Sixth Circuit Applies Noerr-Pennington To Private Standard-Setting Organization
Antitrust Litigation
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  • Sixth Circuit Applies Noerr-Pennington To Private Standard-Setting Organization

    On September 12, 2023, the United States Court of Appeals for the Sixth Circuit affirmed the district court’s dismissal of Sherman Act claims by a supplier of wastewater treatment products against two of its competitors and a private standard-setting organization, NSF International, holding that the Noerr-Pennington doctrine protected defendants from Sherman Act liability.  Geomatrix, LLC v. NSF Int’l, No. 22-1947, 2023 WL 5925977 (6th Cir. Sept. 12, 2023).

    Plaintiff and two defendants are wastewater treatment companies that sell certain types of septic systems.  Defendant NSF International is a certification provider for companies in the wastewater treatment industry.  Plaintiff offers distinct types of wastewater treatment products than defendants.  Specifically, plaintiff markets Treatment and Disposal Systems (“T&D Systems”), while defendants market Contained Systems.

    Plaintiff alleged that defendants conspired to limit the market for plaintiff’s T&D Systems in violation of Section 1 of the Sherman Act.  Specifically, plaintiff alleged that defendants conspired to exclude T&D Systems from the market by falsely disparaging the efficacy of T&D Systems, advocating for their removal from the certification standards, including through the use of allegedly false and defamatory statements, and proposing new standards that would have excluded T&D Systems from the relevant state certifications.

    Defendants countered that their conduct was protected under the Noerr-Pennington doctrine, which immunizes activities to petition the government from antitrust liability.  Here, defendants argued, the competitors’ efforts to influence the private standard-setting body and that body’s efforts in turn to influence state regulatory agencies both constituted protected petitioning activity because it was the responsibility of the state regulatory agencies to determine whether to approve those standards.  The district court agreed with defendants and dismissed plaintiffs’ complaint.  Plaintiff appealed.

    The Sixth Circuit began its analysis by noting that Noerr-Pennington immunity does not protect standard-setting organizations that engage in “primarily commercial” conduct that harms competition as the result of the standard’s own effect on the market.  Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492 (1988).  But where the alleged harm is directly caused by government action that allegedly resulted from the standard-setting body’s advocacy, the petitioning conduct that influenced the government action is protected.  The Sixth Circuit considered two questions in its analysis:  (1) What is the alleged harm? and (2) Is the harm the result of government action or private conduct?  Here, the court concluded that the alleged harm—the alleged exclusion of T&D Systems from competitive opportunities due to its inability to meet certain state certification requirements—was the direct result of state action because regulators, not defendant standard-setting organization, made the decisions that harmed plaintiff.

    The Sixth Circuit reasoned that “‘when a state adopts as its own the conclusions reached’ by a private standard-setting organization, and that adoption injures plaintiff, ‘it is the state and not the private party that injures plaintiff with anticompetitive conduct.’”  Accordingly, the Sixth Circuit concluded that any harm to plaintiff from not being able to market its product in certain states was caused by state action because, although the standards set by defendant standard-setting organization, may have had an influence on state regulators, it was ultimately the decision of the state regulator whether to approve use of the T&D Systems.  Thus, after disposing of plaintiff’s Lanham Act and state law claims, the Sixth Circuit affirmed the judgment of the district court’s dismissing the complaint.

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