Warren BLANK, Plaintiff and Appellant, v. Kevin KIRWAN, et al., Defendants and Respondents.
Plaintiff Warren Blank appeals from orders of dismissal entered in favor of all defendants, after the trial court sustained without leave to amend defendants' general demurrers and granted all defendants' motions to dismiss either under Code of Civil Procedure section 581a or 583 subdivision (a). We reverse in part.
The parties are as follows: Plaintiff is a person who desired to obtain a license to operate a poker club in the City of Bell. Defendants Kevin Kirwan, Jack Simonian, John Gasparian and California Bell Operations, Ltd., [generally referred to as “Kirwin”] were granted a permit to operate a poker club in the City of Bell. Defendants Robert Crow, Trammel Crow Company, and Crow Los Angeles No. 8 [“Crow”] own a parcel of land in the City of Bell which was leased to defendants Kirwin. Also named as defendants are the City of Bell, Pete Werrlein, a member of the Bell City Council, and various Doe defendants, alleged to be City of Bell officials.
Plaintiff filed a complaint in July 1979 and filed a first amended complaint in October 1980, seeking damages and injunctive relief on theories discussed below. Plaintiff alleged these facts: On or before June 29, 1978, defendants Kirwan, Crow, and the Doe defendants learned that defendant City of Bell planned to legalize private poker clubs in the city. The planned ordinances would provide that any qualified applicant for a license would be given fair and equal consideration and more than one license would be available. Defendants, however, conspired to arrange matters so that only defendants Kirwan would be issued a license to operate a poker club, to be located on property owned by defendants Crow.
Defendant Werrlein and various Doe defendants received rewards and other valuable consideration for their participation in the conspiracy. Before any information was made public, defendants Kirwan, Crow, Werrlein and the Does agreed that certain ordinances to implement the legalization of private poker clubs would be presented to the Bell City Council; the ordinances would limit the location of the poker clubs to a certain area and the minimum lot size for any poker club would be seven and one-half acres. Defendants Crow, who owned the only available land in the area in which poker clubs would be permitted, agreed to lease a sufficient area of land only to defendants Kirwan. Defendant Werrlein and the Doe defendants would arrange for defendants Crow to be granted the necessary permits and approvals. Defendant City of Bell would apply for federal funding to pay for necessary improvements to the land which included the property owned by defendants Crow.
On June 29, 1978, the Bell City Council enacted an ordinance legalizing poker clubs. The ordinance provided, in part, that the minimum lot size for any poker club was at least seven and one-half acres. That same day, defendants Kirwan and Crow entered into a written agreement under which defendants Kirwan leased the necessary land from defendants Crow. On August 7, the city council enacted ordinances, creating a new commercial and manufacturing (CM) zone which would allow poker clubs, and rezoning part of the acreage owned by defendants Crow to CM. Defendant City of Bell then announced that all qualified persons could apply for poker club licenses, and plaintiff did apply for a license.
Plaintiff alleged that the application process was a sham because defendants knew and intended that only defendants Kirwan would receive a license. In December 1978, plaintiff was advised that his application would be denied unless he could obtain seven and one-half acres of properly zoned land. Plaintiff tried but was unable to obtain the necessary acreage because of defendants' conspiracy. In February 1979, defendant City granted defendants Kirwan a license to operate a poker club. In May 1980, defendant City denied plaintiff's application for a poker club license. Plaintiff would have been able to secure the property needed to obtain a poker club license and he would have been granted such a license, were it not for defendants' acts.
3. Cartwright Act. Plaintiff's second cause of action, directed against defendants Kirwan, Crow, Werrlein, and the Doe defendants, alleges a violation of the Cartwright Act. (Bus. & Prof.Code, §§ 16700–16761.)
The Cartwright Act is patterned after the federal Sherman Act, and because both statutes have their roots in common law, federal cases interpreting the Sherman Act generally apply to problems arising under the Cartwright Act. (E.g., Marin County Bd. of Realtors, Inc. v. Palsson (1976) 16 Cal.3d 920, 925, 130 Cal.Rptr. 1, 549 P.2d 833.)
Defendants contend that they are immune from any liability under the Cartwright Act or federal antitrust laws under the Noerr-Pennington doctrine, which provides generally that attempts to influence public officials do not violate the antitrust laws.
