Rod Sosa; Gary Whittaker; Rodney Bylsma v. Directv, Inc.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
 ROD SOSA; GARY WHITTAKER;
RODNEY BYLSMA,
Plaintiffs-Appellants,
v.
DIRECTV, INC.; HUGHES
ELECTRONICS CORPORATION; No. 04-55036 GENERAL MOTORS CORPORATION;
YARMUTH WILSDON CALFO, PLLC; D.C. No.
 GREER, HERZ & ADAMS, LLP; CV-03-05972-AHM
STUMP, STOREY, CALLAHAN & OPINION
DIETRICH, PA; DIRECTV END
USER DEVELOPMENT GROUP;
DIRECTV END USER RECOVERY
PROJECT, LLC; SECURE SIGNALS
INTERNATIONAL; MCGINNIS GROUP
INTERNATIONAL, LLC,
Defendants-Appellees. 
Appeal from the United States District Court
for the Central District of California
A. Howard Matz, District Judge, Presiding
Argued and Submitted
November 14, 2005—Pasadena, California
Filed February 15, 2006
Before: Ferdinand F. Fernandez and Marsha S. Berzon,
Circuit Judges, and Owen Panner,* District Judge.
*The Honorable Owen Panner, Senior United States District Judge for
the District of Oregon, sitting by designation.
1669

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Opinion by Judge Berzon;
Concurrence by Judge Panner
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COUNSEL
Jeffrey Willens, Esq., Yorba Linda, California, for the
plaintiffs-appellants.
Dale H. Oliver, Los Angeles, California, argued the case for
the defendants-appellees. Michael E. Williams and A. Eric
Bjorgum, Los Angeles, California, were on the briefs.
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OPINION
BERZON, Circuit Judge:
DIRECTV, Inc., et al. (“DIRECTV”) sent tens of thousands
of demand letters alleging that the recipients had accessed
DIRECTV’s satellite television signal illegally and would be
sued if they did not quickly settle DIRECTV’s claims against
them under the Federal Communications Act. Plaintiffs Rod
Sosa, et al. (“Sosa”) filed this class action lawsuit on behalf
of themselves and a putative class of recipients of the letters
who reached settlements with DIRECTV, claiming that
DIRECTV violated the Racketeer Influenced and Corrupt
Organizations Act (“RICO”), 18 U.S.C. §§ 1961-1968, by
mailing the presuit demand letters. The central question
before us is whether DIRECTV is immune from liability
under RICO, as interpreted in light of the Noerr-Pennington
doctrine deriving from the Petition Clause of the First
Amendment.
I.
DIRECTV broadcasts television signals via satellite to mil-
lions of consumers throughout the United States. The signals
broadcast from the satellites are electronically scrambled. To
receive the signals in an intelligible manner, the consumer
needs to purchase special electronic equipment from third-
party vendors, and also needs an access card, or “smart card,”
supplied by DIRECTV. By using specialized smart card pro-
gramming equipment, an individual can gain unauthorized
access to DIRECTV’s signal, in violation of the Federal Com-
munications Act of 1934, 47 U.S.C. § 605. Such equipment
has a number of lawful applications as well, such as imple-
menting secure access to computer networks or controlling
physical access to buildings or rooms.
In the past several years, DIRECTV, suspicious that the
problem of signal theft had become widespread, initiated liti-
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gation against several companies selling smart card program-
ming technology. In the course of this litigation, DIRECTV
obtained lists of the names and addresses of numerous indi-
viduals who had purchased such equipment. DIRECTV
obtained no information on the uses to which these individu-
als were putting this equipment, nor does its satellite technol-
ogy permit it to determine whether any particular individual
is receiving its signal. Using these lists, DIRECTV sent letters
to over 100,000 individual purchasers of smart card program-
ming equipment, asserting that DIRECTV had records show-
ing that the recipient had used the equipment to steal its
signal, accusing the recipient of violating a federal criminal
statute, and threatening civil legal action unless the recipient
forfeited the equipment to DIRECTV and paid DIRECTV an
unspecified sum to settle its claim.1 When a number of recipi-
1A typical letter reads:
Business records recently obtained by this office show that you
purchased illegal signal theft equipment to gain unauthorized
access to DIRECTV’s programming. . . . [Y]our purchase and
use, or attempted use . . . violates federal and state laws. . . .
Your purchase, possession and use of signal theft equipment to
gain unauthorized access to DIRECTV’s satellite television pro-
gramming subjects you to statutory damages of up to $10,000 per
violation. . . . Moreover, your involvement in modifying devices
to illegally gain access to DIRECTV’s programming increases
potential statutory damages to $100,000.
DIRECTV is prepared to release its claims in return for your
agreement to: (1) surrender all illegally modified Access Cards or
other satellite signal theft devices in your possession, custody or
control; (2) execute a written statement to the effect that you will
not purchase or use illegal signal theft devices to obtain satellite
programming in the future, nor will you have any involvement in
the unauthorized reception and use of DIRECTV’s satellite tele-
vision programming; and (3) pay a monetary sum to DIRECTV
for your past wrongful conduct and the damages thereby incurred
by the company.
If you should choose to reject DIRECTV’s settlement offer, or
should you fail to respond, please be advised that DIRECTV will
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ents contacted DIRECTV by telephone to protest their inno-
cence of the alleged conduct, DIRECTV repeated its
accusations and threats to sue. Rather than incur the expense
of engaging an attorney to respond, some allegedly innocent
recipients, including the three named plaintiffs here, paid
DIRECTV thousands of dollars to settle the claims.
Subsequently, a number of recipients, including all the
plaintiffs in this action, initiated litigation against DIRECTV
in California Superior Court in an action styled Blanchard v.
DIRECTV, Inc., No. BC 284166 (Cal Super. Ct., Oct. 28,
2002), asserting, inter alia, that the letters constituted extor-
tion and violated California’s unfair business practices statute,
Cal. Bus. & Prof. Code §§ 17200-17210. DIRECTV opposed
the litigation by filing a motion to strike under California’s
anti-SLAPP2 statute, Cal. Civ. Proc. Code § 425.16. The state
court granted the anti-SLAPP motion, and Sosa appealed.
Subsequently, Sosa filed the present action in the U.S. Dis-
trict Court for the Central District of California, asserting vio-
lations of RICO and alleging, inter alia, extortion and mail
and wire fraud as predicate acts. DIRECTV filed a motion to
initiate legal proceedings in Federal District Court seeking the
award of damages and other relief . . . .
Copies of the letters received by the named plaintiffs were lodged with
the district court prior to the hearing on DIRECTV’s motion to dismiss.
Although the letter constitutes extrinsic evidence, the district court’s con-
sideration of it did not convert DIRECTV’s 12(b)(6) motion into a motion
for summary judgement, as the letter’s authenticity was not contested and
the letter was crucial to Sosa’s claims. See Parrino v. FHP, Inc., 146 F.3d
699, 706 (9th Cir. 1998).
2“SLAPP is an acronym for ‘strategic lawsuit against public participa-
tion.’ ” Jarrow Formulas, Inc. v. LaMarche, 31 Cal.4th 728, 732 n.1
(2003). The anti-SLAPP statute permits summary dismissal of actions
“arising from any act of [the defendant] in furtherance of the person’s
right of petition or free speech” unless the plaintiff can show a probability
of success on the claim. Cal. Civ. Proc. Code § 425.16(b)(1).
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dismiss under Fed. Rule Civ. P. 12(b)(6), asserting that Sosa
had failed to state a claim under RICO and that Sosa’s claims
were barred by various abstention doctrines and the Noerr-
Pennington doctrine. The district court granted the motion,
basing its ruling solely on the Noerr-Pennington doctrine.
Sosa then filed this appeal. After the federal action was dis-
missed but before the hearing on Sosa’s appeal, the California
Court of Appeal affirmed the anti-SLAPP ruling in the Blan-
chard case, and the California Supreme Court denied review.
We review de novo the district court’s dismissal for failure
to state a claim under Rule 12(b)(6). Madison v. Graham, 316
F.3d 867, 869 (9th Cir. 2002).
II.
On appeal, DIRECTV urges that we need not address the
merits of the district court’s decision because, under the doc-
trine of res judicata, the state court decision in the Blanchard
case precludes the case at bar. To determine the preclusive
effect of the state court judgment in Blanchard, we look to
state law. Manufactured Home Cmtys. Inc. v. City of San
Jose, 420 F.3d 1022, 1031 (9th Cir. 2005). In California,
“[r]es judicata, or claim preclusion, prevents relitigation of the
same cause of action in a second suit between the same par-
ties or parties in privity with them.” Mycogen Corp. v. Mon-
santo Co., 28 Cal. 4th 888, 896 (2002).
[1] Like the federal courts, California courts recognize the
rule that where parallel litigation is pending in different tribu-
nals, the first case to reach final judgment is accorded preclu-
sive effect, regardless of the order in which the cases were
filed. Compare Domestic & Foreign Petroleum Co. v. Long,
4 Cal. 2d 547, 562 (1935) (California rule), with Americana
Fabrics, Inc. v. L & L Textiles, Inc., 754 F.2d 1524, 1529 (9th
Cir. 1985) (federal rule). California and federal law differ,
however, with respect to when a judgment rendered by a trial
court becomes a “final judgment” for res judicata purposes.
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“Under California law, . . . a judgment is not final for pur-
poses of res judicata during the pendency of and until the res-
olution of an appeal.” Eichman v. Fotomat Corp., 759 F.2d
1434, 1439 (9th Cir. 1985) (citing Agarwal v. Johnson, 25
Cal. 3d 932, 954 n.11 (1979), disapproved on other grounds
by White v. Ultramar, Inc., 21 Cal.4th 563, 571 (1999), and
Cal. Civ. Proc. Code § 1049). The judgment in the Blanchard
litigation is now final, because there has been a decision on
appeal as well as denial of review by the California Supreme
Court.
[2] In contrast, “[i]n federal courts, a district court judg-
ment is ‘final’ for purposes of res judicata.” Orion Tire Corp.
v. Goodyear Tire & Rubber Co., 268 F.3d 1133, 1135 n.2 (9th
Cir. 2001). This is so even during the pendency of an appeal.
Eichman, 759 F.2d at 1439. Moreover, “[a] federal [district
court] judgment is as final in California courts as it would be
in federal courts.” Calhoun v. Franchise Tax Bd., 20 Cal.3d
881, 887 (1978).
[3] Assuming, without deciding, that the Blanchard action
and the instant case involve the same cause of action and the
same parties, the judgment of the California Court of Appeal
cannot be given preclusive effect in the present litigation. The
Blanchard case was filed on October 28, 2002, and dismissed
by the Los Angeles County Superior Court on April 1, 2003,
several months before the federal litigation was filed. The dis-
trict court, however, reached the merits and entered judgment
before the Blanchard plaintiffs had exhausted their appeals.
So, because of the differing rules governing the finality of
state and federal judgments, the federal case was the first to
reach final judgment. Accordingly, “the [Blanchard judg-
ment] can scarcely constitute a bar to the instant action,
decided below on an earlier date.” Flood v. Harrington, 532
F.2d 1248, 1250 (9th Cir. 1976); see also Freeman United
Coal Mining Co. v. Office of Workers’ Comp. Program, 20
F.3d 289, 294 (7th Cir. 1994) (later rendered state industrial
commission finding not preclusive in appeal of earlier decided
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federal disability claim). We therefore proceed to the merits
of the district court’s decision.3
III.
The district court dismissed Sosa’s suit on the basis that
DIRECTV’s sending of the demand letters was conduct
immunized from RICO liability under the Noerr-Pennington
doctrine. We review de novo the district court’s dismissal on
3Because we conclude on the merits that the district court should be
affirmed, we have no occasion to consider the thorny issue that would
arise under Flood were we instead to reverse: Would reversing the district
court’s first-in-time final judgment raise the possibility on remand that the
still-valid California final judgment would become preclusive of the fed-
eral litigation?
The concurrence assumes the answer to this complicated question, and
argues that our decision on the merits is “advisory.” Flood held that in cir-
cumstances where, because of the posture of the case on appeal, res judi-
cata does not apply, the court must address the merits of the appeal. Flood,
532 F.2d at 1250. Principles of stare decisis require that we follow Flood
in this regard. See Baker v. Delta Air Lines, Inc., 6 F.3d 632, 637 (9th Cir.
1993) (“We are bound by decisions of prior panels unless an en banc deci-
sion, Supreme Court decision, or subsequent legislation undermines those
decisions.” (citations and internal quotation marks omitted).
Moreover, before we can determine whether the Flood rule or some
other rule would apply were we to reverse the district court, we must
address the merits of the district court’s decision. Because our decision on
the merits is necessary to the resolution of this case, it is not dictum on
any view of the nature of dictum. Compare Miller v. Gammie, 335 F.3d
889, 902 (9th Cir.2003) (en banc) (Tashima, J., concurring) (“dictum [i]s
a statement made during the course of delivering a judicial opinion, but
one that is unnecessary to the decision in the case and therefore not prece-
dential.” (citing Best Life Assurance Co. v. Comm’r, 281 F.3d 828, 834
(9th Cir.2002) (citations and internal quotation marks omitted)) with
Miranda B. v. Kitzhaber, 328 F.3d 1181, 1186 (9th Cir. 2003).(“[W]here
a panel confronts an issue germane to the eventual resolution of the case,
and resolves it after reasoned consideration in a published opinion, that
ruling becomes the law of the circuit, regardless of whether doing so is
necessary in some strict logical sense.” (quoting United States v. Johnson,
256 F.3d 895, 914 (9th Cir. 2001) (en banc)).
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the ground of Noerr-Pennington immunity. Or. Natural Res.
Council v. Mohla, 944 F.2d 531, 533 (9th Cir. 1991).
A.
[4] The Noerr-Pennington doctrine derives from the First
Amendment’s guarantee of “the right of the people . . . to
petition the Government for a redress of grievances.” U.S.
Const. amend. I. Under the Noerr-Pennington doctrine, those
who petition any department of the government for redress
are generally immune from statutory liability for their peti-
tioning conduct. Empress LLC v. City & County of S.F., 419
F.3d 1052, 1056 (9th Cir. 2005) (citing Manistee Town Ctr.
v. City of Glendale, 227 F.3d 1090, 1092 (9th Cir. 2000)).
The Noerr-Pennington doctrine arose in the antitrust con-
text and initially reflected the Supreme Court’s effort to rec-
oncile the Sherman Act with the First Amendment Petition
Clause. In Eastern Railroad Presidents Conference v. Noerr
Motor Freight, Inc., 365 U.S. 127 (1961), trucking companies
brought suit against railroad companies alleging that efforts
by the railroads to influence legislation regulating trucking
violated the Sherman Act. Id. at 129. The Court held that “the
Sherman Act does not prohibit . . . persons from associating
. . . in an attempt to persuade the legislature or the executive
to take particular action with respect to a law that would pro-
duce a restraint or a monopoly.” Id. at 136-37. In reaching this
conclusion, the Court observed that construing the Sherman
Act to reach such conduct “would raise important constitu-
tional questions” respecting the right of petition, stating “we
cannot . . . lightly impute to Congress an intent to invade . . .
freedoms” protected by the Bill of Rights. Id. at 138.
