Fourth Circuit Clarifies Noerr-Pennington Immunity for Contested TCPA Suits: Sham Litigation Exception Refined

Introduction

This case arises from a 2019 suit brought by Navient Solutions, LLC (“Navient”) against a network of lawyers, marketers, and debt-relief businesses, including the Law Offices of Jeffrey Lohman and GST Factoring, Inc. Navient alleged that defendants conspired to defraud it out of millions of dollars by recruiting student-borrowers into filing Telephone Consumer Protection Act (“TCPA”) claims—allegedly sham lawsuits—against Navient. Navient pursued these RICO and related common-law claims in the Eastern District of Virginia. A jury initially sided with Navient, but the district court granted defendants’ renewed Rule 50(b) motions, holding as a matter of law that the TCPA actions were not “sham litigation.” Navient appealed, arguing that the series of TCPA suits was objectively baseless and motivated solely to impose expense on Navient, and thus fell within the “sham litigation” exception to First Amendment petitioning immunity (Noerr-Pennington).

Summary of the Judgment

On May 6, 2025, the Fourth Circuit affirmed. Applying Fourth Circuit precedent (notably Waugh Chapel S., LLC v. United Food & Commercial Workers Union Local 27), the court held that a pattern of repetitive claims is immunized unless it is a sham. