center, Inc. v. Armstrong County
Mem’l Hosp., 185 F.3d 154, 160 (3d Cir. 1999) (calling into
doubt existence of fraud exception).
No. 10-1665 15
Not every fraudulent misrepresentation during an
adjudicative or administrative proceeding can give rise
to antitrust liability, however. As the Supreme Court
has explained, “the sham exception contains an indis-
pensable objective component,” Professional Real Estate
Investors, Inc. v. Columbia Pictures Indus., 508 U.S. 49, 58
(1993), but also “depends on the existence of anti-
competitive intent,” id. at 57 n.4. In the context of the
fraud exception, these requirements indicate that
neither inadvertent misrepresentations, nor misrepre-
sentations lacking any ascertainable effect on the pro-
ceedings in which they were made, are within the
fraud exception’s ambit.
For this reason, a misrepresentation renders an
adjudicative proceeding a sham only if the misrepre-
sentation (1) was intentionally made, with knowledge of
its falsity; and (2) was material, in the sense that it
actually altered the outcome of the proceeding. See Balti-
more Scrap Corp. v. David J. Joseph Co., 237 F.3d 394, 401-02
(4th Cir. 2001) (concluding that any fraud exception to
Noerr-Pennington “extends only to the type of fraud that
deprives litigation of its legitimacy”); Cheminor Drugs,
168 F.3d at 124 (“If the government’s action was not
dependent upon the misrepresented information, the
misrepresented information was not material. . . . [Only]
a material misrepresentation that affects the very core of
a litigant’s . . . case will preclude Noerr-Pennington immu-
nity. . . .”); Kottle, 146 F.3d at 1060 (“litigation can be
deemed a sham if a party’s knowing fraud upon, or its
intentional misrepresentations to, the court deprive the
litigation of its legitimacy”) (quotation omitted); Potters
16 No. 10-1665
Medical Center, 800 F.2d at 580 (“[K]nowingly false sub-
missions or intentional misrepresentations constitute
an abuse of government processes . . . . Only known
falsity supports an antitrust offense.”).4 So formulated, the
fraud exception closes a sizable loophole in the Supreme
Court’s definition of sham litigation, see Professional Real
Estate Investors, 508 U.S. at 60-61—although successful
petitioning activity may not, as a general matter, be
deemed a sham, the fraud exception can remove that
immunity if success is achieved by means of intentional
falsehoods.
4
The Supreme Court has not yet explicitly spoken as to
“whether and, if so, to what extent Noerr permits the imposition
of antitrust liability for a litigant’s fraud or other misrepresenta-
tions.” Professional Real Estate Investors, 508 U.S. at 61 n.6.
Nevertheless, both of the sources cited in that footnote—Fed. R.
Civ. P. 60(b)(3) and Walker Process Equip., Inc. v. Food Mach. &
Chem. Corp., 382 U.S. 172 (1965)—support this formulation of
the fraud exception. See id. at 177 (concluding that proof that a
party “obtained [a] patent by knowingly and willfully misrepre-
senting facts . . . would be sufficient to strip [that party of
protection] from the antitrust laws”); id. at 179-80 (Harlan, J.,
concurring) (agreeing that antitrust liability may lie when a
“patent is shown to have been procured by knowing and willful
fraud” and when “monopolization [is] knowingly practiced
under the guise of a patent procured by deliberate fraud”);
Walsh v. McCain Foods Ltd., 81 F.3d 722, 726 (7th Cir. 1996) (to
obtain relief from a judgment under Rule 60(b)(3), moving
party must show, among other elements, that because of fraud
or misrepresentation “it was prevented from fully and fairly
presenting its case at trial”).
No. 10-1665 17
As noted, the fraud exception is based on the Supreme
Court’s desire to protect the integrity of non-political
governmental proceedings. For that reason, the fraud
exception contains, in addition to its substantive compo-
nents, a threshold procedural component: the excep-
tion does not apply at all outside of adjudicative pro-
ceedings. See Allied Tube, 486 U.S. at 499-500 (“A publicity
campaign directed at the general public, seeking legisla-
tion or executive action, enjoys antitrust immunity even
when the campaign employs unethical and deceptive
methods.”) (citation omitted); California Motor Transp.,
404 U.S. at 513 (noting that misrepresentations are “con-
doned in the political arena”). “There is an emphasis on
debate in the political sphere, which could accom-
modate false statements and reveal their falsity. In the
adjudicatory sphere, however, information . . . is relied
on as accurate for decision making and dispute resolv-
ing.” Clipper Exxpress v. Rocky Mountain Motor Tariff
Bureau, Inc., 690 F.2d 1240, 1261 (9th Cir. 1982). As a result,
fraudulent statements in the adjudicative context
“threaten[ ] the fair and impartial functioning of these
agencies and do[ ] not deserve immunity from the
antitrust laws.” Id. Recognizing this threshold procedural
requirement, the district court in this case concluded
that the fraud exception did not apply because the pro-
ceedings before the Village Board were legislative (i.e.,
political) in nature. Mercatus II, 695 F. Supp. 2d at 821.5
5
In accord with the bulk of the case law using this terminology,
we refer to all decision-making driven wholly or primarily
(continued...)
18 No. 10-1665
2. Drawing the Line: Adjudicative or Legislative?
On appeal, the parties focus their arguments on Noerr-
Pennington almost entirely on whether the Board pro-
ceedings were legislative or adjudicative. But what makes
a proceeding adjudicative or legislative for the purposes
of the exceptions to Noerr-Pennington? The answer to this
question is not as obvious as it might seem at first. Some
proceedings—civil or criminal trials, for example—are,
by their very nature, always adjudicatory. Other times,
however, a governmental body will act in a legislative
capacity in some cases but in an adjudicative capacity
in others.
A legislature clearly acts in a political, legislative capac-
ity when it contemplates the passage of a new law, for
example, but the Supreme Court has indicated that a
legislature might also act in an adjudicative capacity in
certain circumstances, at least so far as Noerr-Pennington
immunity is concerned. Compare Allied Tube, 486 U.S.
at 504 (expressing doubt that “misrepresentations made
under oath at a legislative committee hearing in the
hopes of spurring legislative action” are protected under
Noerr-Pennington), with F.T.C. v. Superior Court Trial
Lawyers Ass’n, 493 U.S. 411, 424 (1990) (“It of course
remains true that no violation of the [Sherman] Act can
be predicated upon mere attempts to influence the
5
(...continued)
by policy and political considerations as “legislative,” fully
cognizant of the fact that many such decisions are made by
executive branches rather than legislatures.
