PRESENT: All the Justices
TITAN AMERICA, LLC, ET AL.
v. Record No. 012554 OPINION BY JUSTICE ELIZABETH B. LACY
September 13, 2002
RIVERTON INVESTMENT
CORPORATION, ET AL.
FROM THE CIRCUIT COURT OF FREDERICK COUNTY
John E. Wetsel, Jr., Judge
In 1998 the appellant, Titan America, LLC, the successor to
Carolinas Cement Company, G.P., t/a Roanoke Cement Company,
(Titan) * sought to acquire land in Warren County to use as a
warehousing and distribution site for its cement business. The
appellees, Riverton Investment Corporation, Capitol Cement
Corporation, and Riverton Corporation (collectively "Riverton"),
a competing cement company and its affiliates, opposed Titan's
plans by appearing before the local governing bodies including
the board of zoning appeals and planning commission, initiating
litigation in circuit court, and funding litigation undertaken
by various Warren County residents.
While Titan ultimately secured the necessary land and
permits to complete its project, Titan filed a motion for
judgment against Riverton in October 1999 asserting, inter alia,
claims of tortious interference with existing and potential
*
The other appellants, Titan Atlantic Cement Industrial and
Commercial Company, S.A., Inc. and Tarmac Cement, Inc. were
general partners of the Carolinas Cement Company, G.P. and
remain members of Titan America, LLC.
economic relationships, conspiracy, and defamation based on the
litigation filed or funded by Riverton. Following consideration
of Riverton's demurrers, motion for partial summary judgment,
and motions for stay of discovery relating to Titan's original
and amended motions for judgment, the trial court ultimately
entered judgment in favor of Riverton, holding that under the
Noerr-Pennington doctrine none of the complained of litigation
was objectively baseless, that discovery was not required, and
that the alleged defamatory statements were made in the course
of litigation and therefore were absolutely privileged. For the
reasons that follow, we will affirm the judgment of the trial
court.
FACTS
A. Underlying Proceedings
Titan originally sought to build its Warren County
distribution facility on a site that it leased from Potomac
Edison Company d/b/a Allegheny Power (Potomac Edison), but later
purchased a site for the facility from the Economic Development
Authority of Warren County and the town of Front Royal (EDA).
The underlying litigation that forms the basis of Titan's motion
for judgment in this case involved both sites. Riverton
recruited the individual litigants involved in this litigation,
Ramona Bowden, Carol and Benjamin Weddle, and Tommy R. and Joyce
S. Fritts, and provided legal representation for them. Although
2
Titan filed this action in Frederick County, on the recusal of
the circuit court judge of Frederick County, the matter was
heard by Judge John E. Wetsel, Jr. Judge Wetsel also heard all
of the underlying proceedings at issue in this case. We recite
the facts in relation to each of the proposed development sites.
1. Potomac Edison Site
In February 1999, Titan applied for a by-right use permit
for its distribution facility on a site it leased from Potomac
Edison. The deputy zoning administrator approved the by-right
permit in March 1999. The following month Bowden and the
Weddles appealed the administrator's decision to the Warren
County Board of Zoning Appeals (BZA), asserting that the
facility did not qualify as a by-right use and that the access
road to the site could not be used for industrial purposes
because it traversed agricultural land. After two public
hearings, the BZA reversed the decision of the zoning
administrator and also held that the existing road could be used
for industrial purposes, but that Titan could not construct a
new road through the agricultural area to service the industrial
portion of the property.
Titan appealed the BZA's decision to deny the by-right
permit to the circuit court. Bowden and the Weddles intervened
in Titan's suit and also filed a separate appeal of the BZA's
decision on the access road issue. In August 1999, the circuit
3
court entered an order reversing the decision of the BZA,
holding that Titan was entitled to the by-right permit and that
the BZA erred in determining that Titan had a grandfathered
right to use the access road for industrial purposes.
While the BZA was considering the access road issue on
remand from the circuit court, Titan and Potomac Edison filed an
application for a variance to allow industrial use of the access
road. The BZA denied the variance and made a finding strictly
limiting Titan's grandfathered non-conforming use of the access
road. Titan and Potomac Edison appealed those decisions to the
circuit court, which upheld the BZA's determinations.
Titan filed a petition for appeal with this Court regarding
the use of the access road, which was refused. This Court
awarded Bowden and the Weddles an appeal on the by-right permit
issue, but dismissed the appeal as moot in June 2000 because
Titan terminated the Potomac Edison lease and abandoned its
plans to develop that site.
2. EDA Site
In the spring and summer of 1999, Titan began to consider
other sites for its facility, including a site owned by EDA at
the Kelley Industrial Park in Warren County. EDA voted to
approve the sale to Titan on September 3, 1999. On September
13, Riverton filed a petition for mandamus against the EDA,
alleging that the EDA violated Code § 2.1-343 of the Virginia
4
Freedom of Information Act by not giving proper notice of its
intention to vote on the sale of the land. Riverton also sought
a declaratory judgment and injunction against the sale of the
site to Titan asserting that the sale was contrary to the
criteria established by statute and EDA rules for such a sale.
EDA settled this action by agreeing to comply with the
provisions of the Virginia Freedom of Information Act and to
vote again on the sale of the land on October 15.
On September 27, 1999, EDA informed Riverton that it had
rescheduled the vote for October 7 and Riverton filed another
action against EDA to enforce the settlement agreement reached
in the prior mandamus proceeding. The circuit court entered a
decree enjoining EDA from voting on the sale of the land to
Titan before October 15.
EDA set November 12 as the date for the vote on the sale of
the land. Riverton and the Fritts filed a complaint seeking a
declaratory judgment and an injunction preventing EDA from
selling the site to Titan. They asserted, as they had in the
prior action, that sale of the land to Titan did not meet the
criteria established by statute and EDA rules for such a sale.
Following a hearing on the request for a temporary injunction,
the circuit court entered an order denying Riverton's and the
Fritts' request for a temporary injunction. Applying a liberal
interpretation of the Industrial Development and Revenue Bond
5
Act, Code §§ 15.2-4900 through -4920, the circuit court
concluded that a facility, new to a community, qualified under
the Act as a new industry in the Commonwealth, that EDA's
variance from its own guidelines did not make the sale arbitrary
and capricious because such guidelines can be altered by EDA at
any time, and that the sale did not constitute special
legislation merely because it benefited Titan. Finally, in
denying the temporary injunction, the trial court stated that
"[w]ithout proof of damage particular to [Riverton and the
Fritts] of an irreparable character, the plaintiffs' standing to
maintain this action is called into question." EDA voted to
sign the contract of sale to Titan on November 12, 1999, and the
sale was completed the same day.
On October 8, 1999, prior to the completion of the sale of
the EDA site to Titan, the zoning administrator approved Titan's
application for a by-right permit for its facility to be built
on the EDA property. The Planning Commission approved the by-
right use of the property on October 13. Riverton and the
Fritts appealed the zoning administrator's and the Planning
Commission's decisions to the BZA. On December 1, 1999, the BZA
concluded that it lacked jurisdiction to review the Planning
Commission's by-right determination, but deferred its ruling on
the issue whether the zoning administrator properly approved the
by-right application.
6
On December 8, 1999, Titan brought an action against the
BZA, Riverton, and the Fritts asking the court to direct the BZA
to terminate the stay and dismiss the appeal of the zoning
administrator's and Planning Commission's decisions and to
enjoin Riverton and the Fritts from further litigating the by-
right issue regarding the EDA site, asserting that that issue
was resolved in the earlier case regarding the Potomac Edison
site. The circuit court denied Titan's requests, finding that
the current proceedings involved a different site and different
parties.
A month later, the BZA concluded that Riverton and the
Fritts did not have standing to appeal the zoning
administrator's decision to the BZA. Riverton and the Fritts
appealed this decision. The circuit court remanded the issue of
standing to the BZA, but rejected the contention raised by
Riverton and the Fritts that Titan did not have the right to
seek the by-right permit.
On remand, the BZA determined that the Fritts had standing
to appeal the administrative decisions to the BZA, but that
Riverton did not. The BZA also concluded that the proposed
facility was a by-right use of the EDA site and consistent with
the zoning ordinance. Titan appealed the BZA's determination
regarding the Fritts' standing and the Fritts appealed the BZA's
conclusion regarding the use of the site for Titan's facility.