United Mine Workers v. Pennington, 381 U.S. 657 (1965),
extended this antitrust immunity to those engaging in lobby-
ing activities directed toward executive branch officials,
regardless of any anticompetitive intent or purpose. Subse-
quently, in California Motor Transport Co. v. Trucking
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Unlimited, 404 U.S. 508 (1972), the Court, recognizing that
“the right to petition extends to all departments of the govern-
ment” and that “[t]he right of access to the courts is . . . but
one aspect of the right of petition,” extended Noerr-
Pennington immunity to the use of “the channels and proce-
dures of state and federal . . . courts to advocate [groups’]
causes and points of view respecting resolution of their busi-
ness and economic interests vis-á-vis their competitors.” Id. at
510-11 (emphasis added).
Recognizing the constitutional foundation of the doctrine,
the Supreme Court has applied Noerr-Pennington principles
outside the antitrust field. In Bill Johnson’s Restaurants, Inc.
v. NLRB, 461 U.S. 731 (1983), the Supreme Court held that
the Petition Clause protects access to judicial processes in the
labor relations context, and that the labor laws must be inter-
preted, where possible, to avoid burdening such access. See
id. at 741-44. In Bill Johnson’s, a restauranteur filed a civil
suit seeking to enjoin employees from picketing his restaurant
as part of a unionization campaign. In response, the employ-
ees filed an unfair labor practice charge with the National
Labor Relations Board, alleging that the civil suit was retalia-
tory and violated section 8(a) of the of National Labor Rela-
tions Act (“NLRA”), 29 U.S.C. § 158(a)(1), (4). See Bill
Johnson’s, 461 U.S. at 734-35. The Court, citing California
Motor Transport, held that, in light of the protection afforded
to the right of access to the courts by the Petition Clause, a
construction of the NLRA permitting the Board to enjoin a
well-founded but retaliatory lawsuit was untenable. Id. at 743.
[5] In BE&K Construction Co. v. NLRB, 536 U.S. 516, 525
(2002), the Supreme Court expanded on its holding in Bill
Johnson’s, making clear that the principles of statutory con-
struction embodied in the Noerr-Pennington doctrine apply
with full force in other statutory contexts. In BE&K, the Court
considered whether the National Labor Relations Act, 29
U.S.C. §§ 151-169, permits the National Labor Relations
Board to impose liability on an employer for its unsuccessful
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prosecution of lawsuits that, while not objectively baseless,
were brought for the purpose of retaliating against workers for
exercising the rights the NLRA protects. BE&K, 536 U.S. at
529-30. In concluding that it does not, the Court conducted a
three step analysis: The Court first identified the burden that
the threat of an adverse NLRA adjudication imposes on an
employer’s petitioning rights. Id. at 530. The Court then
examined the precise petitioning activity at issue, to deter-
mine whether the burden on that activity implicated the pro-
tection of the Petition Clause. Id. at 530-33. Finally, the Court
analyzed the NLRA to see whether it could be construed so
as to preclude such a burden on the protected petitioning
activity. Id. at 535-37.
The Court concluded that a finding that a lawsuit was ille-
gal “is a burden by itself,” because various legal conse-
quences flow from such a finding and because such a finding
“poses the threat of reputational harm that is different and
additional to any burden posed by other penalties.” Id. at 530.
At the second step of its analysis, the Court focused on
whether the burdened petitioning conduct — there, the filing
of reasonably based but unsuccessful lawsuits — fell within
the protection of the Petition Clause. Analogizing to the
speech context, the Court analyzed whether, giving the right
of petition “that breathing space essential to [its] fruitful exer-
cise,” id. at 531 (quoting Gertz v. Robert Welch, Inc., 418
U.S. 323, 342 (1974)) (internal quotation marks omitted),
such lawsuits fall within the protection of the Petition Clause.
Id. The Court found that because the lawsuits at issue were
not baseless, they did not fall within the established “sham lit-
igation” exception laid out in Professional Real Estate Inves-
tors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49
(1993) (“PRE II”), or within the analogous rule in the labor
law context established in Bill Johnson’s. Canvassing a num-
ber of reasons why the Petition Clause might require protec-
tion of “the class of reasonably based but unsuccessful
lawsuits,” the Court concluded that “whether this class of
suits falls outside the scope of the First Amendment’s Petition
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Clause . . . presents a difficult constitutional question,”
BE&K, 536 U.S. at 531-32, even where such suits were
brought with a retaliatory motive, id. at 534-35.
[6] Proceeding to the final step of its analysis, the Court
construed the NLRA narrowly to avoid the constitutional
issue. The Court observed that “[i]n a prior labor law case, we
avoided a similarly difficult First Amendment issue by adopt-
ing a limiting construction of the relevant NLRA provision.”
Id. at 535 (citing Edward J. DeBartolo Corp. v. Fla. Gulf
Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 575
(1988)).4 Following DeBartolo, and consistent with the statu-
tory construction principles applied in the Noerr-Pennington
line of cases, the BE&K Court found the relevant section of
the NLRA, section 8(a)(1), 29 U.S.C. § 158(a)(1), susceptible
of both a broad construction that might reach the lawsuits at
issue, as well as a narrow construction that would not. BE&K,
536 U.S. at 536. The Court found “nothing in the statutory
text indicating that §158(a)(1) must be read to reach all rea-
sonably based but unsuccessful suits filed with a retaliatory
purpose,” and, to avoid implicating the Petition Clause,
adopted the narrower reading. Id.
[7] In light of BE&K’s application of Noerr-Pennington to
the NLRA, we conclude that the Noerr-Pennington doctrine
stands for a generic rule of statutory construction, applicable
to any statutory interpretation that could implicate the rights
protected by the Petition Clause. See White v. Lee, 227 F.3d
1214, 1231 (9th Cir. 2000) (holding, before BE&K, that
because it “is based on and implements the First Amendment
right to petition,” the Noerr-Pennington doctrine is not lim-
ited to the antitrust context, but “applies equally in all con-
4The DeBartolo case involved a lawsuit to enjoin handbilling by a labor
union. Finding that neither the statute nor the legislative history indicated
the clear congressional intent to reach the handbilling at issue, the Court
declined to give the applicable NLRA provision a construction that would
raise serious First Amendment questions. DeBartolo, 485 U.S. at 578-88.
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texts”). Under the Noerr-Pennington rule of statutory
construction, we must construe federal statutes so as to avoid
burdening conduct that implicates the protections afforded by
the Petition Clause unless the statute clearly provides other-
wise.5 We will not “lightly impute to Congress an intent to
invade . . . freedoms” protected by the Petition Clause. Noerr,
365 U.S. at 138.
In determining whether the burdened conduct falls under
the protection of the Petition Clause, we must give adequate
“breathing space” to the right of petition. BE&K, 536 U.S. at
531. On the other hand, neither the Petition Clause nor the
Noerr-Pennington doctrine protects sham petitions, and stat-
utes need not be construed to permit them. Where, however,
the burdened conduct could fairly fall within the scope of the
Petition Clause and a plausible construction of the applicable
statute is available that avoids the burden, we must give the
statute the reading that does not impinge on the right of petition.6
5In this sense, Noerr-Pennington is a specific application of the rule of
statutory construction known as the canon of constitutional avoidance,
which requires a statute to be construed so as to avoid serious doubts as
to the constitutionality of an alternate construction. See, e.g., INS v. St.