No. 10-1665 19
passage or enforcement of laws.” (quotation omitted)).
Given the countless variations on state and federal agen-
cies, it may often not be clear whether, in a given cir-
cumstance, an agency is acting legislatively, adjudica-
tively, or perhaps somehow even in both capacities si-
multaneously. See Daniel J. Davis, Comment, The Fraud
Exception to the Noerr-Pennington Doctrine in Judicial and
Administrative Proceedings, 69 U. Chi. L. Rev. 325, 333
(2002) (observing that “some federal statutes mandate
that certain agencies use hybrid processes that combine
legislative and adjudicatory procedures” and that ad-
ministrative proceedings “can exhibit characteristics of
both legislative and judicial actions”). The district court
correctly observed that “the line between legislation
and adjudication is not always easy to draw.” Mercatus II,
695 F. Supp. 2d at 819 (quotation omitted).
In their briefs, the parties call to our attention only a
single decision from this court discussing in any detail
whether a proceeding was adjudicative or legislative for
the purpose of applying the fraud exception to Noerr-
Pennington. In Metro Cable Co. v. CATV of Rockford, Inc., we
considered whether a mayor and city council acted in a
legislative or adjudicative capacity when they denied the
plaintiff a franchise to construct and operate a cable
television system. 516 F.2d 220, 222 (7th Cir. 1975). In
so doing, we identified a number of characteristics in-
dicating that the franchising decision was legislative
rather than adjudicative.
First, we considered the general nature of the authority
exercised by the mayor and city council. The council
20 No. 10-1665
possessed legislative power and, in fact, “the only way
it [was] organized and equipped to act” was “as a legisla-
tive body.” Id. at 228. The mayor, for his part, was “an
executive officer with some legislative duties, which
include[d] presiding over the city council and voting
when the aldermen are equally divided.” Id. Second, we
considered the formality of the council’s fact-finding
processes. Unlike a court or other adjudicative body
where evidence must satisfy strict rules of relevance and
admissibility, the council did not “compile an evidentiary
record through formal proceedings” and was “free to
base its actions on information and arguments that come
to it from any source.” Id. Third, we considered the
extent to which the fact-finding process was subject to
political influences, noting that the council was “subject
to lobbying and other forms of ex parte influence” that
typify the legislative or political process. Id. Based on
the totality of these factors, we concluded that the
mayor and city council had acted in a legislative
capacity, so the complained-of petitioning activity was
immune from antitrust liability under Noerr-Pennington. Id.
The Metro Cable factors are not exclusive. A number of
other factors may also prove helpful in determining
whether a proceeding is adjudicative or legislative.
Though perhaps encompassed by the Metro Cable factor
regarding the formality of the fact-finding process, the
Supreme Court has treated as significant whether any
testimony at the proceeding in question was given
under oath or affirmation, under penalty of perjury.
See Allied Tube, 486 U.S. at 504 (questioning whether
“misrepresentations made under oath” are protected
No. 10-1665 21
under Noerr-Pennington); California Motor Transp., 404
U.S. at 512 (“[U]nethical conduct in the setting of the
adjudicatory process often results in sanctions. Perjury
of witnesses is one example.”). An oath or affirmation
backed by penalty of perjury should impress upon
a witness the solemnity of the occasion and the
importance of telling the truth, and should make clear
that the witness is not “at liberty to exaggerate or color
his version of an event,” as might be possible in a
more political or legislative setting. See, e.g., United States
ex rel. Haywood v. Wolff, 658 F.2d 455, 463 (7th Cir. 1981).6
In classifying proceedings as legislative or adjudicative
for antitrust purposes, other courts have found sig-
nificant whether the governmental actions at issue
were matters of discretionary authority or were instead
guided by more definite standards susceptible to judicial
review. Kottle, 146 F.3d at 1062; Boone v. Redevelopment
Agency of San Jose, 841 F.2d 886, 896 (9th Cir. 1988). The
absence of definite standards is more characteristic of
purely political or legislative activity than of adjudication.
See Franchise Realty Interstate Corp. v. San Francisco Local
6
We reject Mercatus’ unsupported contention that a govern-
ment proceeding is more likely to be adjudicative if a party
is represented by legal counsel at that proceeding. After all,
the presence or absence of counsel at a proceeding tells very
little about the nature of the proceeding itself—a civil trial
remains adjudicative regardless of whether a party appears
pro se, and decision-making informed by lobbying is no less
political merely because the lobby is represented by legal
counsel.
22 No. 10-1665
Joint Exec. Bd. of Culinary Workers, 542 F.2d 1076, 1079
(9th Cir. 1976) (noting that precise standards “are
simply absent from the rough and tumble of the political
arena; almost any position, including the self-interested
plea of one competitor that another should be denied a
permit, may be urged before such a political body”).7
7
Mercatus argues that we should give significant weight to
whether, in other contexts, the law treats the governmental
activity at issue as legislative or adjudicative. We believe
that such classifications, made for different purposes not
connected to the First Amendment concerns underlying the
Noerr-Pennington doctrine, are unlikely to be useful in
applying that doctrine. Under Illinois law, for example, a
hearing might be characterized as “legislative” for purposes
of judicial review, see 65 ILCS 5/11-13-25 (making any
decision regarding an application for a special use “subject to
de novo judicial review as a legislative decision, regardless
of whether the process in relation thereto is considered ad-
ministrative for other purposes”), at the same time it is
deemed “adjudicative” for the purpose of determining what
process is due at that hearing, see People ex rel. Klaeren v.
Village of Lisle, 781 N.E.2d 223, 234 (Ill. 2002) (deeming
hearings concerning special use applications “administrative
or quasi-judicial” for purposes of determining whether peti-
tioners received due process, not because of political con-
siderations but because “property rights are at stake”). See
Our Savior Evangelical Lutheran Church v. Saville, 922 N.E.2d
1143, 1162 (Ill. App. 2009) (interpreting 65 ILCS 5/11-13-25 to
address only “the mode of direct judicial review over the
listed zoning decisions, not the application of due process to
any of those . . . decisions”) (quotation omitted).