7
On May 31, 2000, the circuit court affirmed the decision of the
BZA. The Fritts appealed the circuit court order to this Court.
An appeal was awarded and the decision of the circuit court was
affirmed by an opinion issued September 14, 2001. Fritts v.
Carolinas Cement Co., 262 Va. 401, 551 S.E.2d 336 (2001).
B. This Litigation
Titan filed this suit on October 28, 1999 alleging tortious
interference with contract and business expectancy, statutory
and common law conspiracy and defamation based on the litigation
pursued and financed by Riverton. Titan also filed requests for
admissions, interrogatories and requests for documents.
Riverton filed a demurrer and a motion for a protective order,
asserting that the claim was barred by the Noerr-Pennington
doctrine. Although Riverton's first demurrer was overruled by
the trial court, the trial court granted Riverton's motion for
summary judgment in part, finding that the underlying
proceedings were brought with probable cause, but deferred
ruling on Titan's arguments that such proceedings were
nevertheless sham proceedings because Riverton orchestrated the
litigation through the use of straw persons. The trial court
granted Riverton's motions to prohibit discovery concerning its
motivation for pursuing the litigation and granted a stay on
further discovery pending its ruling on the straw persons issue.
After further briefing by the parties, the trial court entered
8
an order on June 6, 2000, holding that Riverton's use of straw
persons was not a fraud upon the tribunal and did not constitute
sham litigation depriving Riverton of the protection of the
Noerr-Pennington doctrine.
Titan filed an amended motion for judgment and second
amended motion for judgment, adding claims of abuse of process
and fraud. Riverton's demurrers to both pleadings were
sustained in part and denied in part and the trial court
dismissed with prejudice all claims to which Riverton's
demurrers were sustained. The trial court entered an order
granting Titan's motion to non-suit all remaining claims. We
awarded Titan an appeal.
On appeal, Titan asserts that the Noerr-Pennington doctrine
should not be applied to the causes of action pled in this case,
that even if the doctrine is applied, the trial court applied
the wrong test, that Titan's allegations of sham activity by
Riverton were sufficient to withstand a demurrer, that the trial
court should not have considered whether Riverton was entitled
to the protection of the Noerr-Pennington doctrine without
discovery and further development of the evidence, and that the
trial court erred in holding that defamatory statements made by
Riverton were entitled to an absolute privilege. We will
address these issues in order.
DISCUSSION
9
A. The Noerr-Pennington Doctrine
1. Application to state law conspiracy and business tort
claims
The Noerr-Pennington doctrine was initially developed in
the United States Supreme Court cases of Eastern Railroad
Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127
(1961), and United Mine Workers of America v. Pennington, 381
U.S. 657 (1965). In those cases, the Supreme Court held that
actions taken to influence legislative or executive action
cannot be the basis for a violation of the Sherman Antitrust Act
unless such activities were "a mere sham" designed to disguise
actions directed towards interfering with the business
relationships of a competitor. Noerr, 365 U.S. at 144. This
doctrine is based on the federal constitutional rights to free
speech and to petition the government. In subsequent cases, the
doctrine has been expanded to apply to actions taken in
adjudicatory proceedings before administrative agencies and
courts. California Motor Transp. Co. v. Trucking Unlimited, 404
U.S. 508, 510-11 (1972).
Titan argues that the Noerr-Pennington doctrine should not
be extended to state law claims of the type raised in this case
because the doctrine was developed in the context of the federal
antitrust laws and because Virginia law affords a defendant
10
sufficient defenses "without the need to inject an additional
defense based on the Noerr-Pennington doctrine."
The Noerr-Pennington doctrine arises from rights afforded
by the First Amendment to the United States Constitution and
does not limit protection of those rights to causes of action
involving antitrust matters. See, e.g., Pacific Gas & Elec. Co.
v. Bear Stearns & Co., 791 P.2d 587, 594 (Cal. 1990); Protect
Our Mountain Env't v. County of Jefferson, 677 P.2d 1361, 1365-
66 (Colo. 1984); Harrah's Vicksburg Corp. v. Pennebaker, 812 So.
2d 163, 171 (Miss. 2001). We have previously acknowledged that
the Noerr-Pennington doctrine is concerned with efforts to
affect the decisions of legislative, judicial, and executive
bodies in the field of public policy matters. Lockheed Info.
Mgmt. Sys. Co., Inc. v. Maximus, Inc., 259 Va. 92, 104, 524
S.E.2d 420, 426-27 (2000) (citing F. Buddie Contracting, Inc. v.
Seawright, 595 F. Supp. 422 (N.D. Ohio 1984)). While we have
rejected the application of the doctrine when the government is
acting in its proprietary capacity under the "commercial
activity exception," the rationale underlying that exclusion
does not exist in this case. Id., 524 S.E.2d at 427. This case
involves actions seeking to enforce or challenge governmental
decisions through the use of the courts and, thus, falls
squarely within the constitutional protections recognized by the
Noerr-Pennington doctrine. We conclude that the protection of
11
First Amendment rights provided by application of the Noerr-
Pennington doctrine should be available to a defendant in causes
of action for tortious interference with business expectancy and
conspiracy, and that the trial court did not err in applying the
Noerr-Pennington doctrine in this case.
2. Appropriate test for determination of sham litigation
Titan asserts that, even if the Noerr-Pennington doctrine
is applicable in this case, the trial court applied the wrong
test in considering whether the litigation at issue was sham
litigation. The trial court utilized the two-part test set out
in Professional Real Estate Investors, Inc. v. Columbia Pictures
Industries, Inc., 508 U.S. 49, 60 (1993) (PRE). Under that
test, a court first determines whether the challenged litigation
was objectively baseless. Id. A case is objectively baseless
if the proponent of the litigation lacked probable cause to
institute the unsuccessful lawsuit. Id. Probable cause in this
context means a " 'reasonable belief that there is a chance that
[a] claim may be held valid upon adjudication.' " Id. at 62-63
(quoting Hubbard v. Beatty & Hyde, Inc., 178 N.E.2d 485, 488
(Mass. 1961)). If such litigation is objectively baseless, the
court then makes a subjective inquiry into whether the
litigation was filed with an anti-competitive purpose. Id. at
60. If the litigation was not objectively baseless, the second
inquiry is not necessary. Id. In this case, the trial court
12
concluded that none of the underlying actions was objectively
baseless and, accordingly, did not consider whether the actions
were subjectively pursued for anti-competitive purposes.
Titan argues that the PRE analysis should not be applied in
this case because PRE involved a single underlying action, not a
series of proceedings as in this case. Rather, Titan asserts
that the trial court should have applied the test suggested by
language in California Motor Transport, a case involving
multiple underlying actions. 404 U.S. at 515. Titan argues,
based on California Motor Transport, that courts must apply a
subjective test when multiple filings are alleged to have been
"pursued to harass, delay and coerce a competitor." Titan
describes that test as looking at "the totality of the filings
and determin[ing] whether they were truly undertaken out of a
genuine interest in redressing grievances, or whether they were
merely a part of a pattern or practice of successive filings
undertaken for the purpose of harassing and injuring a
competitor." Whether there was probable cause to file an action
is irrelevant in this test, according to Titan. Therefore,
Titan argues that the trial court in this case should not have
looked to whether the litigation undertaken directly or
indirectly by Riverton was objectively baseless but rather
should have considered whether the litigation was pursued for
the purpose of harassing and injuring its competitor.
13
We disagree with Titan and its interpretation of California
Motor Transport. The United States Supreme Court in PRE
considered California Motor Transport and other cases decided
since Noerr and concluded that "the sham exception contains an
indispensable objective component" and a subjective
"anticompetitive intent or purpose alone cannot transform
otherwise legitimate activity into a sham." PRE, 508 U.S. at
58–59. The language in California Motor Transport upon which
Titan relies for the test it advocates is the statement that "a
pattern of baseless, repetitive claims may emerge which leads
the factfinder to conclude that the administrative and judicial
processes have been abused." California Motor Transport, 404
U.S. at 513. This statement specifically identifies baseless
litigation as forming the pattern of harassment, a requirement
consistent with the test established in PRE.
