Webb v. Fury

Neely, Justice,

dissenting:

*461The majority opinion in this case is essentially well reasoned and written; it appears at first blush eminently sensible, but I feel I must dissent because it overstates the rule of the N oerr-Penning-ton doctrine and fails adequately to explore appropriate procedures for cases of this sort. The majority appears to establish blanket immunity for false publications, even if published with the knowledge that the statements are false, and blanket immunity for tortious interference with business activity so long as this interference masquerades as an act of petitioning the government. At the same time I am not satisfied with the posture of the respondent in this case, DLM Coal Company, that a mere allegation of knowing, willful falsehood is sufficient to precipitate a disastrously expensive law suit in all its terror. Hence my concern becomes one of how to fashion appropriate procedures that will address the overall equities of the situation.

I

Noerr held that the right to engage in political activity cannot be curtailed simply because one has a financial interest in the outcome of the political controversy involved, see Eastern R.R. Presidents Conference v. Noerr Motor Freight, 365 U.S. 127, 139 (1961). It also held that the use of deception is not itself a violation of the Sherman Act, id. at 140-42. U.M.W. v. Pennington, 381 U.S. 657 (1965), reiterated that an anti-competitive purpose lying behind attempts to influence the government does not make such attempts illegal. Further, it established that Noerr privileges extend to attempts to influence government activity of all types, not just “political” questions before the legislature. Finally, Pennington applied the doctrine that no damages may be collected from a private person when those damages resulted from government action. Id. at 669-72.

The doctrine developed by these two cases does not create a blanket immunity for all activities that look like petitioning activities. Noerr itself postulated what has become known as the “sham” exception, contemplating occasions where the petitioning activities are “a mere sham to cover what is actually nothing more than an *462attempt to interfere directly with the business relationships of a competitor.” Eastern R.R. Presidents Conference v. Noerr Motor Freight, supra at 144. The United States Supreme Court has approved the application of this qualification to immunity in at least two cases. In California Motor Transport v. Trucking Unlimited, 404 U.S. 508 (1972) the Court talks about petitioning activity “which leads the fact finder to conclude that the administrative and judicial processes have been abused,” id. at 513. Abuse was evident there where the consequence of the defendants’ “petitioning” activity tended to “deprive the competitors of meaningful access to the agencies and courts,” id. at 512.

The logic of Noerr and Pennington does not suggest that only access-barring activity falls outside of Noerr-Pennington immunity. When Pennington stated that “Noerr shields from the Sherman Act a concerted effort to influence public officials regardless of intent or purpose,” U.M.W. v. Pennington, 381 U.S. 657, 670 (1965), it was referring to anti-competitive purpose and intent. It did not mean to confer immunity on people who appear to be petitioning the government but who in fact have no intention to influence government or to vindicate rights reasonably asserted. See California Motor Transport v. Trucking Unlimited, 404 U.S. 508, 511-12 (1972). When putative petitioners know for a certainty that there is no basis to their claim, there is no pure petitioning taking place. This becomes abundantly clear from the findings and holding in United States v. Otter Tail Power Co., 331 F. Supp. 54 D. Minn. (1971) remanded with instructions, 410 U.S. 366 (1973), 360 F. Supp. 451 (D. Minn. 1973), aff'd, 417 U.S. 901 (1974). At trial, the court found the following facts which are particularly pertinent to the case at bar:

The efforts of Elbow Lake, Hankinson, Aurora and Colman, South Dakota, to establish municipal power systems were opposed by the defendant in court proceedings. Otter Tail either instituted or sponsored and financially supported court litigation which had the effect of frustrating the sale of revenue bonds to finance the municipal systems. A *463“no-litigation certificate,” reflecting the absence of litigation which might impair the salability of revenue bonds, is essential to a successful sale of municipal bonds. The pendency of litigation has the effect of preventing the marketing of the necessary bonds thus preventing the establishment of a municipal system.
Most of the litigation sponsored by the defendant was carried to the highest available appellate court and although all of it was unsuccessful on the merits, the institution and maintenance of it had the effect of halting, or appreciably slowing, efforts for municipal ownership. The delay thus occasioned and the large financial burden imposed on the towns’ limited treasury dampened local enthusiasm for public ownership.

331 F. Supp. at 61-2 [footnotes omitted]. The court concluded that Otter Tail’s litigation efforts were not immune from anti-trust liability because they were not undertaken to “redress claimed wrongs” but rather to frustrate a competitor. Id. at 62. The Supreme Court remanded the case for reconsideration in light of the California Motor decision, 410 U.S. 366 (1973), and upon remand the District Court again found that the defendant was not immune because “the repetitive use of litigation by Otter Tail was timed and designed principally to prevent the establishment of municipal electric systems and thereby to preserve defendant’s monopoly,” 360 F. Supp. 451 (D. Minn. (1973). That conclusion was affirmed by the Supreme Court, at 417 U.S. 901 (1974).

