On The Case

Chamber to SCOTUS: Corporation's 'objectively baseless suit' is not a sham

If there is one voice in America that we can count on to decry baseless lawsuits, it is the loud squawk of the U.S. Chamber of Commerce. The Chamber represents the interests of its hundreds of thousands of corporate members – and those members don’t like being sued.

So when the Chamber has an opportunity to urge the U.S. Supreme Court to rein in litigation, it speaks up. Take a look at the amicus briefs the group has filed at the high court in the last year or so.

There's the merits-stage filing in TransUnion LLC v. Ramirez, arguing that people who were falsely flagged as terrorists in credit reports haven't suffered a concrete injury. In Goldman Sachs Group Inc v. Arkansas Teacher Retirement System, the Chamber warned the Supreme Court of the dire consequences of allowing shareholders to sue over generic statements of corporate principles.

The group's certiorari-stage amicus brief in Bristol-Myers Squibb Co v. Connors called on the justices to give defendants a better shot at defeating claims dreamed up by contingency fee lawyers working for state attorneys general. And in Care Alternatives v. U.S. ex rel. Druding, the Chamber contended that whistleblowers in False Claims Act suits must show that defendants made "objectively false" statements to the U.S. government, not merely that the whistleblower believed the statements to be fraudulent.

You get the idea. Plaintiffs, in the view of the Chamber, must be policed closely lest courts indulge their tendency to bring abusive, unwarranted litigation.

It now appears, however, that the Chamber believes there’s an exception to that rule: when the plaintiffs are themselves corporations.

This is going to take a bit of explaining. On Tuesday, the Chamber filed an amicus brief in AbbVie Inc v. Federal Trade Commission, backing a petition by the pharmaceutical company AbbVie for Supreme Court review of a 2020 ruling by the 3rd U.S. Circuit Court of Appeals. AbbVie, represented by Wilmer Cutler Pickering Hale and Dorr, wants the justices to reverse the 3rd Circuit's holding that the company engaged in sham litigation when it sued the drug maker Perrigo Co Inc for patent infringement under the Hatch-Waxman Act.

The 3rd Circuit found that AbbVie had no reasonable hope of winning the patent case but sued anyway in order to delay Perrigo’s generic version of testosterone gel from coming to the market to compete with AbbVie’s AndroGel. AbbVie’s suit, the appeals court said, was therefore sham litigation unprotected by the Noerr-Pennington doctrine’s immunity for parties that seek redress from the government, including redress through suits in federal court.

AbbVie, as my Reuters colleague Blake Brittain has reported, said in its Supreme Court petition that the 3rd Circuit erred because it conflated the two parts of the test for sham litigation that the justices established in 1993's Professional Real Estate Investors v. Columbia Pictures (508 U.S. 49). Under that stringent test, sham litigation must be both objectively baseless and subjectively motivated by bad faith. But the 3rd Circuit, according to AbbVie, wrongly held that the two parts of the test were intertwined, with the objective baselessness of AbbVie's suit against Perrigo implying the company's bad faith in filing it.

The Chamber agreed with AbbVie in Tuesday’s amicus brief. The 3rd Circuit’s diminishment of the “bad faith” requirement, it said, would cast a pall over litigation (and lobbying) that asserts novel theories and challenges government action. The Noerr-Pennington doctrine is supposed to protect groundbreaking litigation, the Chamber said, but the 3rd Circuit’s application of the test for sham litigation increases the risk of bringing such suits.

“Litigants, including members of the Chamber, will be deterred from filing suit to vindicate their rights, for fear that courts may declare their lawsuits a ‘sham’ – even where, as here, a trial produced no evidence of subjective unlawful intent,” the brief argued.

The Noerr-Pennington doctrine, the Chamber reminded the justices, is rooted in the First Amendment’s guarantee that Americans have a right to petition the courts to address their grievances. The group said its brief, written by counsel of record Ilana Eisenstein of DLA Piper, was meant “to reinforce the strong public policies behind the First Amendment right” to bring a lawsuit – even a lawsuit advancing a novel or controversial position.

I’m sure many class action and mass torts plaintiffs who have seen the Chamber of Commerce call time and again for restrictions on their ability to sue might cock an eyebrow at the Chamber’s vigorous defense of its members’ right to file novel claims that could turn out to be baseless, as long as those claims are not also brought in bad faith.

I asked Daryl Joseffer, chief counsel of the Chamber’s Litigation Center, about the apparent disconnect. “The Chamber opposes all baseless lawsuits and thinks courts should efficiently dispose of them and, when appropriate, impose targeted sanctions such as award of attorney’s fees,” he said in an email statement. Noting that the group generally opposes government enforcement actions, Joseffer said the Chamber’s only aim in the AbbVie case is that the Supreme Court “uphold its longstanding, two-part Noerr-Pennington standard for protecting First Amendment rights.”

No doubt, the Chamber’s AbbVie brief addresses only the specific technicalities of the sham litigation exception to the Noerr-Pennington doctrine. But I suspect that plaintiffs who are not members of the Chamber of Commerce would appreciate the same consideration from the group for their novel claims.

Opinions expressed here are those of the author. Reuters News, under the Trust Principles, is committed to integrity, independence and freedom from bias.