Considering the holdings in both PRE and California Motor
Transport, we find no support for the imposition of a single,
subjective test based on a finding of anti-competitive purpose
simply because a series of actions rather than a single action
is the focus of the alleged anti-competitive activity. We
conclude that, when considering an allegation that the sham
exception to the Noerr-Pennington doctrine applies, a court must
consider first whether any or all of the complained of actions
were objectively baseless, and those which are not may not be
14
considered in determining whether the sham exception is
applicable. Therefore, the trial court in this case did not err
in applying the two-part test as described in PRE.
3. Standing to claim the protection of the Noerr-
Pennington doctrine.
Titan argues that Riverton was not entitled to the
protection of the Noerr-Pennington doctrine because such
protection is available only to those persons or entities that
are parties to the underlying litigation. Relying on In re
Burlington Northern, Inc., 822 F.2d 518 (5th Cir. 1987), cert.
denied sub nom. Union Pacific Railroad v. Energy Transportation
Systems, Inc., 484 U.S. 1007 (1988), Titan asserts that a person
without standing to bring a suit cannot "manufacture standing"
by "orchestrating litigation" for the purpose of interfering
with a competitor. Titan argues that Riverton's lack of
standing in the underlying litigation denies Riverton the
protection of the Noerr-Pennington doctrine for its actions in
supporting, soliciting, and financing others in the prosecution
of that litigation.
The trial court considered these same arguments in
connection with its ruling on Riverton's demurrer and motion for
partial summary judgment on Titan's original motion for
judgment. The trial court rejected Titan's arguments, adopting
the rationale of the federal district court in Baltimore Scrap
15
Corp. v. The David J. Joseph Co., 81 F. Supp. 2d 602 (D. Md.
2000). In that case, the district court held that the Noerr-
Pennington doctrine applied even if a company secretly and for
anti-competitive purposes, sponsored a lawsuit against a
competitor, "so long as the lawsuit is neither a sham, meaning
that it is not objectively baseless, nor fraudulent." Id. at
603. The United States Court of Appeals for the Fourth Circuit
subsequently affirmed the federal district court's holding that
the defendants' participation in the underlying action was not
determinative in the sham litigation analysis and that
"[f]unding of litigation by a non-party can be petitioning to
the same extent" as actually filing the lawsuit. Baltimore
Scrap Corp. v. The David J. Joseph Co., 237 F.3d 394, 401 (4th
Cir.), cert. denied, 533 U.S. 916 (2001). In reaching its
holding, the Fourth Circuit observed that
nonparties often provide aid to litigants, whether
through financial backing, legal assistance, amicus
briefs, or moral support. . . . The realities often
are that litigation cannot be entirely financed out of
the pocket of the party bringing suit. . . . To hold
that only parties who have standing in their own right
receive the protection of Noerr-Pennington immunity is
to artificially restrict that doctrine by penalizing
even the lawful support of objectively meritorious
actions.
Id. at 401.
We consider this rationale the more persuasive and proper
application of the Noerr-Pennington doctrine. Accordingly, we
16
conclude that the trial court did not err in holding that
Riverton's support for and financing of the litigation brought
by others did not exclude Riverton from the protection afforded
by the Noerr-Pennington doctrine.
B. Demurrer
Next Titan asserts that the trial court should not have
decided this matter on demurrer. Applying the principle that a
pleading that sufficiently states a cause of action survives a
demurrer, Titan argues that each of its pleadings sufficiently
recited facts which if proved at trial would have invoked the
sham exception to the Noerr-Pennington doctrine, and therefore
the trial court should have denied Riverton's demurrers. We
disagree with Titan.
When the Noerr-Pennington doctrine and accompanying sham
exception were invoked in Titan's pleadings and challenged by
Riverton's demurrers, the trial court was required to consider
the facts alleged in the pleadings as true and to draw all
reasonable inferences from those facts in favor of Titan.
However, the trial court was not required to accept Titan's
conclusions of law and, thus, the trial court was not bound by
Titan's allegations in its pleadings that the litigation in
question was baseless. Yuzefovsky v. St. John's Wood
Apartments, 261 Va. 97, 102, 540 S.E.2d 134, 137 (2001). To
rule on the demurrer, the trial court was required to apply the
17
two-part PRE test and the initial focus of the court's inquiry
was whether the underlying litigation was objectively baseless.