The allegations in the complaint in. the case at bar are quite like the conclusions of the district court in Otter Tail. The plaintiff alleges that the communications with the various federal agencies by the defendants were calculated to harass the plaintiff and interfere in its business and not to vindicate perceived rights under the law. In addition, plaintiff here was unable to get a “clean bill of health” from its independent auditors because there were complaints pending against it, just as the towns in Otter Tail could not get “no-litigation certificates,” and so in both cases sales of stock and bonds, respectively, were hindered. Finally, *464plaintiff contends that the communications with the government as well as the newsletter were false and that defendants knew that the material they wrote was false or were reckless as to the truth at the time of writing. The question for us is whether they may have some legal relief if all this is true.

II

The majority answers this question in the negative. They reject there being any significance in plaintiff’s allegations of knowing falsehood by citing Noerr, which admittedly involved deceit. But the deceit there was that the defendants had third parties make statements to the government on behalf of the defendants which appeared to be spontaneous statements of the third parties. The deceit there had nothing to do with the truth or falsity of the statements involved. The majority also argues that if allegations of malice could suffice to overcome a defense of first amendment privileges it would deter people from exercising important rights even in a legitimate fashion. This is a substantial problem but in other circumstances a malice standard has been held to protect adequately first amendment interests, see Times v. Sullivan, 376 U.S. 254 (1964) and its progeny, and I think that it should suffice here if proper procedural safeguards are devised, as I shall argue later. I would only add at this point that the only case of which I am aware from West Virginia on this point supports this conclusion: “But the privilege thus allowed [by the rights to assembly and petition] is not an absolute one as contended by the defendant. It raises a presumption of good faith and lack of malice in the representations made, in consequence of which express malice must be established by allegation and proof, to warrant recovery.” Hancock v. Mitchell, 83 W.Va. 156, 159, 98 S.E. 65 (1919), and see The Quagmire Thickens: A Post-California Motor View of the Antitrust and Constitutional Ramifications of Petitioning the Government, 42 U. Cin. L. Rev. 281, 286 (1973) [hereinafter Quagmire].

At the same time the majority reads the so-called sham exception too narrowly. They argue that the plaintiff neither alleges nor adduces facts which tend to show that *465it was in fact denied access to the administrative procedures or that such was the defendants’ intent. They note that the pleadings show no irregularities in the procedures followed by the defendants or by the government agencies, and that, unlike California Motor, supra the defendants did not systematically oppose all DLM permit applications regardless of merit. But this misses the point of the sham exception. The majority says that “[cjonduct which prevents a party from participatingin policy-making functions of the executive, legislative, or judicial branches of government is not petitioning activity protected by the right to petition the government, and such conduct may give rise to a cause of action for damages.”

Their mistake is that the sham exception really uncovers from immunity any course of conduct which in fact is not petitioning activity, despite its appearance. Hence plaintiffs allegations of knowing falsehood and intent to harass become very important and relevant. If plaintiffs allegations can be substantiated they tend to prove that the defendants were not engaged in petitioning activity. If they knew that their statements to the federal agencies were not true, then they could not have been petitioning the government to “redress claimed wrongs.” And if they were not petitioning the government, then they are not entitled to immunity.

Ill

So I would answer the question posed earlier in the affirmative: If the plaintiff can prove its allegations it may have legal relief. But as the majority eloquently argues there are substantial constitutional rights at stake and we dare not fashion a remedy for plaintiffs like DLM that would trample first amendment rights and privileges and/or impose risks on or disincentives to those who would genuinely and legitimately exercise those rights and privileges. How then can we protect both sides in controversies of this type?

In the area of speech an allegation that false material was published which at the time of publication was known to be false and which was deliberately published with the *466intent to injure through false publication has always sustained a cause of action for libel, even by a public official, see Sprouse v. Clay Communication, 158 W.Va. 427, 211 S.E.2d 674 (1975) cert. denied, 423 U.S. 882 (1975). I would agree with the majority that this model is not entirely satisfactory in cases such as the one at bar, however. It is not overly difficult to plead malice even though it may be hard to prove it. In cases such as Sprouse where there is an individual plaintiff and a corporate defendant, the defendants are almost always better financed than the plaintiffs. While there is a certain amount of unfairness in forcing them to go through discovery merely on the allegation of malice, they generally can afford whatever expense that may entail and the cost of the process is not generally so high as to be punitive in itself and a disincentive to pioneering or crusading journalism.