Cyr, 533 U.S. 289, 299-300 (2001) (“[I]f an otherwise acceptable con-
struction of a statute would raise serious constitutional problems, and
where an alternative interpretation of the statute is ‘fairly possible,’ we are
obligated to construe the statute to avoid such problems.”); Ashwander v.
Tenn. Valley Auth., 297 U.S. 288, 341 (1936) (Brandeis, J., concurring)
(same).
6Even before BE&K clarified that the principal application of the Noerr-
Pennington doctrine is as a rule of statutory construction, the body of
Noerr-Pennington law in our circuit has so applied the doctrine in cases
falling outside of the antitrust context. For example, in White, the U.S.
Department of Housing and Urban Development (“HUD”) conducted an
eight-month investigation into whether plaintiffs’ advocacy activities and
state court lawsuit opposing the development of a multi-family housing
unit in their neighborhood violated the Federal Housing Act (“FHA”), and
as a result, HUD officials advised plaintiffs to cease their litigation activi-
ties. White, 227 F.3d at 1220. Plaintiffs challenged this investigation as a
violation of their rights of free speech and petition. Id. We declined to
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B.
Applying these principles here, we must determine whether
Sosa’s RICO lawsuit burdens DIRECTV’s petitioning activi-
ties. If it does, we must examine the precise petitioning con-
duct DIRECTV engaged in to determine whether the burden
identified may be imposed consistently with the Constitution.
If there is a substantial question that it may not, we must
determine whether RICO or the RICO predicate acts Sosa
alleges clearly provide for liability for the conduct at issue. If
a reasonable construction of RICO or the predicate act stat-
utes exists that avoids the burden, we will adopt that construc-
tion. Only where the statutes clearly provide for the burden
posed by the lawsuit will we address whether the statute may
construe the FHA broadly to reach the constitutionally protected activities
at issue in the case. Id. at 1239. Following Noerr-Pennington, we held that
the FHA did not preclude the filing of a reasonable but unsuccessful law-
suit, and instead imported into the FHA context the narrow “sham litiga-
tion” exception of PRE II. Id. at 1232-33; see also id. at 1232 n.14
(observing without deciding that the Noerr-Pennington doctrine may “pro-
vide[ ] broader protection than the First Amendment”). We have similarly
applied Noerr-Pennington as a rule of construction in other statutory con-
texts. See Freeman v. Lasky, Haas & Cohler, 410 F.3d 1180, 1184 (9th
Cir. 2005) (Noerr-Pennington doctrine’s reach “extends only so far as
necessary to steer the Sherman Act clear of violating the First Amend-
ment.”); Manistee Town Center v. City of Glendale, 227 F.3d 1090, 1093
(9th Cir. 2000) (declining to interpret 42 U.S.C. § 1983 as subjecting gov-
ernmental entities or officials to liability for activity that would otherwise
be with the protection of the Noerr-Pennington doctrine).
Other circuits have similarly used Noerr-Pennington principles to guide
their interpretation of statutes, see, e.g., Tarpley v. Keistler, 188 F.3d 788,
794-95 (7th Cir. 1999) (refusing to construe 42 U.S.C. § 1983 as extend-
ing conspiracy liability to petitioning activity), as well as their application
of common law doctrines, see, e.g., Video Int’l Prod., Inc. v. Warner-
Amex Cable Commc’ns, Inc., 858 F.2d 1075, 1084 (5th Cir. 1988) (“There
is simply no reason that a common-law tort doctrine can any more permis-
sibly abridge or chill the constitutional right of petition than can a statu-
tory claim such as antitrust.”).
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be applied to the petitioning conduct consistently with the
Constitution.
1.
[8] Sosa’s lawsuit seeks to impose RICO liability on
DIRECTV for sending the demand letters. A successful RICO
claim would quite plainly burden DIRECTV’s ability to settle
legal claims short of filing a lawsuit. Like the antitrust laws,
RICO provides for private enforcement and treble damages.
Compare 15 U.S.C. § 15(a) (Clayton Antitrust Act), with 18
U.S.C. § 1964(c) (RICO); see also BE&K, 536 U.S. at 528-29
(noting that treble damages provisions and private enforce-
ment demonstrate that antitrust suits may “pose a greater bur-
den on petitioning than the threat of an NLRA adjudication”).
Accordingly, Sosa’s RICO suit poses a burden on DIREC-
TV’s communication of the demand letters almost identical to
that posed by the Sherman Act claims on the petitioning con-
duct at issue in Noerr and its progeny.
2.
At the second step of the BE&K analysis, the question is
whether imposing these burdens on the sending of prelitiga-
tion demand letters runs afoul of the Petition Clause. In ana-
lyzing this question, we must consider whether the demand
letters constitute either protected petitioning activity or activ-
ity which must be protected to afford breathing space to the
right of petition guaranteed by the First Amendment.
[9] We have observed that only litigation activities which
constitute “communication[s] to the court” may be fairly
described as “petitions.” Freeman v. Lasky, Haas & Cohler,
410 F.3d 1180, 1184 (9th Cir. 2005). Such communications
include “[a] complaint, an answer, a counterclaim and other
assorted documents and pleadings, in which plaintiffs or
defendants make representations and present arguments to
support their request that the court do or not do something.”
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Id. In contrast, the demand letters at issue in this case were
not communicated to the court, but were directed to private
parties prior to any petition being filed with the court.
[10] This conclusion is not the end of the inquiry, however.
Although the letters were not themselves petitions, the Peti-
tion Clause may nevertheless preclude burdening them so as
to preserve the breathing space required for the effective exer-
cise of the rights it protects. The notion of First Amendment
breathing space derives from cases in the Freedom of Speech
arena. In New York Times Co. v. Sullivan, 376 U.S. 254
(1964), the Supreme Court held that, to adequately safeguard
the freedom of speech, a defamation plaintiff who is a public
official must prove not only falsehood but also actual malice,
thereby providing protection to some false statements. Id. at
279-80. “Although the erroneous statement of fact is not wor-
thy of constitutional protection, . . . [t]he First Amendment
requires that we protect some falsehood in order to protect
speech that matters.” Gertz, 418 U.S. at 340-41. The protec-
tion is necessary “to assure to the freedoms of speech and
press that ‘breathing space’ essential to their fruitful exer-
cise.” Id. at 342.
Thus, under the breathing space principle, the First Amend-
ment protects two kinds of activities that do not come within
the protection of the speech clause in their own right: First,
certain classes of speech not meriting protection in themselves
— the false statements in New York Times, for example —
must nevertheless be protected in order fully to vindicate the
free speech rights guaranteed by the First Amendment. See,
e.g., New York Times, 376 U.S. at 279-80, 285 (holding that
false statements about public officials not made with actual
malice cannot give rise to damages for defamation). Second,
certain conduct, not in itself speech, is protected in order ade-
quately to protect the actor’s ability to exercise his free speech
rights. See, e.g., Buckley v. Valeo, 424 U.S. 1, 17 (1976) (per
curiam) (holding that conduct of giving or spending money in
political campaigns may not be regulated where conduct is
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integrally intertwined with communication) (citing United
States v. O’Brien, 391 U.S. 367, 382 (1968)).
These principles are similarly applicable in the Petition
Clause context. PRE II recognized the applicability of the first
aspect of the breathing space principle when it defined the
Noerr-Pennington doctrine’s “sham litigation” exception as
requiring both objective baselessness and an improper motive.