To make this determination, the trial court took judicial
notice of the records of the underlying actions, a procedure
long recognized as appropriate by our jurisprudence.
[W]here the plaintiff refers to another proceeding or
judgment, and specifically bases his right of action,
in whole or in part, on something which appears in the
record of the prior case, the court, in passing on a
demurrer to the complaint, will take judicial notice
of the matters appearing in the former case.
Fleming v. Anderson, 187 Va. 788, 794-95, 48 S.E.2d 269, 272
(1948); see also Martone v. Martone, 257 Va. 199, 208, 509
S.E.2d 302, 307 (1999). The issue before the trial court was
the objective legal merit of each of the underlying proceedings.
Following a review of each proceeding, the trial court, which
conducted those underlying proceedings, concluded that Riverton
had probable cause to pursue each of the proceedings and,
therefore, those cases were not objectively baseless. Having
made this determination, the trial court did not have to reach
the second part of the PRE test by considering Titan's
allegations of sham activity when ruling on Riverton's demurrer.
C. Discovery Limitation
Titan also complains that, in light of its allegations of
fraud and misrepresentation, the trial court erred in limiting
discovery and making a probable cause determination without
18
further development of the evidence. Titan asserts that making
the probable cause determination solely on the basis of the
record of the underlying proceedings as a matter of law is
proper only if "there is no dispute over the predicate facts of
the underlying legal proceeding." PRE, 508 U.S. at 64-65.
Here, Titan alleges disputed facts in the underlying litigation
regarding "secret conspiracies," the use of straw persons,
Riverton's "surreptitious orchestration and involvement" in the
underlying litigation, and that named litigants were not members
of a "citizens group." These matters involve Riverton's
motivation for participating in the proceedings and the manner
in which the litigation proceeded and do not address the
predicate facts of the underlying legal proceedings.
Clearly, the parties had divergent views on the legal
implications of the facts in the underlying litigation, such as:
whether Titan's proposed facility was a warehouse or
distribution center entitled to a by-right permit; could the
access road to the facility be used for industrial purposes;
were the notice provisions of the Freedom of Information Act
violated; and did EDA comply with existing law and internal
rules in selling its property to Titan? These disputes,
however, are not disputed facts in the underlying litigation
that would prevent a court from determining whether the
19
underlying litigation was "objectively baseless" as a matter of
law.
Finally, Titan urges that the trial court erred in making
its probable cause rulings "in a vacuum" without further
discovery on Titan's allegations that Riverton engaged in
"concealments and misrepresentations, the full extent of which
could not be known without ordinary discovery." We agree with
Titan that the protection of the Noerr-Pennington doctrine
should not be based on a judgment obtained by fraud and that
intentional misrepresentations made to a court may deprive a
proceeding of its legitimacy. But such alleged
misrepresentations must be material to the underlying
proceedings. To make this determination, the court examines the
record of the underlying proceedings, the outcome of those
cases, the nature of the alleged fraud or misrepresentation, and
whether those allegations would have had an impact on the
outcome of the underlying litigation. See Bath Petroleum
Storage, Inc. v. Market Hub Partners, L.P., 129 F. Supp. 2d 578,
593 (W.D. N.Y.), aff'd, 229 F.3d 1135 (2nd Cir. 2000), cert.
denied, 532 U.S. 1037 (2001). If this analysis shows that the
alleged misrepresentations did not have a significant impact on
the underlying litigation, further discovery is not necessary:
To allow [ ] claims based solely on broad and
indistinct allegations of misrepresentation and "sham
litigation" to reach discovery, regardless of the role
20
the claimed misrepresentations played, or could have
played, in the prior proceeding would predicate the
viability of [a] complaint on a petitioner's
subjective intent, and not the objective merit of its
petition, and thus directly contravene the Supreme
Court's holding in PRE.
Id. at 594 (citations and quotations omitted).
