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From Antitrust Law Daily, November 1, 2017

Series of ‘objectively reasonable’ petitions did not fall into sham exception to Noerr-Pennington doctrine

By Jeffrey May, J.D.

A company seeking permission from the Puerto Rico Telecommunications Regulatory Board (TRB) to offer Internet protocol television service to the residents of Puerto Rico failed to support claims that an incumbent provider of cable television service in Puerto Rico abused its right to petition the TRB, the courts, and other officials to take action adverse to the complaining rival’s license application and that the company could be found liable for unlawful monopolization and attempted monopolization under the "sham" exception to the Noerr-Pennington immunity doctrine. The defending firm did not lose its protection to petition the government when it launched a "fusillade of ultimately unsuccessful petitions" where no one petition was sufficiently baseless to fit within the "sham" exception (Puerto Rico Telephone Co., Inc. v. San Juan Cable Company LLC, October 31, 2017, Kayatta, W.).

The U.S. Court of Appeals in Boston upheld a federal district court's determination that the facts in the case could not subject San Juan Cable LLC, doing business as OneLink, to liability under the sham exception.

Contending that OneLink was not eager to face competition, Puerto Rico Telephone Company, Inc., (PRTC) alleged that OneLink abused the government petitioning process to monopolize or attempt to monopolize the market. OneLink purportedly filed 24 "petitions" in the form of requests that a court or other government tribunal, agency, or official take action adverse to PRTC’s license application, and it failed to prevail on any of those petitions. Although OneLink took issue with the number of petitions and the win-loss record, the appellate court assumed that OneLink filed 24 separate petitions and that none resulted in a meaningful victory. Moreover, the court assumed that the filings were "objectively reasonable," because PRTC waived any challenge to a lower court's finding to that effect.

PRTC's waiver of any argument that some of OneLink's numerous filings were baseless created an immediate obstacle to PRTC's ability to maintain the lawsuit, the court explained. The court said that it saw "the logic inherent in reasoning that a nonfrivolous suit might be viewed differently when flown in a flock of frivolous suits." However, the court continued that it saw "little logic in concluding that an exercise of the right to file an objectively reasonable petition loses its protection merely because it is accompanied by other exercises of that right."

It was reasonable to believe that the petitioning activity had value apart from inflicting costs on PRTC. "[H]ad OneLink received the relief for which it petitioned, it would have received the benefits of lawfully delaying or restricting the entry of a competitor into its market," the court concluded.

Concurring opinion. In a concurring opinion, two judges "reserve[d] for future cases a fuller accounting of whether and when a series of non-baseless petitions might constitute a sham within the meaning of the Noerr-Pennington doctrine." According to the concurring judges, to let this suit proceed would be to tilt the balance too far against OneLink's right of petition.

The case is No. 16-2132.

Attorneys: Patrick J. Pascarella, Jr., Benjamin C. Sasse, and Michael C. Brink (Tucker Ellis LLP) for Puerto Rico Telephone Co., Inc. Jacob M. Roth, Brinton Lucas, Thomas Demitrack, Brian K. Grube (Jones Day) and Orlando Fernandez (Orlando Fernandez Law Offices) for San Juan Cable LLC.

Companies: Puerto Rico Telephone Co., Inc.; San Juan Cable LLC, d/b/a OneLink Communications, a/k/a Liberty Cablevision of Puerto Rico LLC

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