PRE II, 508 U.S. at 60-61. This definition overprotects base-
less petitions so as to ensure citizens may enjoy the right of
access to the courts without fear of prosecution. BE&K made
this breathing room protection explicit. Recognizing that
under New York Times and Gertz, false statements are not
wholly unprotected by the First Amendment, the Court
observed that baseless litigation might also require protection
in some circumstances. BE&K, 536 U.S. at 531. Accordingly,
the Court noted, “we have never held that the entire class of
objectively baseless litigation may be enjoined or declared
unlawful even though such suits may advance no First
Amendment interests of their own.” Id.
The second aspect of the breathing space principle was rec-
ognized in Noerr itself, where the Court extended immunity
not only to the railroads’ direct communications with legisla-
tors but also to its public relations campaign, finding that the
latter’s aim was to influence the passage of favorable legisla-
tion. Noerr, 365 U.S. at 140-43. Building on this aspect of
Noerr, the Supreme Court, in Allied Tube & Conduit Corp. v.
Indian Head, Inc., held that “private action . . . cannot form
the basis for antitrust liability if it is ‘incidental’ to a valid
effort to influence governmental action.” 486 U.S. 492, 499
(1988) (quoting Noerr, 365 U.S. at 143). Similarly, in a series
of cases culminating in United Mine Workers of America v.
Illinois State Bar Ass’n, 389 U.S. 217 (1967), the Court held
that laws restricting the ability of unincorporated associations
to employ attorneys for their members, id. at 221-22, or to
advise their members to seek legal advice and to recommend
specific lawyers, Bhd. of R.R. Trainmen v. Virginia ex rel. Va.
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State Bar, 377 U.S. 1, 8 (1964), violated the members’ rights
of association and petition, notwithstanding that such laws did
not directly restrict the members’ access to the courts or abil-
ity to obtain counsel independently. Ill. State Bar Ass’n, 398
U.S. at 222; Trainmen, 377 U.S. at 8; see also United Transp.
Union v. State Bar of Mich., 401 U.S. 576, 585-86 (1971);
NAACP v. Button, 371 U.S. 415, 433 (1963). This is so
because, to exercise its petitioning rights meaningfully, a
party may not be subjected to liability for conduct intimately
related to its petitioning activities. “The First Amendment
would . . . be a hollow promise if it left government free to
destroy or erode its guarantees by indirect restraints so long
as no law is passed that prohibits free speech, press, petition,
or assembly as such.” Ill. State Bar Ass’n, 389 U.S. at 222.
Consistent with the breathing space principle, we have rec-
ognized that, in the litigation context, not only petitions sent
directly to the court in the course of litigation, but also “con-
duct incidental to the prosecution of the suit” is protected by
the Noerr-Pennington doctrine. Columbia Pictures Indus.,
Inc. v. Prof’l Real Estate Investors, Inc., 944 F.2d 1525,
1528-29 (9th Cir. 1991) (“PRE I”), aff’d 508 U.S. 49 (1993);
see also Freeman, 410 F.3d at 1184.7 In PRE I, the defendant,
Professional Real Estate Investors (“PRE”), brought antitrust
counterclaims predicated in part on Columbia’s refusal to
enter into settlement negotiations with respect to Columbia’s
copyright infringement suit. We held that “[a] decision to
accept or reject an offer of settlement is conduct incidental to
the prosecution of the suit and not a separate and distinct
7In Theofel v. Farey-Jones, 359 F.3d 1066, 1078-79 (9th Cir. 2004), we
stated in dicta that “[w]e are skeptical that Noerr-Pennington applies at all
to” a subpoena directed to a private party in private commercial litigation.
Nevertheless, we declined to reach the issue, finding that even if Noerr-
Pennington applied, the subpoena was objectively baseless and fell within
the doctrine’s sham exception. Id. at 1079. In Freeman, we answered the
question left open in Theofel, concluding that private litigation communi-
cations in commercial litigation sufficiently implicate the exercise of peti-
tioning rights to trigger Noerr-Pennington protection. 410 F.3d at 1184.
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activity which might form the basis for antitrust liability.”
PRE I, 944 F.2d at 1528. We concluded that Noerr-
Pennington applied with equal force to such conduct. Id. at
1529. Thus, where the underlying litigation fell within the
protection of the Petition Clause, such incidental conduct
would also be protected. Id.
In Freeman, the plaintiff brought suit alleging that discov-
ery misconduct in related litigation constituted a violation of
the antitrust laws. 410 F.3d at 1183. The court held that dis-
covery communications, while not themselves petitions, con-
stitute “conduct incidental to a petition.” Id. at 1184 (internal
quotation marks omitted). Therefore, unless the underlying
petition itself fell outside the protection of the right of peti-
tion, these communications come within the Noerr-
Pennington doctrine. Id.
[11] Accordingly, the law of this circuit establishes that
communications between private parties are sufficiently
within the protection of the Petition Clause to trigger the
Noerr-Pennington doctrine, so long as they are sufficiently
related to petitioning activity.8
Here, the conduct alleged to enjoy Noerr-Pennington
immunity was DIRECTV’s communication of settlement
demands prior to initiating any actual litigation. Unlike the
situations in PRE I and Freeman, there was no suit ongoing,
and thus, no existing “petition” to which the settlement
demands were incidental.
Sosa contends that this distinction is decisive. He argues
8We also reject Sosa’s argument that because the demand letters here
were sent from one private party to another to further DIRECTV’s com-
mercial interests, they do not implicate the Petition Clause. Indeed, in
nearly every instance in which Noerr-Pennington has been applied,
including Noerr itself, the petitioning conduct at issue was carried out to
further the petitioning party’s commercial interests.
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that extending Petition Clause protection to conduct incident
to actual litigation is justified because any misconduct
engaged in during litigation is subject to control by the court
via contempt proceedings or sanctions under the Federal
Rules of Civil Procedure. In contrast, according to Sosa, a
party faced with an extortionate presuit demand has no
recourse to a court in an existing proceeding, and must incur
the expense of retaining counsel to respond to meritless
claims.
We are not persuaded that this distinction changes the anal-
ysis. It is a fact of our system of justice that parties are often
compelled to engage counsel and defend lawsuits that ulti-
mately prove to have little merit. While responding to
demands to settle unfounded claims is burdensome, it is likely
less burdensome than if the opposing party, fearing liability
in tort for demanding settlement of a possibly weak claim,
proceeded directly to litigation. Moreover, the established
sham exception to the Noerr-Pennington doctrine provides
adequate protection against baseless claims asserted in preliti-
gation settlement letters. See PRE II, 508 U.S. at 60-61; see
also Kottle v. Nw. Kidney Ctrs., 146 F.3d 1056, 1060 (9th Cir.
1998) (citing cases and describing three pronged sham litiga-
tion exception).
[12] We conclude that restrictions on presuit demand letters
may therefore raise substantial Petition Clause issues if, on
examination, such restrictions could impair the right of access
to the courts protected by the First Amendment. We conclude,
for several reasons, that the connection between presuit
demand letters and access to the courts is sufficiently close
that the Petition Clause issues raised by providing a treble-
damages remedy with regard to such letters are indeed sub-
stantial.
First, preceding the formal filing of litigation with an invi-
tation to engage in negotiations to settle legal claims is a com-
mon, if not universal, feature of modern litigation. Even if it
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does not result in a final resolution of the dispute and vindica-
tion of the legal rights at issue, this practice permits parties to
frame their legal positions, often streamlining any subsequent
litigation, and thereby reducing legal costs and facilitating
access to the courts. Restricting such prelitigation conduct
when the same demands asserted in a petition to the court is
protected would render the entire litigation process more
onerous, imposing a substantial burden on a party’s ability to
seek redress from the courts.