In this case, Titan's allegations of fraud and
misrepresentations, as we have already noted, concerned
Riverton's motivation in pursuing or supporting the underlying
actions. Allegations that Riverton solicited and financed
litigation by others, even if its involvement was kept from the
court, is not the type of fraud on the court that would bring
into question the legitimacy of the proceeding, Baltimore Scrap,
237 F.3d at 401-02, especially when the court has determined
that the litigation was brought with probable cause and was not
objectively baseless.
The trial court carefully reviewed each of the underlying
actions, including Riverton's suit based on an alleged violation
of the Freedom of Information Act and the continuation of the
appeal before this Court regarding the Potomac Edison site. In
each instance the trial court concluded that none of the suits
was objectively baseless. As stated by the trial court "[w]hile
Riverton may have gotten perilously close to the line, it did
not cross it." In light of this record, we conclude that the
trial court did not err in considering whether there was
21
probable cause to pursue the underlying litigation based on the
records of those proceedings without allowing further discovery.
Titan has challenged the use of the Noerr-Pennington
doctrine in this case and the manner and circumstances under
which it was applied. Titan has not challenged the trial
court's probable cause determinations based on the record of any
of the underlying proceedings. Accordingly, the trial court's
conclusion that Riverton had probable cause to pursue that
litigation is not before us for review.
D. Defamation
In its September 13, 1999 bill of complaint seeking a writ
of mandamus, a declaratory judgment, and an injunction against
the sale of the EDA site to Titan, Riverton alleged that "the
Commission of the European Communities and the Restrictive
Practices Court in London have found that Titan and a Tarmac
subsidiary, respectively, have violated European antitrust laws
by engaging in collusive, anti-competitive activities in the
cement industry, including market sharing and price fixing."
Titan asserts that this statement was per se defamatory. The
trial court sustained Riverton's demurrer to Titan's defamation
count, concluding that the statement was entitled to an absolute
privilege because it was made in the course of litigation.
Titan assigns error to this holding.
22
A statement made in the course of a judicial proceeding is
absolutely privileged if it is material and relevant to the
proceeding. Donohoe Constr. Co. v. Mount Vernon Associates, 235
Va. 531, 537, 369 S.E.2d 857, 860 (1988). Such statements are
privileged because of the safeguards in those proceedings,
including rules of evidence and penalties for perjury.
Lockheed, 259 Va. at 101, 524 S.E.2d at 424-25. Titan argues
that the statement at issue here had no bearing on the issue in
the litigation which was a suit "to compel [EDA] to comply with
the Freedom of Information Act." The matter was settled by
agreement on the pleadings with no evidence taken. Under these
circumstances, Titan concludes that the allegedly defamatory
statement was not entitled to absolute privilege.
Titan's argument overlooks the second part of Riverton's
mandamus proceeding in which Riverton sought a declaratory
judgment and injunction precluding the sale of the land by EDA
to Titan. In that count, Riverton alleged that, by statute, EDA
was required to consider the public interest in determining
whether it would sell the site to Titan. Whether the sale would
be in the public interest if the site were to be used to
facilitate unfair competition was an issue before EDA and the
circuit court and, therefore, statements regarding Titan's past
actions were relevant. Finally, settlement of the litigation
before consideration of all the counts does not deprive
23
statements relevant to the untested allegations of the
protection of absolute privilege. Furthermore, the trial court
judge in this case conducted all the underlying proceedings
including the mandamus action. He was aware of all the
arguments made and their relevance to the causes of actions
before him.
Based on this record, we cannot say that the trial court
was in error as a matter of law in determining that the
allegedly defamatory statement was relevant to the proceedings.
For the reasons stated above, we hold that the trial court
did not err by applying the Noerr-Pennington doctrine to the
state tort claims at issue here; that the trial court properly
applied the two-step analysis from PRE when determining that
Riverton's actions did not fall within the sham exception to the
Noerr-Pennington doctrine; that the trial court did not err by
deciding that Riverton had standing to claim the Noerr-
Pennington doctrine as a defense; that the trial court properly
made the determination regarding whether Riverton had probable
cause to bring the underlying proceedings based on the record of
those proceedings without allowing or considering additional
discovery or evidence; and that the trial court did not err in
sustaining Riverton's demurrer to Titan's defamation count.
Accordingly, we will affirm the judgment of the trial
court.
24
Affirmed.
25