No. 10-1665 23
Before applying these factors to the case now before
us, however, we must note the significant constitutional
concerns implicated by the fraud exception’s application
to petitioning activity. Noerr-Pennington was crafted to
protect the freedom to petition guaranteed under the
First Amendment. See, e.g., Premier Elec. Constr. Co., 814
F.2d at 371. This freedom has long been recognized as a
cornerstone of democratic government itself. See United
Mine Workers of America, Dist. 12 v. Illinois State Bar
Ass’n, 389 U.S. 217, 222 (1967) (“[T]he rights to assemble
peaceably and to petition for a redress of grievances are
among the most precious of the liberties safeguarded by
the Bill of Rights.”); De Jonge v. Oregon, 299 U.S. 353, 364
(1937) (“The very idea of a government, republican in
form, implies a right on the part of its citizens to meet
peaceably for consultation in respect to public affairs
and to petition for a redress of grievances.”) (quotation
omitted); McDonald v. Smith, 472 U.S. 479, 486 (1985)
(Brennan, J., concurring) (noting that, “except in the
most extreme circumstances,” the right to petition the
government “cannot be punished . . . without violating
those fundamental principles of liberty and justice
which lie at the base of all civil and political institutions”)
(quotation omitted).
Accordingly, we have recognized that the application
of the sham exception might inadvertently stifle the
legitimate exercise of this core right. Havoco of America,
Ltd. v. Hollobow, 702 F.2d 643, 651 (7th Cir. 1983) (declaring
that the fraud exception “cannot be used to chill [the]
constitutional right” to “petition without fear of sanc-
tions”); Stern v. U.S. Gypsum, Inc., 547 F.2d 1329, 1345 (7th
24 No. 10-1665
Cir. 1977) (concluding, in context of civil rights suit, “that
the real if peripheral chill of the right to petition which
[the] knowing falsity rule could engender is significant
enough for the First Amendment values to play a part
in construing federal legislation”); see also BE & K
Constr. Co. v. NLRB, 536 U.S. 516, 529-33 (2002) (con-
sidering First Amendment burden imposed by NLRB’s
effective expansion of the sham exception in labor cases);
Forro Precision, Inc. v. IBM Corp., 673 F.2d 1045, 1060 (9th
Cir. 1982) (extending Noerr-Pennington to communica-
tions with law enforcement based on concern that a
contrary ruling would discourage citizens from pro-
viding information to the police).
That risk grows when, as may often be the case, a
layperson is uncertain whether the governmental action
at issue is adjudicatory or legislative. See James M.
Sabovich, Petition Without Prejudice: Against the Fraud
Exception to Noerr-Pennington Immunity From the Toxic Tort
Perspective, 17 Penn. St. Envtl. L. Rev. 1, 12 (2008) (ob-
serving that the “fact-specific” test used to determine
“whether the proceeding is judicial, leave[s] the im-
munity for many petitions uncertain.”) (footnote omit-
ted). Such uncertainty may stem either from an unfamil-
iarity with the relevant legal principles due to a lack
of legal counsel, or from a more basic unfamiliarity
with the specific proceedings at issue. For example, a
petitioner might not know that one municipal body,
unlike its counterparts in other municipalities, forbids
ex parte lobbying of its members, or she might simply
be unaware that a prohibition on such lobbying has
any legal significance for her petitioning activity.
No. 10-1665 25
Regardless of its source, the greater the uncertainty, the
more likely that laypeople will hesitate to seek redress,
out of fear that their petitioning activity will subject
them to legal liability. Given the “broad spectrum of
possibilities” implicated whenever a person contemplates
engaging in legitimate First Amendment petitioning
activity, a law’s chilling effect is particularly great when
it is unclear whether that law actually forbids the con-
templated activity. See Schirmer v. Nagode, 621 F.3d 581,
586 (7th Cir. 2010). Such chilling effect will be par-
ticularly pronounced when, as is the case with the
antitrust laws, the allegedly fraudulent statements may
be punishable by treble damages. That is not to say that
any such chill would be confined to only that narrow
class of petitioning activity forbidden by the antitrust
laws, of course. After all, “Noerr-Pennington has been
extended beyond the antitrust laws, where it originated,
and is today understood as an application of the first
amendment’s speech and petitioning clauses.” See New
West, L.P. v. City of Joliet, 491 F.3d 717, 722 (7th Cir. 2007).
For these reasons, we must ensure that we do not trans-
form the Sherman Act into a means by which to chill
vital conduct protected under the First Amendment. Cf.
Laird v. Tatum, 408 U.S. 1, 11 (1972) (noting that “constitu-
tional violations may arise from the deterrent, or ‘chilling,’
effect of governmental regulations that fall short of a
direct prohibition against the exercise of First Amend-
ment rights”).
Applying the factors we set out above, it is clear that
the Village Board acted in a legislative capacity when
it declined to approve the proposed Mercatus physi-
cian center. Like the city council in Metro Cable, the
26 No. 10-1665
Board generally acts in a policymaking capacity. The
Board also appears ill-equipped to conduct adjudica-
tive proceedings. It conducts the vast majority of its
business through relatively informal public meetings
and holds formal hearings only once a year regarding
the Lake Bluff budget.
More specifically, the process by which the Board
considered whether to grant Mercatus approval to
develop the Shepard Land was decidedly legislative or
political in nature. Both Mercatus and the Hospital en-
gaged in ex parte lobbying of individual Board members
prior to the hearings. Mercatus executives contacted or
met personally with individual Board members, and at
least one Board member even took a tour of Mercatus’
facilities. A number of Lake Bluff residents also con-
tacted the Board members to voice their views on the
Mercatus project. This lobbying activity by advocates
on both sides was perfectly legitimate, as would not be
the case in an adjudicative proceeding. In fact, the
lobbying was encouraged by the village president, who
described the decision as “[e]ssentially . . . political” and
preferred to give parties “the opportunity to lobby
directly the trustees.” Letchinger Dep. at 18, 20.
The processes by which the Board gathered informa-
tion to guide its decision-making, unlike the processes
in adjudicative proceedings, were decidedly informal.
None of the evidence the Board considered was subject
to strict rules of admissibility or any recognizable eviden-
tiary rules, for that matter. At least one Board member,
on his own initiative, contacted independent think tanks
No. 10-1665 27
for guidance. Members of the general public were
allowed to voice their opinions regarding Mercatus’
proposed site plan. None of the testimony before the
Board was given under oath or on penalty of perjury.
The Board’s decision on development approval was
not guided by enforceable, definite standards subject to
review.8 The special use ordinance applicable to the
8
We decline Mercatus’ invitation to determine for ourselves
whether the village’s special use ordinance actually granted
the Board broad authority to deny development approval.
Mercatus had the opportunity to present this argument to the
Zoning Board of Appeals, 65 ILCS 5/11-13-3(f); 65 ILCS 5/11-13-
12, and then to the state courts on administrative review, 65
ILCS 5/11-13-13, but there is no indication in the record that
Mercatus ever did so. Having eschewed that opportunity,
Mercatus cannot now turn to the antitrust laws to avoid the
consequences of that decision. The antitrust laws are designed
to protect competition. They are not a guarantee of good
government. See City of Columbia v. Omni Outdoor Adver., Inc.,
499 U.S. 365, 378 (1991) (noting that the antitrust laws were not
created to “vindicate[ ] . . . principles of good government”);
Noerr, 365 U.S. at 140 (“Insofar as [the Sherman Act] sets up a
code of ethics at all, it is a code that condemns trade restraints,
not political activity. . . .”). And they certainly are not a license
for the federal courts to displace the State of Illinois to sit in
review of what is entirely a matter of local law. Cf. City of
Columbia, 499 U.S. at 372 (“ ‘We should not lightly assume
that [the antitrust law] dictates transformation of state ad-
ministrative review into a federal antitrust job.’ ”), quoting P.
Areeda & H. Hovenkamp, Antitrust Law ¶ 212.3b, p. 145 (Supp.
(continued...)
28 No. 10-1665
Shepard Land required that the Board approve any
additional development of that land, but the ordinance
provided no standards governing the grant or denial of
that approval. As several Board members recognized,
this broad language gave the Board significant discre-
tion whether or not to grant Mercatus approval to
develop the Shepard Land.
The record thus shows beyond reasonable dispute
that the proceedings before the Board were legislative
in nature. It was, as the village president explained,
“ultimately a political decision” not to grant Mercatus
approval to develop the Shepard Land. Because the
fraud exception does not apply to legislative pro-
ceedings, guided as they are by political considera-
tions, Noerr-Pennington immunity applies. We need not
address whether the Hospital’s alleged misrepresenta-
tions rendered the Board proceedings a sham. The
district court properly granted summary judgment for
the Hospital on Mercatus’ antitrust claims based on the
Hospital’s activities during the Village Board proceedings.
8
(...continued)
1989). If Mercatus can invoke federal antitrust laws by claiming
that the Village Board had no authority to reject Mercatus’ site
plan once the Architectural Board had approved it, and can
thereby obtain a federal forum to review the merits of the
Village Board’s decision to reject the plan, “we cannot
imagine what zoning dispute could not be shoehorned into
federal court.” Coniston Corp. v. Village of Hoffman Estates, 844
F.2d 461, 467 (7th Cir. 1988).
No. 10-1665 29
IV. The Hospital’s Public Relations Campaign
Mercatus next argues that, even if Noerr-Pennington
immunizes the Hospital’s alleged misrepresentations
directly to the Board, it does not apply to misrepresenta-
tions made to the public during the course of the
Hospital’s public relations campaign. We disagree.
A. Facts on Summary Judgment
To encourage Lake Bluff citizens to put political
pressure on the Board, the Hospital launched a broad
public relations campaign portraying Mercatus as a
threat to “charity care and general health care services.”
As part of this campaign, the Hospital contacted its
employees, physicians, and donors to warn them of the
danger Mercatus posed to the Hospital’s ability to
provide care and encouraged them to contact Board
members to voice their opposition to the Mercatus physi-
cian center. Hospital physicians also sent a letter, al-
legedly drafted by the Hospital’s public relations con-
sulting firm, to a local newspaper saying that the
Mercatus center would offer services the Hospital
already provided and urging Lake Bluff residents to
ask the Board to reconsider its approval of the proposed
Mercatus physician center.
B. Public Relations Campaigns—A Necessary Corollary
of Noerr-Pennington
This public relations campaign, designed to encourage
the public to urge the Board to disapprove Mercatus’ plans
30 No. 10-1665
to develop the Shepard Land, is also sheltered by Noerr-
Pennington. Noerr itself held that a public relations cam-
paign to influence government action was beyond the
reach of the Sherman Act. 365 U.S. at 140-42. As the
Supreme Court has explained, a “publicity campaign
directed at the general public, seeking legislation or
executive action, enjoys antitrust immunity even when
the campaign employs unethical and deceptive methods.”
Allied Tube, 486 U.S. at 499-500; see id. at 504 (stating
that “rounding up supporters is an acceptable and consti-
tutionally protected method of influencing elections”).
Despite Mercatus’ insistence to the contrary, the Hospi-
tal’s public relations campaign does not lose its protec-
tion even if it caused Mercatus injury unrelated to the
Board’s denial of development approval. “It is inevitable,
whenever an attempt is made to influence legislation by
a campaign of publicity, that an incidental effect of that
campaign may be the infliction of some direct injury
upon the interests of the party against whom the
campaign is directed.” Noerr, 365 U.S. at 143; see id. at 144
(“Inherent in [fights between competitors], which are
commonplace in the halls of legislative bodies, is the
possibility, and in many instances even the probability,
that one group or the other will get hurt by the arguments
that are made.”). All but the most stunningly unsuccessful
public relations campaigns will persuade at least some
members of the public. Those individuals may, in turn,
refuse or hesitate to do business with the target, causing
that target some injury despite the government’s refusal to
act. Such injuries are inevitable whenever a business
attempts to rally the public to encourage government
No. 10-1665 31
action that will adversely affect one of its competitors.
To make such injuries from public relations campaigns
actionable under the antitrust laws would “be tanta-
mount to outlawing all such campaigns.” Id. at 143-44.
That would greatly limit people’s ability to rally public
support to their causes, thereby limiting the ability of
all but the most powerful and influential individuals
to petition effectively for redress. Such an invasive reg-
ulation of the political process “has not been done
by anything in the Sherman Act.” Id. at 144.9 Summary
judgment for the Hospital regarding its public
relations campaign was correct as a matter of law.
V. The Hospital’s Derogatory and Territorial Communications
Mercatus also argues that a number of statements the
Hospital made outside of its public relations campaign
violated the antitrust laws because they impaired
Mercatus’ ability to compete with the Hospital.
9
Our statement in Premier Electric that, “if . . . injury occurs no
matter how the government responds to the request for
aid—then we have an antitrust case,” 814 F.2d at 376, should
not be construed to the contrary or as conflicting with Allied
Tube or Noerr. Our statement addressed only those circum-
stances in which a party imposes an unlawful restraint of
trade, such as a boycott, as part of a larger attempt to petition
the government. See id. (noting that the defendant’s petitioning
activity was “an unvarnished effort to enforce a private price-
fixing agreement”).
32 No. 10-1665
A. Facts on Summary Judgment
In addition to its public relations campaign against
Mercatus, the Hospital also allegedly communicated with
other businesses to make it more difficult for Mercatus to
enter the Lake Bluff market. For example, the Hospital
contacted Mercatus’ business partner ENH to question
why it would support a physician center “that was
ideally designed to lure [away] physicians that were
aligned with the hospital,” and to warn ENH to stay out
of Lake Bluff. A Hospital employee also contacted other
health care providers to discuss Mercatus’ CEO’s rude
treatment of her during her visit to Mercatus’ Vernon
Hills facility and to warn them of the competitive threat
Mercatus posed to their business. Mercatus also alleges
that the Hospital made false statements asserting
“that Mercatus was not in compliance with federal anti-
kickback regulations.”
B. “Mere” Speech and the Law of Antitrust
Unlike the Hospital’s public relations campaign, we
see no discernible connection between any of these com-
munications and the proceedings before the Board; as a
result, they are simply outside Noerr-Pennington’s reach.
See MCI Communications Corp. v. Am. Tel. & Telegraph Co.,
708 F.2d 1081, 1159 (7th Cir. 1983) (“The Noerr-Pennington
doctrine is concerned solely with the right to attempt
to influence government action.”). That is not to say, of
course, that these statements are necessarily actionable
in antitrust. To resolve that particular question, we
must consider the precise speech at issue here.
No. 10-1665 33
1. The Hospital’s Warning to ENH
We first turn to the Hospital’s warning that ENH stay
out of the Hospital’s territory. Under circuit precedent,
such a territorial admonition to a competitor—like other
speech made in the commercial context—does not violate
the antitrust laws unless it leads to an agreement
to restrain trade or is accompanied by some sort of “en-
forcement mechanism” designed somehow to coerce or
compel that competitor to heed the admonition. See
Sanderson v. Culligan Int’l Co., 415 F.3d 620, 623 (7th Cir.
2005) (affirming summary judgment against antitrust
claim based on allegedly defamatory statements, due to
lack of “an enforcement mechanism”); Schachar v.
American Academy of Ophthalmology, Inc., 870 F.2d 397, 400
(7th Cir. 1989) (“Without [an enforcement mechanism]
there is only uncoordinated individual action, the
essence of competition.”).
We find nothing in the record to indicate that the Hos-
pital’s warnings to ENH were backed by any sort of
coercive conduct that might give rise to antitrust liability.
The Hospital did not threaten to spearhead a boycott of
ENH’s services or to have ENH’s suppliers withhold
medical supplies if it entered Hospital territory. See
Schachar, 870 F.2d at 399 (noting that boycotts and agree-
ments not to distribute certain products are the types of
enforcement mechanisms that may render speech action-
able under the antitrust laws). Nor did the Hospital
possess any inherent authority that it could leverage to
compel ENH to stay out of Lake Bluff. See id. at 398
(finding significant that defendant had “no authority
34 No. 10-1665
over hospitals, insurers, state medical societies or
licensing boards, and other persons who might be able
to govern the performance of surgery”). Regardless of
what the Hospital said, ENH was free to choose for
itself whether to compete close to the Hospital.
Put simply, all the Hospital did was say aloud what
every business already thinks about its competitors: stay
out of my territory. See Olympia Equip. Leasing Co. v. W.
Union Telegraph Co., 797 F.2d 370, 379 (7th Cir. 1986)
(“Most businessmen don’t like their competitors, or for
that matter competition.”). Such a statement, absent an
agreement or any coercive enforcement mechanisms to
back it up, is simply not actionable under the Sherman Act.
2. The Hospital’s Derogatory Comments About Mercatus
We next turn to the remainder of the Hospital’s com-
munications, all of which served to disparage either
Mercatus itself or the services it offered. Like the
Hospital’s territorial admonitions to ENH, these state-
ments were not backed by threats designed to coerce
acceptance of the Hospital’s views about Mercatus. See
Sanderson, 415 F.3d at 623; Schachar, 870 F.2d at 400. As a
result, this speech can be compared to a kind of commer-
cial speech familiar to all: advertisements. Like an adver-
tisement (think of Apple’s long-running “Mac vs. PC”
commercials, for example), the Hospital’s statements
implicitly touted the Hospital’s strengths while calling
into question the wisdom of doing business with
Mercatus. As a general matter, such statements are out-
side the reach of the antitrust laws, however critical they
No. 10-1665 35
may be of a competitor’s product or business model.
“Antitrust law does not compel your competitor to
praise your product or sponsor your work. To require
cooperation or friendliness among rivals is to undercut
the intellectual foundations of antitrust law.” Id. at 399.
This analysis holds true even if the Hospital’s state-
ments about Mercatus were false. As we recognized in
Sanderson, even false statements about a competitor serve
to “set the stage for competition.” 415 F.3d at 623. If the
Hospital falsely claimed that Mercatus would drive
local community-based hospitals out of business, for
example, Mercatus could respond with information to
refute that claim. If the Hospital falsely claimed that
Mercatus violated anti-kickback regulations, Mercatus
could respond with facts indicating the falsity of that
claim.10 By engaging in this process, Mercatus could
have derived a distinct competitive advantage: a false-
hood, when exposed, will likely “generate bad will
toward the firm by which [the public] was misled.” Covad
Communications Co. v. Bell Atlantic Corp., 398 F.3d 666,
674 (D.C. Cir. 2005).