In Eastern R. Conf. v. Noerr Motors (1961) 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464, the Supreme Court held that a violation of the Sherman Act cannot “be predicated upon mere attempts to influence the passage or enforcement of laws” (365 U.S. at p. 135, 81 S.Ct. at p. 528), and that “the Sherman Act does not prohibit two or more persons from associating together in an attempt to persuade the legislature or the executive to take particular action with respect to a law that would produce a restraint or a monopoly.” (Id., at p. 136, 81 S.Ct. at p. 529.) The court recognized that there might be situations in which the activity “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.” (Id., at p. 144, 81 S.Ct. at p. 533.)
In Mine Workers v. Pennington (1965) 381 U.S. 657, 670, 85 S.Ct. 1585, 1593, 14 L.Ed.2d 626, the Supreme Court made clear that joint “efforts to influence public officials do not violate the antitrust laws even though intended to eliminate competition,” and that such “conduct is not illegal, either standing alone or as part of a broader scheme itself violative of the Sherman Act.”
Finally, in California Transport v. Trucking Unlimited (1972) 404 U.S. 508, 510–511, 92 S.Ct. 609, 611–612, 30 L.Ed.2d 642, the Supreme Court extended the Noerr doctrine to courts and administrative agencies. However, relying on the “mere sham” exception suggested in Noerr, the court held that the immunity provided under Noerr would not apply where the purpose of the activity was to deprive “the competitors of meaningful access to the agencies and courts.” (404 U.S. at pp. 512, 515, 92 S.Ct. at pp. 612, 614.) In California Transport, the plaintiffs had alleged concerted action by the defendants “to institute state and federal proceedings to resist and defeat applications by respondents to acquire operating rights or to transfer or register those rights.” (Id., at p. 509, 92 S.Ct. at p. 611.)
Noerr, Pennington, and California Transport were relied on in Metro Cable Co. v. CATV of Rockford, Inc. (7th Cir.1975) 516 F.2d 220, 229, which held that the Noerr doctrine applies even if public officials are part of the conspiracy.2
In Metro, the plaintiff alleged that he was unable to obtain a cable television franchise because the competitor defendants, the mayor and an alderman conspired, in exchange for substantial campaign contributions, to prevent the plaintiff from getting a franchise. (516 F.2d at pp. 223.)
The court, in holding that the Noerr doctrine applied, reasoned that a contrary rule “would in practice abrogate the Noerr doctrine. It would be unlikely that any effort to influence legislative action could succeed unless one or more members of the legislative body became such ‘co-conspirators.’ ” (Id., at p. 230.) The allegations concerning the giving of “ ‘substantial’ sums to the mayor and an alderman ․ do not bring within the Sherman Act conduct that is otherwise excluded from the Act's coverage by the Noerr doctrine. Campaign contributions are, whether we like it or not, a part of the political process.” (Id., at pp. 230–231.)
The court rejected the plaintiffs' argument that the conduct alleged was within the Noerr “sham exception,” relied on, as noted, in California Transport. “[T]here is no conceivable basis for arguing that defendants' conduct was a sham rather than a genuine effort to influence legislative action. Plaintiff's injury was caused by the governmental action which defendants genuinely attempted to secure and succeeded in securing.” (Id., at p. 232.)
Metro Cable was followed in First Am. Title Co. of S.D. v. S.D. Land Title Ass'n (8th Cir.1983) 714 F.2d 1439, 1441–1442, in which the plaintiffs alleged a conspiracy that included a state licensing board, and the court held that the Noerr doctrine applied to acts which involved making false and inaccurate statements. (714 F.2d at p. 1446.)
Plaintiff relies on Harman v. Valley National Bank of Arizona (9th Cir.1964) 339 F.2d 564, 566, which held that the Noerr doctrine did not apply where the plaintiff alleged that the Attorney General was part of a conspiracy of the defendants to monopolize banking by forcing the plaintiff into receivership. (See also, Independent Taxicab Operators' Ass'n v. Yellow Cab Co. (N.D.Cal.1968) 278 F.Supp. 979, 985.) 3
Harman preceded and was questioned in Metro Cable. However, in Duke & Company Inc. v. Foerster (3d Cir.1975) 521 F.2d 1277, 1278, the plaintiff alleged that he was damaged by an agreement among the defendant municipal corporations and the defendant private corporations to boycott his products. The court relied on Harman and held that the Noerr-Pennington doctrine did not apply where “the complaint goes beyond mere allegations of official persuasion by anti-competitive lobbying and claims official participation with private individuals in a scheme to restrain trade, ․” (521 F.2d at p. 1282.)