But in the case before us we have ordinary citizens who are being sued by a well financed corporation for activities which appear to be not only constitutionally privileged but statutorily solicited and welcomed. While the plaintiff here in effect can spend unlimited amounts on superb legal talent, defendants in this and similar cases will be hard pressed to hire counsel at all. The potential for chilling legitimate first amendment rights when there is anything less than absolute immunity is awe inspiring.

The key to solving this dilemma is finding a device which will screen legitimate first amendment activity from irresponsible or sham first amendment activity. The majority has accomplished this in effect through its interpretation of California Motor. The majority would require an allegation that the plaintiff was denied access to government agencies and they imply that it is necessary for the plaintiff to allege that there has been a pattern of baseless litigation by the defendants. See, too, Quagmire, supra, at 315-16. The pattern of baseless litigation is the screening device which gives defendants protection against suits based on mere allegations of “malice” or “sham.”

*467IV

I propose a screening device which is more sensitive to the facts of a case as they really are and not j ust to the facts as they appear based on notice pleadings. I realize that this device is a significant departure from ordinary procedures, but this need not deter us from implementing it. First amendment law is in large measure a departure from ordinary principles. For example, the requirement that a public figure plead and prove malice to recover in libel is a judge-made rule designed to preserve the robust exchange of ideas and information which is essential to our way of life. We need not be shy of creating other rules which serve the same purpose, particularly if those rules also accommodate other societal interests, such as the right to recover damages from a tort-feasor in courts and not on the streets.

The procedure I propose involves three stages. First, I would adopt the statement of the majority in Franchise Realty Interstate Corp. v. San Francisco Local Joint Executive Board of Culinary Workers, 542 F.2d 1076, 1082-83 (1976): “[W]here a plaintiff seeks damages or injunctive relief, or both, for conduct which is a prima facie protected by the first amendment, the danger that the mere pendency of the action will chill the exercise of first amendment rights requires more specific allegations than would otherwise be required.” Granted this entails a first amendment gloss on our Rules of Civil Procedure which generally require only notice pleading. However, if parties are aware that facts must be pleaded in such situations then this requirement should work no special hardship. If necessary, the Court should invoke its rule-making authority and amend the Rules to so provide. As an aside, the plaintiff in this case probably pleaded enough facts to get past this stage and for that reason I would not have granted the writ of prohibition.

Second, I would require that a preliminary hearing of sorts be held early in the proceedings in which the trial judge will decide whether the plaintiff has shown enough facts to proceed with the case. As we recently held, “whenever there is a first amendment defense to actions under state law the state court is required to be a judge of *468both the facts and the law,” Mauck v. City of Martinsburg, _W.Va._, 280 S.E.2d 216, 220 (1981). The court must determine that the suit is brought in good faith and is supported by reasonable cause to believe that intentional, false material was communicated to the public or a governmental agency. Since to get to this point may often require some discovery and the costs of discovery and attendant legal fees themselves may chill the free exercise of first amendment rights, in appropriate circumstances of gross imbalance of assets, I would permit the trial court to order the advance of defendant’s costs associated with discovery from plaintiff. Should the plaintiff succeed on the merits, these payments would be refunded.

Third, if the plaintiff is actually able to get to a trial on the merits but loses, I would require that the defendant be awarded the full costs of his defense as a matter of course without exception. This remedy permits the defendant to retain counsel on a basis similar to the “contingent fee” arrangement so prevalent in tort actions by plaintiffs. Furthermore, if after the trial it becomes apparent that the plaintiff actually was using the legal process in the same despicable way that he had alleged the defendant had, namely, to oppress citizens who have legitimately exercised first amendment rights, then the courts should exercise their equitable powers to impose costs against the plaintiff in excess of the actual costs of defending the case. See W. Va. Code, 59-2-11 [1923]; W. Va. R. Civ. P. 54(d).

The effective exercise of first amendment rights requires immunity from liability for good faith and negligent false statements, but there must be some protection against the deliberate lie. Some balance must be struck which allows the one to proceed uninhibited while also punishing those who hide irresponsible and malicious actions behind the guise of first amendment freedom. I am disappointed that the majority of this Court did not take this occasion to fashion remedies which would address more fairly both aspects of the first amendment problem and allow redress for malicious attacks. I have outlined procedures that will essentially be cost-free to defendants in these cases and, therefore, should prevent suits of this kind from deterring *469citizens from exercising their rights. Without coming to any conclusions about the merits of the claim presented by DLM, I would have denied the writ and sent the case back to the circuit court for further evaluation and a determination about whether there is reasonable cause to believe that the defendants acted maliciously and so are not entitled to absolute immunity for their actions.