The genuine anticompetitive effects of false and mis-
leading statements about a competitor are minimal, at
best. Although false statements about a rival “can [theo-
retically] obstruct competition on the merits,” it is dif-
ficult to identify those “false statements on which
10
Mercatus claims that, “in [its] substantially weakened state . . .
[it] did not have the luxury of more speech,” but we fail to
see how it was rendered unable to speak.
36 No. 10-1665
buyers do, or ought reasonably to, rely.” 3 P. Areeda & D.
Turner, Antitrust Law, ¶ 737b at 280-81 (1978), quoted
in American Prof’l Testing Service, Inc. v. Harcourt Brace
Jovanovich Legal & Prof’l Publications, Inc., 108 F.3d 1147,
1152 (9th Cir. 1997). Many consumers will “recognize
disparagement as non-objective and highly biased.” Id.
As a result, courts must exercise “caution . . . against
attaching much weight to isolated examples of disparage-
ment,” and claims based on one competitor’s disparage-
ment of another “should presumptively be ignored.”
Id. Recognizing these concerns, other circuits have con-
cluded that the anticompetitive effects of false speech
are presumptively minimal. See, e.g., American Council
of Certified Podiatric Physicians & Surgeons v. American Bd.
of Podiatric Surgery, Inc., 323 F.3d 366, 370 (6th Cir.
2003); American Prof’l Testing Service, 108 F.3d at 1152;
National Ass’n of Pharmaceutical Mfrs. v. Ayerst Labs., 850
F.2d 904, 916 (2d Cir. 1988).
As we said in Sanderson, absent an accompanying
coercive enforcement mechanism of some kind, even
demonstrably false “[c]ommercial speech is not actionable
under the antitrust laws.” 415 F.3d at 624; see Schachar,
870 F.2d at 400 (noting that, whenever one competitor’s
statements about another are “false or misleading or
incomplete or just plain mistaken, the remedy is not
antitrust litigation but more speech—the marketplace
of ideas”); cf. Associated Gen. Contractors of California, Inc.
v. California State Council of Carpenters, 459 U.S. 519, 526-
27 (1983) (observing that even conduct that might con-
stitute “common-law fraud or deceit” is “plainly not
subject to review under the federal antitrust laws”).
No. 10-1665 37
To the extent that a falsehood results in some harm to
a competitor, that is a matter better suited for the laws
against unfair competition or false advertising, not the
antitrust laws, which are “concerned with the protec-
tion of competition, not competitors.” Mullis v. Arco
Petroleum Corp., 502 F.2d 290, 298 (7th Cir. 1974) (quotation
omitted); see Northwest Power Products, Inc. v. Omark
Indus., Inc., 576 F.2d 83, 88 (5th Cir. 1978) (“The thrust of
antitrust law is to prevent restraints on competition.
Unfair competition is still competition and the purpose
of the law of unfair competition is to impose restraints
on that competition.”). “Some other law may require
judicial intervention in order to increase the portion of
truth in advertising; the Sherman Act does not.” Sanderson,
415 F.3d at 624.
Neither the Hospital’s territorial comments nor its
alleged derogatory statements about Mercatus are a
valid basis, whether considered alone or in conjunction
with the Hospital’s other complained-of conduct, for an
antitrust claim. The district court correctly granted sum-
mary judgment for the Hospital regarding these matters.
VI. The Hospital’s “Physician Strategy”
Thus far, we have determined that the bulk of the Hospi-
tal’s complained-of conduct is either (1) petitioning
activity immune from antitrust liability under Noerr-
Pennington; or (2) speech that falls outside the scope of
the antitrust laws. The only remaining issue to warrant
discussion relates to the Hospital’s “physician strat-
38 No. 10-1665
egy”—its attempts to convince certain Hospital-
affiliated physician practice groups not to relocate their
practices to the Mercatus physician center.
A. Facts on Summary Judgment
Beginning in 2004, Mercatus approached a number of
physicians to discuss relocating their practices to its
proposed physician center. By May 2006, a number of
Hospital-affiliated physicians had conditionally
accepted offers to relocate to the physician center.
Fourteen of the seventeen physicians whom Mercatus
recruited were on the Hospital’s staff, and six of that
number were tenants of Hospital office space. In par-
ticular, two physician practice groups, North Suburban
Medical Associates (“NSM”) and Lake Forest Medical
Associates (“LFM”), agreed to move their practices to
the Mercatus physician center if Mercatus met certain
contractual milestones. As part of those agreements,
those practice groups signed “no-shop” agreements
that forbade them from pursuing or entertaining a “con-
tractual relationship or other agreement with any other
entity or person engaged in a business similar to
[Mercatus].”
The Hospital wanted these physician groups—signif-
icant revenue producers important to the Hospital—to
get out of their deals with Mercatus. To do so, the Hos-
pital offered a number of incentives to NSM and LFM to
entice them not to relocate to the proposed Mercatus
physician center. The Hospital offered to assume NSM’s
No. 10-1665 39
office lease and then to sublease a more manageable
portion of that space back to NSM, to help NSM
negotiate a lease extension from its landlord, and to
make NSM a partner in the development of an electronic
medical records interface—essentially “the same things
that Mercatus had agreed to provide.” The Hospital also
offered LFM a chance to partner with the Hospital in
developing an electronic medical records system, as well
as a subsidy to implement that system in LFM’s of-
fices. The Hospital also announced that it would freeze
LFM’s lease rate and offered to provide LFM assistance
in recruiting a new physician to its practice.1 1 Allegedly,
the Hospital also falsely told these physicians that
Mercatus had violated certain anti-kickback regulations.
Both NSM and LFM eventually terminated their rela-
tionships with Mercatus, but the Hospital has followed
through on only some, but not all, of its offers to those
practice groups.