In Kurek v. Pleasure Driveway & Park. Dist., etc. (7th Cir.1977) 557 F.2d 580, 584–585, the plaintiffs, five golf professionals, alleged a conspiracy, which included the Park District, by which the plaintiffs' concessions to operate pro shops were terminated and that of a competitor substituted. Kurek acknowledged Metro Cable, but concluded that the Noerr doctrine did not apply because the Kurek defendants made an economically unreal “sham” proposal not intended to be put into effect, but only to provoke the plaintiffs into certain conduct. Moreover, the court was doubtful that the Noerr doctrine applied to situations where the officials involved “had no state mandate or authority to engage in the activities attacked here ․” (557 F.2d at p. 593.)
Finally, in Westborough Mall v. City of Cape Girardeau, Mo. (8th Cir.1983) 693 F.2d 733, 736, the plaintiff developers alleged that various city officials and private individuals had conspired to prevent competition by rezoning certain property owned by the plaintiffs. The court acknowledged Metro Cable but concluded that the “defendants may not be protected by Noerr because their legitimate lobbying efforts may have been accompanied by illegal or fraudulent actions.” (693 F.2d at p. 746.)
A simple rule cannot be readily extracted from the cases. Harman v. Valley National Bank of Arizona, supra, 339 F.2d 564, and Duke & Company Inc. v. Foerster, supra, 521 F.2d 1277 appear to hold that any allegation of official involvement will negate the Noerr doctrine. Metro Cable Co. v. CATV of Rockford, Inc., supra, 516 F.2d 220, appears to hold that the Noerr doctrine applies regardless of the extent of an official's involvement in the alleged conspiracy. Westborough Mall v. City of Cape Girardeau, Mo., supra, 693 F.2d 733, appears to hold that the Noerr doctrine applies unless fraudulent or illegal activity is involved.
We conclude that Metro Cable provides the basis for a more workable rule. Noerr established that the offensiveness of the conduct cannot be a measure of whether the conduct is immune to liability under the antitrust laws. (See 365 U.S., at pp. 129–130, 81 S.Ct. at pp. 525–526.) The degree of official participation in an attempt by others to affect governmental action may range from the act of opening a letter to the act of requesting an advance cash payment from a petitioner. No easy line can be drawn, and otherwise illegal activity can more appropriately be regulated through specific legislation. (See Metro Cable, supra, 516 F.2d at pp. 230–231.) We agree: “Acceptance of the co-conspirator theory would mean that although competitors have a constitutional right to petition the government, the right could be lost if the petitioning is successful, because the government officials might be labeled co-conspirators, and Noerr protection lost.” (Fischel, The Noerr-Pennington Doctrine (1977) 45 Univ.Chi.L.Rev. 80, 115.)
Plaintiff has not suggested that defendants' actions were “a sham.” Defendants' alleged conduct appears contained within the concept of petitioning and persuading the government: defendants tried to and did convince members of the city council, including one or more persons named as defendants, to adopt certain ordinances that would benefit those defendants at the expense of all other persons including plaintiff.
Defendants' demurrers were properly sustained to the second cause of action.
Summary and Order
The trial court erred in granting defendants' motions to dismiss under Code of Civil Procedure section 583, subdivision (a). The trial court properly granted the motions of defendants California Bell, Simonian and Gasparian, to dismiss under section 581a. The trial court properly sustained all defendants' demurrers to the first, second, and third causes of action.
The orders of dismissal as to defendants California Bell, Simonian, Gasparian and City of Bell are affirmed. The judgments (orders of dismissal) as to all other defendants are reversed.
1. Not certified for publication.
2. Metro Cable did note that the case was “not a case in which the agency of government itself is alleged to be a part of the conspiracy, ․” (516 F.2d at p. 229.) Whatever the notation means is not relevant to this case where no wrongdoing was alleged as to defendant City of Bell.
3. Plaintiff also relies on Woods Exploration & Pro. Co. v. Aluminum Co. of Amer. (5th Cir.1971) 438 F.2d 1286, 1296–1297, which assumed that the Noerr doctrine did not apply to administrative agencies, a view repudiated by California Transport v. Trucking Unlimited, supra, 404 U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642.)
4. Not certified for publication.
SOVEN, Associate Justice.* FN* Assigned by the Chairperson of the Judicial Council.
KLEIN, P.J., and LUI, J., concur.