Second, many states, including California, protect prelitiga-
tion communications under statutorily granted litigation privi-
leges. See, e.g., Rubin v. Green, 4 Cal. 4th 1187, 1193-94
(1993) (discussing Cal. Civ. Code § 47(b)); accord Kirsch-
stein v. Haynes, 788 P.2d 941, 947 (Okla. 1990) (adopting the
rule of Restatement (Second) of Torts § 586 that “communi-
cations preliminary to a proposed judicial proceeding” are
protected under the litigation privilege (quoting Restatement
(Second) of Torts § 586 (1977))). Such laws highlight the inti-
mate relationship between presuit settlement demands and the
actual litigation process. Moreover, such privileges indicate
that, unlike the lobbying of a private organization as in Allied
Tube, the demand letters at issue here are not “the type of
commercial activity that ha[ve] traditionally had [their] valid-
ity determined by” generally applicable regulatory statutes.
Allied Tube, 486 U.S. at 505. On the contrary, they are the
type of activity that typically arises only in the context of con-
templated petitioning activity.
Third, extending immunity to private presuit demand letters
protects the same interests the Supreme Court has identified
as implicated in the Petition Clause’s protection of private liti-
gation. See, e.g., Bill Johnson’s, 461 U.S. at 743. Thus, in Bill
Johnson’s, the Court observed that “[t]he first amendment
interests involved in private litigation” include “compensation
for violated rights and interests, the psychological benefits of
vindication, [and] public airing of disputed facts.” 461 U.S. at
743 (internal quotation marks omitted). Similarly, “the ability
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to lawfully prosecute even unsuccessful suits adds legitimacy
to the court system as a designated alternative to force.”
BE&K, 536 U.S. at 532. These interests are equally served
when disputes are resolved outside the formal litigation pro-
cess through presuit settlement demands, backed up by the
possibility of resort to the courts.
Fourth, our conclusion is consistent with established
Supreme Court law rejecting burdens on the right to petition
the courts even where no actual litigation was pending. See
Ill. State Bar Ass’n, 389 U.S. at 222. It is also consistent with
our decision in Liberty Lake Investments, Inc. v. Magnuson,
12 F.3d 155 (9th Cir. 1993), in which we held that Noerr-
Pennington immunity extended to an individual who funded
anticompetitive litigation but was not himself a party to the
litigation and was therefore not himself petitioning the courts.
Id. at 157-59; accord Balt. Scrap Corp. v. David J. Joseph
Co., 237 F.3d 394, 397-99 (4th Cir. 2001) (holding secret
funding of a lawsuit brought against a potential competitor to
maintain a monopoly was protected under Noerr-Pennington,
even though the funding party was not a litigant).
Fifth, extending Noerr-Pennington immunity to litigation-
related activities preliminary to the formal filing of the litiga-
tion is consistent with the law of the majority of other circuits
that have considered the issue. See, e.g., Primetime 24 Joint
Venture v. Nat’l Broad. Co., 219 F.3d 92, 100 (2d Cir. 2000)
(holding presuit challenges to signal strength determinations
by satellite broadcasters within the protection of Noerr-
Pennington); Glass Equip. Dev., Inc. v. Besten, Inc., 174 F.3d
1337, 1343-44 (Fed. Cir. 1999) (holding that threat of patent
enforcement litigation could not subject patent holder to anti-
trust liability); McGuire Oil Co. v. Mapco, Inc., 958 F.2d
1552, 1560 (11th Cir. 1992) (holding that concerted threats of
litigation are protected under Noerr-Pennington); CVD, Inc.
v. Raytheon Co., 769 F.2d 842, 850-51 (1st Cir. 1985) (hold-
ing that threat of trade-secret litigation must be a sham to
expose maker to antitrust liability); Coastal States Mktg., Inc.
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v. Hunt, 694 F.2d 1358, 1367-68 (5th Cir. 1983) (extending
petitioning immunity to generalized threats to litigate to pro-
tect claim to oil assets).
In arguing for a contrary result, Sosa relies entirely on a
Tenth Circuit case, Cardtoons, L.C. v. Major League Baseball
Players Ass’n, 208 F.3d 885 (10th Cir. 2000) (en banc). In
Cardtoons, the Tenth Circuit held that neither the Noerr-
Pennington doctrine nor the Petition Clause protected a pre-
suit cease-and-desist letter asserting trademark infringement.9
Id. at 886-88. Sosa attempts to distinguish the substantial
body of contrary law and argues that Cardtoons is the only
authority directly relevant to the issue before us.
As Sosa correctly observes, all of the appellate cases that
have extended immunity to presuit settlement demands have
done so in the context of antitrust suits. We do not see the rel-
evance of this observation. We recognize that Noerr and its
progeny were based in part on a construction of the antitrust
laws. As we have already observed, however, BE&K, decided
after Cardtoons, compels a similar construction of other laws
to the extent they impinge on the right of petition. Conse-
quently, we regard the Cardtoons decision as an outlier,
inconsistent with the weight of authority relevant to the First
Amendment status of presuit litigation-related conduct. More
importantly, we are doubtful that the majority’s opinion in
Cardtoons survives the Supreme Court’s decision in BE&K.
The reasoning of the Cardtoons dissenters, concluding that
prelitigation demand letters are within the scope of the Peti-
9Cardtoons reasoned that a prelitigation letter directed from one private
party to another, rather than to the government, and sent to further the
business interests of the sender did not implicate the Petition Clause. 208
F.3d at 892-93. In dissent, Judge Lucero, joined by Judges Brorby and
Briscoe, argued that, “[b]ased on the interests served by the Petition
Clause and the requirement that First Amendment rights be given ‘breath-
ing space,’ the concept of petitioning activity must embrace [a presuit]
cease-and-desist letter.” Id. at 896 (Lucero, J., dissenting).
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tion Clause, is, in our view, the more persuasive and the more
consistent with BE&K.
Finding that the protections of the Petition Clause extend to
prelitigation settlement demands as a class does not mean that
such demands are absolutely protected from liability. “The
Petition Clause . . . was inspired by the same ideals of liberty
and democracy that gave us the freedoms to speak, publish,
and assemble . . . , and there is no sound basis for granting
greater constitutional protection to statements made in a peti-
tion to the [government] than other First Amendment expres-
sions.” McDonald v. Smith, 472 U.S. 479, 485 (1985). In
general, “First Amendment rights are not immunized from
regulation when they are used as an integral part of conduct
which violates a valid statute.” Cal. Motor Trans., 404 U.S.
at 514. Accordingly, Noerr-Pennington immunity is not a
shield for petitioning conduct that, although “ostensibly
directed toward influencing governmental action, is a mere
sham to cover what is actually nothing more than an attempt
to interfere directly with the business relationships of a com-
petitor.” Noerr, 365 U.S. at 144.
In PRE II, the Supreme Court established a two-part defini-
tion of the “sham litigation” exception to Noerr-Pennington
in the antitrust context. 508 U.S. at 60-61. To establish that
a petition to the court is a sham, the party seeking to impose
liability must establish both that the legal claim is objectively
baseless and that the suit was brought for an anticompetitive
purpose. BE&K left open the question whether a similar two-
part test would apply in the labor relations context. 536 U.S.
at 536-37. The Court found that the evidence of an improper
purpose was insufficient to impose liability for a reasonably
based but unsuccessful suit, but declined to hold that such
suits are categorically immune.
In Kottle, we identified three circumstances in which the
sham litigation exception might apply: first, where the lawsuit
is objectively baseless and the defendant’s motive in bringing
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it was unlawful, 146 F.3d at 1060; second, where the conduct
involves a series of lawsuits “brought pursuant to a policy of
starting legal proceedings without regard to the merits” and
for an unlawful purpose, id. (citing USS-POSCO Indus. v.