B. Lack of Evidence of Predatory Conduct
On appeal, Mercatus argues that this conduct was not
protected by Noerr-Pennington and was not (as the
district court concluded) mere speech outside the scope
11
Mercatus claims that the Hospital also promised the
physician groups “equity in [the Hospital’s] real estate.”
Nothing in the portions of the record relied on by Mercatus
supports this contention. At most, the record indicates that
the Hospital was considering whether to offer the physician
groups such an equity option.
40 No. 10-1665
of the antitrust laws. Although we agree with Mercatus
on both points, Mercatus has failed to present sufficient
evidence that the Hospital’s actions constituted actual
or attempted monopolization under the Sherman Act.
See Professional Real Estate Investors, 508 U.S. at 61 (noting
that “even a plaintiff who defeats [a] defendant’s claim
to Noerr immunity . . . must still prove a substantive
antitrust violation” ). To prove actual monopolization of
a market, Mercatus must show (1) that the Hospital
possessed monopoly power in that market; and (2) that
the Hospital willfully acquired or maintained that
power by means other than the quality of its product, its
business acumen, or historical accident. Chillicothe Sand
& Gravel Co. v. Martin Marietta Corp., 615 F.2d 427, 430
(7th Cir. 1980). To prove attempted monopolization,
Mercatus must show (1) the Hospital’s specific intent to
achieve monopoly power in a relevant market; (2) preda-
tory or anticompetitive conduct directed to accom-
plishing this purpose; and (3) a dangerous probability
that the attempt at monopolization will succeed. Lektro-
Vend Corp. v. The Vendo Co., 660 F.2d 255, 270 (7th Cir.
1981). The second element of each claim can be met by
showing that the Hospital engaged in predatory or
anticompetitive conduct of some kind. See Chillicothe
Sand & Gravel, 615 F.2d at 430; American Academic
Suppliers, Inc. v. Beckley-Cardy, Inc., 922 F.2d 1317, 1320 (7th
Cir. 1991) (“The offense of monopolization is the acquisi-
tion of monopoly by improper methods or, more com-
monly . . . the abuse of monopoly, the latter occurring
for example when a monopolist by pricing below cost
succeeds in repelling or intimidating new entrants or
No. 10-1665 41
extending his monopoly into new markets.”); State of
Illinois ex rel. Burris v. Panhandle Eastern Pipe Line Co.,
935 F.2d 1469, 1481 (7th Cir. 1991) (“Section 2 forbids not
the intentional pursuit of monopoly power but the em-
ployment of unjustifiable means to gain that power.”).
Turning to Mercatus’ submissions to this court, we see
little to indicate why the Hospital’s actions might be
considered anticompetitive or predatory. This issue is
never really addressed in Mercatus’ opening brief, which
focuses primarily on arguing that Noerr-Pennington im-
munity does not apply. And Mercatus’ bare claim that
the Hospital’s conduct “prevented [Mercatus’] entry and
reduced competition” simply does not suffice. After all,
many kinds of conduct may prevent or discourage a
potential competitor from entering a particular market.
Federal antitrust laws are implicated only when that
conduct is predatory or unjustifiable. See, e.g., Burris,
935 F.2d at 1481 (“Section 2 forbids not the intentional
pursuit of monopoly power but the employment of unjusti-
fiable means to gain that power.”).
To the extent that Mercatus addresses this issue, it only
further muddies what are already murky waters. Its
reply brief argues that the Hospital “tortiously violated
Mercatus’ no-shop agreements.” The Hospital was not
party to those agreements and could not breach a
contract to which it was not a party. Assuming that
Mercatus meant to say that the Hospital tortiously inter-
fered with its contractual relationships with the
physicians, an allegation that the Hospital acted
“tortiously” does little to advance Mercatus’ argument. The
42 No. 10-1665
antitrust laws are designed to protect competition, while
business tort law is generally designed to protect the
competitors themselves. See, e.g., American Council of
Certified Podiatric Physicians & Surgeons v. American Bd. of
Podiatric Surgery, Inc., 323 F.3d 366, 372 (6th Cir. 2003)
(“Isolated business torts . . . do not typically rise to the
level of [an antitrust] violation unless there is a harm
to competition itself.”).1 2 For the Hospital’s alleged inter-
ference to have violated the antitrust laws, then, its
specific acts of interference must have had a negative
effect on competition. The problem is, any interfer-
ence with the no-shop agreements was arguably pro-
competitive to at least some extent, given that the no-shop
agreements were designed to prevent the Hospital or
anyone else from competing for the physicians of LFM
and NSM. That remains true whether or not the
Hospital, which was admittedly aware of the no-shop
agreements’ existence, actually knew the substance of
those agreements.
12
We agree with the Hospital that Mercatus’ claim appears
somewhat akin to a breed of antitrust violation recognized in
the Ninth Circuit as “predatory hiring.” “Unlawful predatory
hiring occurs when talent is acquired not for purposes of using
that talent but for purposes of denying it to a competitor.”
Universal Analytics, Inc. v. MacNeal-Schwendler Corp., 914
F.2d 1256, 1258 (9th Cir. 1990) (addressing “the first reported
case of a claimed violation of section 2 as a result of alleged
employee raiding or predatory hiring”). We have never recog-
nized predatory hiring as a valid theory of antitrust liability
and need not do so at this time since Mercatus has said it
does not assert a predatory hiring claim.
No. 10-1665 43
To show that the Hospital’s “physician strategy”
violated the antitrust laws, Mercatus had to present
evidence that t he Hospital engaged in som e
anticompetitive conduct in addition to its alleged in-
terference with the no-shop agreements. To that end,
Mercatus alleges that the Hospital falsely implied
that Mercatus was in violation of anti-kickback regula-
tions, but we have already concluded that statements of
this sort are either pro-competitive or have, at best, a
minimal anticompetitive effect. Setting aside that alleged
false statement, we just cannot see any reason to be trou-
bled by the manner in which the Hospital went about
convincing these physicians not to move their practices
to Mercatus’ physician center. The Hospital did not
leverage its market power to make the physicians offers
on supra-competitive terms impossible for any competitor
to match. The Hospital simply offered the physicians
many of the same incentives Mercatus offered to
induce them to relocate their practices in the first place.
