Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc.
508 U.S. 49 (1993)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A lawsuit does not fall under the 'sham' exception to antitrust immunity unless it is objectively baseless, meaning no reasonable litigant could realistically expect success on the merits. A plaintiff's subjective anticompetitive motivation cannot, on its own, render an objectively reasonable lawsuit a sham.
Facts:
- Professional Real Estate Investors, Inc. (PRE) operated the La Mancha resort hotel in Palm Springs, California.
- PRE installed videodisc players in its hotel rooms and rented videodiscs of motion pictures to guests for in-room viewing.
- Columbia Pictures Industries, Inc. (Columbia), a group of major motion picture studios, held the copyrights to the motion pictures PRE was renting.
- PRE's in-room viewing service competed with Columbia's licensed cable system, Spectradyne, which transmitted copyrighted motion pictures to hotel rooms.
Procedural Posture:
- Columbia Pictures Industries, Inc. sued Professional Real Estate Investors, Inc. (PRE) in the U.S. District Court for the Central District of California for copyright infringement.
- PRE filed an antitrust counterclaim, alleging Columbia's suit was a sham.
- The District Court first ruled on the copyright claim, granting summary judgment for PRE, finding no infringement.
- On appeal by Columbia, the U.S. Court of Appeals for the Ninth Circuit affirmed the summary judgment for PRE on the copyright claim.
- The case was remanded to the District Court to address PRE's pending antitrust counterclaim.
- The District Court granted summary judgment for Columbia on the antitrust claim, holding the copyright suit was not a sham because it was brought with probable cause.
- PRE appealed the antitrust ruling to the Ninth Circuit.
- The Ninth Circuit affirmed, holding that the existence of probable cause precluded the application of the sham exception as a matter of law.
- The U.S. Supreme Court granted PRE's petition for a writ of certiorari.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a lawsuit that is not objectively baseless lose its immunity from antitrust liability under the Noerr-Pennington doctrine if it was brought with a subjective, anticompetitive purpose?
Opinions:
Majority - Justice Thomas
No. An objectively reasonable effort to litigate cannot be a sham regardless of subjective intent. To qualify as a sham, litigation must first be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits. Only if the challenged litigation is found to be objectively meritless may a court then proceed to the second step and examine the litigant's subjective motivation to determine if the baseless lawsuit was an attempt to use the governmental process, rather than the outcome of that process, as an anticompetitive weapon. In this case, the law regarding copyright infringement for in-room hotel viewing was unsettled, with different circuit courts reaching different conclusions. Therefore, Columbia had probable cause to bring its infringement suit, meaning the suit was not objectively baseless, and the inquiry ends there without considering Columbia's subjective intent.
Concurring - Justice Souter
No. While agreeing with the majority's test and conclusion, this opinion expresses concern that equating the 'objectively baseless' standard with the tort concept of 'probable cause' could lead lower courts to mistakenly import all the procedural and substantive nuances of wrongful civil proceeding law into federal antitrust analysis. The better approach is to stick to the Court's own formulation: whether a reasonable litigant could realistically have expected success on the merits. On that standard, Columbia's suit was not a sham.
Concurring - Justice Stevens
No. While agreeing with the judgment, this opinion argues that the majority’s two-part test is unnecessarily broad and rigid. The equation of 'objectively baseless' with having no realistic expectation of success is too narrow; there could be lawsuits that have a slight chance of success but are still objectively unreasonable to bring, for example, if the potential recovery is trivial compared to the litigation costs and the true purpose is to inflict collateral harm on a competitor through the litigation process itself. The majority's simple rule may not be adequate for more complex cases involving repetitive filings or broader anticompetitive schemes.
Analysis:
This case significantly narrows the 'sham' exception to Noerr-Pennington antitrust immunity by establishing a dispositive, two-part test that prioritizes objective reasonableness. By making 'objectively baseless' a threshold requirement, the Court makes it much more difficult for antitrust plaintiffs to challenge a competitor's lawsuit, as evidence of bad faith or anticompetitive motive is irrelevant if the suit has any plausible legal basis. This decision provides strong protection for the First Amendment right to petition the courts, reducing the chilling effect that potential antitrust liability might have on litigants seeking to enforce their rights, even in unsettled areas of the law.
Unlock the full brief for Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc.