Yesterday, the Fourth Circuit held that the Noerr-Pennington doctrine cannot shield parties who file a slew of lawsuits against another party that turn out to be meritless. In ruling in Waugh Chapel South, LLC v. United Food and Commercial Workers, the Fourth Circuit overturned a dismissal by the district court, holding that genuine issues of material fact must be resolved regarding whether the United Food and Commercial Workers (UFCW) Locals 27 and 400 engaged in a campaign of filing baseless lawsuits in order to force Waugh Chapel South LLC (WCS) to end its relationship with Wegmans Food Markets, ostensibly because Wegmans is a non-union supermarket.
WCS, a real estate developer in Maryland, was in the process of installing a Wegmans in its newly-minted shopping center in the mid-2000s when a UFCW executive allegedly told a WCS higher-up that the UFCW would "fight every project you develop where Wegmans is a tenant" if the store did not unionize. In 2008, the UFCW allegedly began to make good on its promise, filing the first of 16 lawsuits either directly or by proxy against WCS. It is critical to note that only one of these suits was characterized by the Fourth Circuit as "successful," while the remaining fifteen were either dismissed off-hand or withdrawn under "suspicious circumstances."
After expending vast sums of cash defending 16 different lawsuits over five years, WCS filed a complaint in federal court against the UFCW in March of 2011, asserting that UFCW had violated the secondary-boycott provisions of the National Labor Relations Act by exerting "pressure on an unrelated, secondary, or neutral employer in order to coerce the secondary employer to cease dealing with the primary employer, thereby advancing the union’s goals indirectly."
The district court dismissed WCS’s complaint, so the developer appealed to the Fourth Circuit. As explained above, the Fourth Circuit overturned the dismissal, holding that while the Noerr-Pennington doctrine has been expanded to cover the realm of labor relations, the "First Amendment offers no protection when petitioning activity ostensibly directed toward influencing governmental action is a mere sham to cover . . . an attempt to violate federal law." Sham litigation, the court continued, occurs where a party files a slew of "baseless, repetitive claims . . . which leads the factfinder to conclude that the administrative and judicial processes have been abused."
Since most of the UFCW’s suits against WCS failed "demonstrably," the court remanded the complaint back to the district court for further fact-finding as to whether the dismissed or withdrawn suits were really part of a pattern or practice of filing sham litigation in order to strong-arm the WCS into axing Wegmans. As the court so aptly noted, one win in 16 concerning suits filed by the UFCW "at least suggests a policy of starting legal proceedings without regard to the merits and for the purpose of violating the law."
In sum, the Fourth Circuit’s decision has provided employers with some defenses against repeated baseless litigation filed by labor unions against them. While the Noerr-Pennington doctrine can be used as a shield by litigants in the context of labor law, the Fourth Circuit will not uphold the use of the doctrine as a shield where a party has engaged in "sham litigation." Accordingly, the continued filing of disingenuous litigation by a recalcitrant union can now be met with a secondary-boycott suit, at least under the facts as presented to the Fourth Circuit in this matter.