Hastings Law Journal Volume 41 | Issue 4 Article 3 1-1990 Interest Groups, Political Freedom, and Antitrust: A Modern Reassessment of the Noerr-Pennington Doctrine Gary Minda Follow this and additional works at: https://repository.uchastings.edu/hastings_law_journal Part of the Law Commons Recommended Citation Gary Minda, Interest Groups, Political Freedom, and Antitrust: A Modern Reassessment of the Noerr-Pennington Doctrine, 41 Hastings L.J. 905 (1990). Available at: https://repository.uchastings.edu/hastings_law_journal/vol41/iss4/3 This Article is brought to you for free and open access by the Law Journals at UC Hastings Scholarship Repository. It has been accepted for inclusion in Hastings Law Journal by an authorized editor of UC Hastings Scholarship Repository. For more information, please contact [email protected]. Interest Groups, Political Freedom, and Antitrust: A Modern Reassessment of the Noerr-Pennington Doctrine by GARY MINDA Table of Contents I. The Policy Underpinnings of the Noerr-PenningtonDoctrine .......................................................... 913 A. The Noerr and Pennington Cases ...................... 914 (1) Eastern Railroad Presidents Conference v. Noerr M otor Freight.................................... 914 (2) United Mine Workers of America v. Pennington ... 924 B. California Motor Transport: The Constitutionalization of N oerr? ........... 927 C. The Warren Court's Vision of Interest Groups, Political Freedom, and Antitrust ...................... 931 II. Modem Interest Group Theory and Antitrust: Reassessing the Policy Underpinnings of the Noerr-Pennington Doctrine .......................................................... 935 A. The Theory of Interest Group Pluralism .............. 937 B. Pessimistic Pluralists ................................. 942 (1) Public Choice Theorists .......................... 945 (2) Antitrust Capture Theorists ...................... 948 C. Republicanism ....................................... 952 D. Implications-Interest Group Theory and Antitrust ... 959 III. Uncertain Doctrine-The Dilemmas of Pluralism .......... 963 A. The Noerr Exception Takes on New Meaning-Sham Litigation ............................................ 963 B. Retreat from the Noerr-Pennington Doctrine- Petitioning Nongovernmental Bodies .............. 973 C. Retreat from the First Amendment-Political Boycotts and the First Amendment Defense .................... 982 [905] THE HASTINGS LAW JOURNAL [Vol. 41 IV. An Antitrust Approach for Limiting Business Predation in the Governmental Sphere ................................. 999 A. General First Amendment Considerations ............. 1001 B. General Antitrust Immunity Principles ................ 1008 (1) Identifying Antitrust Harms ...................... 1009 (2) Judicial Recognition of a "Sham Petitioning" Exception ....................................... 1011 C. Petitioning to Influence Legislative and Quasi- Legislative A ction .................................... 1013 (1) Factors Determining Sham Behavior Likely to Have a Predatory Market Design ................. 1013 a. Was the Petitioning Effort Based on Misrepresentations, Falsehoods, Distortions, or Unethical Propaganda Techniques? ............ 1013 b. Did the Producer Group Have a Unique, Anticompetitive Interest in the Subject Matter of Petitioning Activity? ....................... 1015 c. Was the Petitioning Totally Negative in its Appeal? Was It Designed to Block Entry or Exit of a Rival from the Market Rather Than Affirmatively Advance a New Policy? ......... 1016 d. Petitioning Expenditures ...................... 1017 (2) Successful Versus Unsuccessful Petitioning- Causation and Antitrust Injury ................... 1018 D. Petitioning to Influence Executive and Administrative A ction ............................................... 1021 E. Petitioning to Influence Judicial and Quasi-Judicial A ction ............................................... 1022 F. Substantive Violations and Remedies .................. 1024 C onclusion ..................................................... 1027 April 1990] POLITICAL FREEDOM AND ANTITRUST Interest Groups, Political Freedom, and Antitrust: A Modern Reassessment of the Noerr-Pennington Doctrine by GARY MINDA* Because business competes for the favor of government as much as for the trade of customers,' government has become an alternative mar- ketplace for corporate America.2 It is thus not surprising to find corpo- rations, trade associations, and their political action committees working, * Professor of Law, Brooklyn Law School. I would like to thank C. Edwin Baker, David Gray Carlson, Melanie E. Meyers, Jeffery Stempel, and Cass R. Sunstein for their com- ments and criticism. Heather MacMaster, Susan Sandier, Kimberly Slade, and Beth Shillin provided excellent research assistance. The research for this Article was supported by the Brooklyn Law School's Summer Research Fund. © Gary Minda 1990. 1. See, eg., Hurwitz, Abuse of Governmental Processes, the First Amendment, and the Boundaries of Noerr, 74 GEo. L.J. 65, 68 (1985). 2. American business corporations working through political action committees (PACs), trade associations, and "grass-roots" lobbyists have had an enormous influence over the substance and nature of the political process. See, e.g., T. EDSALL, THE NEW POLITICS OF INEQUALITY (1984); B. JACKSON, HONEST GRAFT: BIG MONEY AND THE AMERICAN POLIT- ICAL PROCESS (1989); C. LINDBLOM, POLITICS AND MARKETS (1977); D. VOGEL, FLUCTU- ATING FORTUNES: THE POLITICAL POWER OF BUSINESS IN AMERICA (1989); see also D. SCHLOZMAN & J. TIERNEY, ORGANIZED INTERESTS AND AMERICAN DEMOCRACY (1986) (empirical investigation illustrating the substantial power of interest groups to influence gov- ernment decisions). Critics have observed that there has been a marked revival of corporate lobbying power in Washington since the early 1970s. See, eg., D. VOGEL, supra, at 193-227 (describing how the business' community, frustrated by the political setbacks of Watergate, launched a coordinated effort to revive its status as a political power). Thomas Edsall reports that "[i]n 1974 there were 89 corporate PACs, in 1978 there were 784, and by the end of 1982 there were 1,467." T. EDSALL, supra, at 131. One study indicates that all but a few of the 4,828 PACs active in 1988 were established to make direct contributions to political candidates during the last Presidential election. See R. BAKER, THE NEW FAT CATS: MEMBERS OF CONGRESS AS POLITICAL BENEFACTORS (1989). Vogel notes that by 1980 "more than 80 percent of the Fortune 500 companies had established a unit responsible for managing the external environment." D. VOGEL, supra, at 195. Between 1968 and 1978, the number of corporations with "public-affairs" offices in Washington increased from 100 to 500. Id. at 197. By 1980, the number of persons employed by private industry to represent industry interests in Washington exceeded the number of federal employees in the Washington metropolitan area. Id. at 198. In 1989, the forced resignations of the House Speaker, James Wright, and the House Majority Whip, Anthony Coelho, dramatically illustrated the destructive influence of the power and greed of big money and big business. See generally E. DREW, POLITICS AND MONEY: THE NEW ROAD TO COMPETITION (1983) (discussing the power of money and busi- ness in Congress). THE HASTINGS LAW JOURNAL [Vol. 41 unilaterally or in concert, to manipulate state and local government for purely private economic advantage. 3 Nor is it surprising to learn that corporate interests have reaped the benefits of legislation and administra- tive regulations that subsidize private interests adverse to the public in- terest, causing distortions and inefficiencies in the normal operation of market competition.4 Truly surprising, and deeply troubling, is the fact that the courts have been largely unable to develop a workable legal framework under the Sherman Antitrust Act to regulate predatory con- duct of business in the governmental sphere even though such conduct presents potentially serious danger to market competition. 5 The Sherman Antitrust Act declares in the broadest possible lan- 6 guage that restraints of trade and acts of monopolization are illegal. 3. See, e.g., D. VOGEL, supra note 2. A growing chorus of academic opinion has ex- pressed "considerable dissatisfaction" with the ability of special interest groups to transform the lawmaking process of government "into a series of accommodations among competing elites." Sunstein, Interest Groups in American Public Law, 38 STAN. L. REv. 29, 29 (1985); see also Macey, Promoting Public-RegardingLegislation Through Statutory Interpretation: An In- terest Group Model, 86 COLUM. L. REV. 223, 223 (1986). 4. See, e.g., M. OLSON, THE RISE AND DECLINE OF NATIONS: ECONOMIC GROWTH, STAGFLATION, AND SOCIAL RIGIDITIES (1982) (arguing that legislation advancing the needs of special interests undermines economic efficiency); Stewart, The Reformation of American Administrative Law, 88 HARV. L. REV. 1669, 1684-86 (1975) (describing how administrative agencies have been captured by the interests they are charged to regulate); Wiley, A Capture Theory of Antitrust Federalism, 99 HARV. L. REV. 713, 723-25 (1986) (describing how the benefits of regulation have been captured by private interests at the expense of the public interest). 5. The antitrust dangers of this form of non-price predation were recognized in a recent antitrust enforcement guideline of the DEPARTMENT OF JUSTICE, InternationalOperations