Contra Costa County Bldg. & Constr. Trades Council, 31
F.3d 800, 810-11 (9th Cir. 1994)); and third, if the allegedly
unlawful conduct “consists of making intentional misrepre-
sentations to the court, litigation can be deemed a sham if ‘a
party’s knowing fraud upon, or its intentional misrepresenta-
tions to, the court deprive the litigation of its legitimacy.’ ” Id.
(quoting Liberty Lake, 12 F.3d at 159).
We have applied this test in other litigation contexts as
well. See White, 227 F.3d at 1232-33. In addition, we have
observed that private discovery conduct, not itself a petition,
may fall within the sham exception where either the conduct
itself, Theofel, 359 F.3d at 1079, or the underlying petition,
Freeman, 410 F.3d at 1185, meets PRE II’s sham litigation
test. We need not decide precisely how PRE II’s or Kottle’s
definition of sham litigation applies to presuit demand letters
in the RICO context, however, because Sosa has declined to
argue that the letters fall within the sham exception.
[13] In sum, whether, to preserve the breathing space
essential to the fruitful exercise of the right of petition, the
First Amendment requires the extension of Noerr-Pennington
immunity to the making of reasonably based prelitigation set-
tlement demands “at the least presents a difficult constitu-
tional question.” BE&K, 536 U.S. at 532. Accordingly, we
proceed to the third step of the BE&K analysis and analyze
whether RICO may be fairly construed to avoid reaching the
constitutional issue.
3.
The question at this stage is whether, given the important
goals of RICO, the statute proscribes the sending of prelitiga-
tion demand letters asserting legal claims that may be weak
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but do not rise to the level of shams. In answering this ques-
tion, we must bear in mind the principle that “if an otherwise
acceptable construction of a statute would raise serious consti-
tutional problems, and where an alternative interpretation of
the statute is ‘fairly possible,’ we are obligated to construe the
statute to avoid such problems.” INS v. St. Cyr, 533 U.S. 289,
299-300 (2001) (quoting Crowell v. Benson, 285 U.S. 22, 62
(1932)).
Leaving aside the other elements of a civil RICO claim,
RICO imposes civil and criminal liability on organizations
engaged in “racketeering activity.” 18 U.S.C. §§ 1962-1964.
Racketeering activity, in turn, is defined to include a number
of generically specified criminal acts as well as the commis-
sion of one of a number of listed predicate offenses. Id.
§ 1961(1). RICO’s general definition of racketeering activity
does not in terms clearly reach the conduct at issue here.
Accordingly, we turn to the particular RICO predicates
alleged here to determine whether they do so or whether,
instead, they are susceptible of a construction that avoids the
serious constitutional question of Petition Clause immunity.
In his complaint, Sosa alleged violations of the federal mail
and wire fraud statutes, id. §§ 1341, 1343, the Hobbs Act, id.
§ 1951, the interstate racketeering statute, id. § 1952, the fed-
eral money laundering statues, id. §§ 1956-1957, and the stat-
utes prohibiting movement of stolen property in interstate
commerce, id. §§ 2314-2315, as well as extortion under Cali-
fornia law, Cal. Penal Code §§ 518-520, 523. Only the mail
and wire fraud, Hobbs Act, and state extortion predicates can
even arguably be read to reach the conduct at issue here.
[14] The Hobbs Act defines “extortion” as “the obtaining
of property from another, with his consent, induced by wrong-
ful use of actual or threatened force, violence, or fear, or
under color of official right.” 18 U.S.C. § 1951(b)(2). While
on its face, this provision could be read broadly to reach the
class of suits at issue here, it need not be so read. It is cer-
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tainly possible, perhaps even likely, that the threat of being
faced with a costly lawsuit induced “fear” in Sosa, but extor-
tion requires more than fear. See Rothman v. Vedder Park
Mgmt., 912 F.2d 315, 318 (9th Cir. 1990) (holding that induc-
ing fear of economic loss could not in itself constitute extor-
tion). The use of the fear must be “wrongful.” 18 U.S.C.
§ 1951(b)(2); see Rothman, 912 F.2d at 318. It is true that the
assertion of weak claims predicated on unsupportable factual
allegations may be said in some sense to be wrongful. Such
a broad reading of the term “wrongful” is not required, how-
ever. Applying the Noerr-Pennington statutory construction
presumption, we do not believe the Hobbs Act imposes liabil-
ity for threats of litigation where the asserted claims do not
rise to the level of a sham.10 California’s extortion statute like-
wise requires the “wrongful use of . . . fear,” see Cal. Penal
Code § 518, and is equally susceptible of our narrow reading.
See In re Nichols, 82 Cal. App. 73, 76 (1927) (holding extor-
tion predicated on threat to sue requires allegation that threat-
ened suit was objectively baseless).
[15] Similarly, the mail and wire fraud statutes do not
unambiguously reach demands to settle reasonably based
legal claims. Both statutes require a “scheme or artifice to
defraud, or for obtaining money or property by means of false
or fraudulent pretenses, representations, or promises.” 18
U.S.C. § 1341, see also id. § 1343. This language has been
given a broad interpretation, see United States v. Louderman,
576 F.2d 1383, 1388 (9th Cir. 1978), and may be read to
reach certain types of fraudulent settlement communications.
10Other circuits have reached similar results, many refusing to impose
Hobbs Act liability even on baseless litigation. See, e.g., United States v.
Pendergraft, 297 F.3d 1198, 1208 (11th Cir. 2002) (holding threats to sue
a public entity cannot constitute Hobbs Act extortion, even where sup-
ported by false testimony and fabricated evidence); I.S. Joseph Co. v. J.
Lauritzen A/S, 751 F.2d 265, 267 (8th Cir. 1984) (holding threats of
groundless litigation cannot constitute extortion under the Hobbs Act); cf.
Vemco, Inc. v. Camardella, 23 F.3d 129, 134 (6th Cir. 1994) (holding
threats to enforce even a fraudulent contract not extortion under RICO).
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Indeed, in Living Designs, Inc. v. E.I. DuPont de Nemours &
Co., 431 F.3d 353 (9th Cir. 2005), we permitted the plaintiffs
to maintain a RICO suit predicated on fraudulent discovery
conduct in prior litigation that induced the plaintiffs to settle
the suit for a lower amount than they would have in the
absence of the fraud. Id. at 365. The defendants had failed
during the prior litigation to disclose damaging evidence
which was solely in their possession and had falsely claimed
that the evidence did not exist. Id. at 356-58. We concluded
that such conduct could amount to mail fraud, notwithstand-
ing its connection to a legal proceeding. Id. at 364-65.
Although we did not explicitly discuss the Noerr-Pennington
doctrine, the conduct alleged quite clearly fell within the third
prong of Kottle’s sham litigation exception, in that it
amounted to a “knowing fraud upon . . . the court depriv[ing]
the litigation of its legitimacy,” Kottle, 146 F.3d at 1060 (cit-
ing Liberty Lake, 12 F.3d at 159), and was done for the pro-
hibited purpose of injuring plaintiffs’ business or property
interests. Living Designs, 431 F.3d at 363-64.
Here, Sosa has alleged that in its demand letters and in tele-
phone conversations with Sosa and the other plaintiffs,
DIRECTV made false representations of fact and law, and
that as a result Sosa settled DIRECTV’s claims. It is well
established, however, that misrepresentations of the law are
not actionable as fraud, including under the mail and wire
fraud statutes, because statements of the law are considered
merely opinions and may not be relied upon absent special
circumstances not present here. Miller v. Yokohama Tire
Corp., 358 F.3d 616, 621 (9th Cir. 2004).
