sham test if and only if the first, objective, prong is satisfied and the MSC letter or the Putty Hill litigation was objectively baseless. If neither the MSC letter nor the Putty Hill lawsuit was objectively baseless, then Defendants' purpose in sending the letter and filing the suit, however improper, does not strip them of Noerr-Pennington immunity for these activities.
In this case, as noted, Defendants invoked governmental processes on two occasions. First, in February 1984, Abell sent a letter of complaint to the Maryland Securities Commission, complaining of violations of Maryland franchise law on the part of APC. Following receipt of that letter, the Maryland Commission conducted an investigation and, in March 1984, issued an Order to Show Cause why the registration of APC and APC's CEO Andrew Whelan to offer and sell franchises in Maryland should not be denied, suspended or revoked for engaging in the offer and sale of unregistered franchises in violation of the Maryland franchise regulations and why a Cease and Desist Order should not be issued against them for engaging in the offer and sale of an unregistered security in violation of Maryland securities law. See In the Matter of Animated Playhouse Corporation and Andrew Whelan, Administrative Proceeding before the Securities Commission, Office of the Attorney General, Maryland Division of Securities (3/7/84).
As a result of this Order to Show Cause, in November 1984 Andrew Whelan entered into an "Undertaking" in which he agreed not to make any offers of sales of franchises which would violate Maryland law. Andrew Whelan neither admitted nor denied the Commission's allegations in signing the Undertaking; thus, the MSC proceedings did not end favorably for Mr. Whelan or APC. While Whelan and APC did not admit to the violations, there is nothing in the record to suggest that Whelan or APC had complied with the Maryland franchise and securities laws or that the action taken by the MSC was inappropriate. Indeed, Plaintiffs have not in any respect formally challenged the propriety of the Maryland action or the basis for it. Given the independent investigation and disposition in the administrative proceeding in Maryland, it is clear that Abell's letter to the MSC was not "objectively baseless". By any standard, the MSC letter would be protected under Noerr-Pennington and cannot provide a basis for Plaintiffs' tortious interference, malicious prosecution, abuse of process or wrongful involvement in litigation claims.
The second occasion in which Plaintiffs claim that Defendants wrongfully instituted government action was the Defendants' filing of the Putty Hill law suit against the Whelans in March 1984. That lawsuit was predicated essentially on the same issues as the MSC proceeding, namely franchise and securities law violations on the part of the Whelans and APC. This Court need look no further than the response of the MSC to the allegations before it. In short, the fact that the MSC conducted an independent investigation and found sufficient evidence to issue an order to show cause and enter a consent decree with Whelan and APC compels this Court to conclude that there was an objective determination that the charges filed by Defendants in the Putty Hill lawsuit were not baseless. Therefore, Defendants are entitled to immunity for the filing of the Putty Hill suit.
Based on the well-developed record that exists at this point in this litigation, this Court holds that neither the MSC letter nor the Putty Hill lawsuit were objectively meritless under Professional Real Estate and that therefore the sham exception to Noerr-Pennington does not apply to this case. Because each of the predicate acts on which each of the claims remaining in this case rest is protected, the action before this Court is dismissed in its entirety.
United States District Court
ORDER - June 23, 1993, Filed
This matter is before the Court on Defendants' Motion for Judgment N.O.V. Upon consideration of Defendants' motion and Plaintiffs' Opposition thereto, and after hearing oral argument from counsel for both sides at a hearing held on May 28, 1993, for the reasons stated in the foregoing Memorandum Opinion, it is hereby
ORDERED that Defendants' Motion for Judgment N.O.V. is granted; and it is
FURTHER ORDERED that all claims remaining in this action are dismissed.
United States District Court
JUDGMENT - June 28, 1993, Filed
In accordance with the Memorandum Opinion and Order filed on June 23, 1993, judgment is hereby entered on behalf of the defendants.
United States District Judge
June 28, 1993.