Nor is there any evidence that the Hospital resorted to
unfair or coercive tactics, such as threats to revoke the
physicians’ Hospital staff privileges if they relocated to
Mercatus’ physician center.1 3
To the extent that Mercatus tries to argue that the
Hospital, in the course of making its offers, “exerted
13
In his deposition testimony, Mercatus’ CEO implied that
the Hospital threatened to make public one physician’s “per-
sonal conduct issue” if that physician continued to support
Mercatus. If true, this would be troubling, but the physician
denied that the Hospital ever made such a threat. No admis-
sible evidence supports Mercatus’ allegation.
44 No. 10-1665
extreme pressure” on the physicians, this argument
founders for two reasons. First, the evidence indicates
that at least some of the “pressure” of which Mercatus
complains was not exerted by the Hospital but was an
indirect result of the Hospital’s public relations cam-
paign. According to Mercatus’ own CEO’s deposi-
tion testimony, the Hospital’s “misinformation in com-
municating with all constituents . . . sullied the entire
physician market” for Mercatus. For example, one key
physician felt “ostracized from the . . . community
because . . . of his support of the project in the face of the
hospital’s objections.” Another physician was “fairly
shaken” by “buzz in the community.” But such com-
munity reaction was the inevitable result of the
Hospital’s robust public relations campaign. We have
already explained that the public relations campaign
falls under the protection of Noerr-Pennington.
Second, to whatever extent the Hospital directly exerted
pressure on LFM and NSM to remain with the Hospital,
the Hospital had good competitive reason to do so.
Mercatus readily admits that it was trying to lure
away from the Hospital a group of doctors with “a
critical mass” of more than 30,000 patients. The loss of
this many patients was apparently fatal to Mercatus’
plans to build a physician center anywhere in Lake
Bluff. The effects of such a loss on the Hospital would
undoubtedly have been significant as well. It is not trou-
bling, then, that the Hospital made an extraordinary
effort to retain these physicians (and, through them, the
No. 10-1665 45
revenue from treating their patients).1 4 And even if such
efforts were somewhat aggressive or heavy-handed, the
antitrust laws do not prohibit “conduct that is only
unfair, impolite, or unethical.” Schachar, 870 F.2d at 400
(citation omitted).
We also see nothing predatory or anticompetitive in
the fact that the Hospital failed to follow through with
a few of the promises it made to convince these practice
groups not to relocate to the Mercatus physician center.
For starters, we reject Mercatus’ economic expert’s
attempt to argue that any failure to keep a prom-
ise—apparently, regardless of the reason for that fail-
ure—is anticompetitive. If that were the case, even the
most mundane breach of contract could violate the anti-
trust laws. Lest we transform every inadvertent failure
to keep a commercial promise into an antitrust
violation, we conclude that the Hospital’s conduct can
be considered predatory only if its promises were made
not to compete in the market, but only to unfairly
stymie unwanted competition.
That might be the case if, for example, it could be
shown that the Hospital’s promises were made with
no intent of ever being kept, or if the Hospital’s promises
were broken only after the Hospital realized that
14
It is questionable whether the Hospital even exerted such
pressure. During his deposition, a physician with NSM made
quite clear that he did not feel any pressure from the Hospital,
which he said had “offered another opportunity that I couldn’t
explore while I was under the no-shop” agreement.
46 No. 10-1665
Mercatus’ competitive threat had passed. But nothing
in the record, even when viewed in the light most favor-
able to Mercatus, indicates that this was the case. The
evidence shows only that the Hospital fulfilled some
but not quite all of the promises it made to each
physician group. NSM agreed to partner with the
Hospital to develop an electronic medical records sys-
tem. NSM has not yet signed a contract to purchase
that system, though it has expressed “verbal intent” to do
so. And though the Hospital helped NSM obtain an
extension of its office lease, the Hospital has neither
assumed that lease nor subleased a portion of the office
space thereunder back to NSM. The Hospital froze LFM’s
lease rate as promised, but has not yet provided the
promised recruitment assistance to LFM, apparently
because LFM never recruited another physician. As a
result, we have, at best, a claim for breach of contract by
the physicians against the Hospital (or perhaps a claim for
promissory estoppel), not an antitrust case by Mercatus.
Because of the potential chill that antitrust litigation
can have on legitimate pro-competitive practices, see
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 594 (1986), Mercatus was obliged, in opposing the
Hospital’s motion for summary judgment, to “present
evidence that tends to exclude the possibility that
the [Hospital’s] conduct was as consistent with competi-
tion as with illegal conduct.” Nelson v. Monroe Reg’l
Med. Center, 925 F.2d 1555, 1578 (7th Cir. 1991) (quotation
omitted). Despite this burden, Mercatus appears to
merely complain that the Hospital had the audacity to
try to retain the business of the physicians through
No. 10-1665 47
whom Mercatus admittedly sought to draw substantial
income away from the Hospital. But this is an example
of the very type of competition the antitrust laws were
designed to protect. It would be perverse if Mercatus’
failure to prevail in that competition gave it a grievance
cognizable under the Sherman Act. Even if the Hospital
had monopoly power in the geographic and product
markets Mercatus’ economic expert endorsed, the
Hospital had no duty to step aside and allow Mercatus
to make off with its physicians, patients, and revenue. Cf.
Olympia Equip. Leasing, 797 F.2d at 379 (“Consumers
would be worse off if a firm with monopoly power had
a duty to extend positive assistance to new entrants, or
having extended it voluntarily a duty to continue it
indefinitely.”). Nothing in the voluminous record could
enable any reasonable finder of fact to render a verdict
for Mercatus regarding the Hospital’s pursuit of these
two physician practice groups.
VII. Conclusion
In the end, the vast majority of the conduct of which
Mercatus complains was a legitimate exercise of the
Hospital’s right to petition the government for redress,
regardless of how dishonest or distasteful that conduct
might have been. None of the remaining complained-of
conduct—competition for key physicians, empty ter-
ritorial statements to a competitor, and false derogatory
statements about Mercatus—gives rise to liability
under the antitrust laws, whether considered in isola-
tion or taken together as a whole. To the extent Mercatus
48 No. 10-1665
was harmed by the Hospital’s actions, any remedies
might arise under Illinois tort law, not federal antitrust
law. The judgment of the district court is A FFIRMED.
5-26-11