[16] We would independently reach the same conclusion
here regarding the asserted misrepresentations of law in the
presuit demand letters, applying our understanding of the
Noerr Pennington doctrine. On that understanding, presuit let-
ters threatening legal action and making legal representations
in the course of doing so cannot come within a statutory
restriction unless the statute unavoidably so requires, absent
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representations so baseless that the threatened litigation would
be a sham. The mail and wire fraud statutes do not unavoid-
ably so require. Rather, they can be, we conclude, construed
to avoid burdening the ability of potentially adverse parties to
make legal representations in demand letters and other presuit
communications sent in contemplation of possible litigation.
Nothing in the mail and wire fraud statutes addresses the issue
of legal representations directly. Nor need we impute to Con-
gress an intent to include within the statutory phrase “scheme
or artifice to defraud” erroneous representations of law made
in a presuit demand letter; legal representations made by
potential litigation adversaries are exceedingly unlikely to be
believed without investigation. Further, Sosa has declined to
invoke the sham exception, so that is off the table. DIREC-
TV’s assertions that Sosa’s conduct was unlawful, therefore,
cannot support the mail and wire fraud predicates, even if
DIRECTV intentionally misstated the law.
Whether the alleged misrepresentations of fact could, if
proven, constitute mail or wire fraud is less clear. In the crim-
inal context, presuit settlement demands containing false
statements of fact can under some circumstances constitute
mail fraud. E.g., United States v. Marbella, 73 F.3d 1508,
1511 (9th Cir. 1996) (affirming conviction for insurance fraud
based on settlement demand containing false medical claims).
Such letters cannot amount to mail fraud, however, where the
sender knows the recipient will not be deceived by the false-
hoods. See United States v. Pendergraft, 297 F.3d 1198, 1209
(11th Cir. 2002) (where the senders knew that the recipient
would not be deceived by falsehoods, “they could not have
had an intent to deceive” as required for mail and wire fraud
liability).
Here, Sosa argues that DIRECTV’s threat to sue “within 14
days” was false and constituted mail fraud. Sosa acknowl-
edges that many thousands of lawsuits were ultimately filed
against recipients who failed to settle DIRECTV’s claims, but
he contends that most of these suits were not filed within 14
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days, and that DIRECTV never intended to sue all of those to
whom it sent the letter. We are dubious that this statement
would be actionable under any circumstances. We need not
reach this question here, however. “It is well settled that, to
maintain a civil RICO claim predicated on mail [or wire]
fraud, a plaintiff must show that the defendants’ alleged mis-
conduct proximately caused the injury.” Poulos v. Caesars
World, Inc., 379 F.3d 654, 664 (9th Cir. 2004) (citing Holmes
v. Sec. Investor Prot. Corp., 503 U.S. 258, 268 (1992)). Sosa
utterly fails to show how DIRECTV’s false threat to sue
within 14 days proximately caused him any injury.
Sosa further contends that DIRECTV’s assertion that it had
documents showing that he had “purchased . . . signal theft
equipment to gain unauthorized access to DIRECTV’s pro-
gramming” and its other allegations concerning Sosa’s unau-
thorized access to its signal were false and amounted to a
scheme or artifice to defraud. He argues that as a result of
these statements, he was induced to settle with DIRECTV. As
in Pendergraft, DIRECTV’s statements asserting that Sosa
had modified smart cards and used smart card programming
equipment to access its signal without paying for it cannot
constitute mail or wire fraud. Because these statements con-
cerned Sosa’s own conduct, DIRECTV could not have
intended that he would be deceived by them and was therefore
necessarily lacking in the intent requisite to have committed
mail or wire fraud. Pendergraft, 297 F.3d at 1209.
Sosa also alleges that, contrary to its assertion in the letter,
DIRECTV had no business records showing that Sosa had
actually used the equipment to access its signal. In fact, the
letter does not unambiguously assert that the records showed
the use to which Sosa put the equipment. It states that they
“show that you purchased . . . signal theft equipment to gain
unauthorized access to DIRECTV’s programming.” Sosa
readily admits that he purchased the equipment to which
DIRECTV refers. The phrase “to gain unauthorized access to
DIRECTV’s programming” is ambiguous: It is not clear
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whether this statement means that the records themselves
indicated the use to which Sosa had put the equipment, or
rather that DIRECTV believed on the basis of the records that
Sosa had used it to access its signal.
This ambiguity may have been intentional, and may even
have been intended to suggest that DIRECTV’s evidence was
stronger than it in fact was. Sosa has not argued, and likely
could not argue, however, that this statement rendered
DIRECTV’s claim against him a sham. Given the Noerr-
Pennington presumption, we are not convinced that the mail
and wire fraud statutes reach this kind of carefully worded
statement, so characteristic of the posturing that occurs at the
start of any litigation and capable of being tested in any ensu-
ing suit. In addition, it should have been obvious that in any
such suit, the dispositive issue would not be what DIREC-
TV’s records showed about Sosa’s activities, but what those
activities actually were — a matter, once again, fully within
Sosa’s knowledge and capable of proof. In light of the burden
RICO liability would impose on DIRECTV’s right to petition
the courts, we decline to construe mail and wire fraud statutes
so broadly as to reach peripherally relevant, arguably ambigu-
ous statements such as this single representation in DIREC-
TV’s demand letters, absent a showing that the statement
meets the standard for the sham exception. See Kottle, 146
F.3d at 1060.
[17] Accordingly, we hold that RICO and the predicate
statutes at issue here do not permit the maintenance of a law-
suit for the sending of a prelitigation demand to settle legal
claims that do not amount to a sham. Because the demand let-
ters at issue here sought settlement of claims against Sosa
under the Federal Communications Act, and no sham is
claimed, they cannot form the basis of liability under RICO.
Because we affirm the district court’s ruling on the basis of
the Noerr-Pennington doctrine, we need not address the other
bases for dismissal asserted by appellees below and on appeal.
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IV.
Our decision today makes clear that the Noerr-Pennington
doctrine requires that, to the extent possible, we construe fed-
eral statutes so as to avoid burdens on activity arguably falling
within the scope of the Petition Clause of the First Amend-
ment. Prelitigation communications demanding settlement of
legal claims must be afforded Noerr-Pennington protection
when we construe statutes asserted to regulate them. RICO
does not unambiguously include the presuit demand letters in
this case within the scope of conduct it enjoins, so we decline
to give it such a broad construction. Accordingly, we affirm
the judgment of the district court holding DIRECTV immune
from liability and dismissing Sosa’s complaint.
AFFIRMED.
PANNER, District Judge:
I respectfully concur in the result.
The majority opinion is essentially advisory. If we affirm
the decision of the district court, Sosa loses. If we reverse the
district court and reinstate this action, Sosa still loses because
the California state court judgment is now final and would bar
all of Sosa’s claims.1 I would file a short order stating that
1In my view, Flood v. Harrington, 532 F.2d 1248 (9th Cir. 1976), does
not command otherwise. Flood had no occasion to consider what effect a
California court would give to the judgment, as we must do here. See 28
U.S.C. § 1738. The plaintiff in Flood did not lose in state court, and then
file essentially the same action in federal court, as Sosa did here. Rather,
the decision on appeal in Flood was entered first, and both decisions were
entered by a federal court. Furthermore, the two actions in Flood involved
different claims and parties. Lastly, Flood did not consider what would
transpire on remand had the panel found in favor of the plaintiff, and rein-
stated his action.
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fact, and reserve the extensive discussion of Noerr-
Pennington and RICO for a case in which it is necessary to
decide those questions.
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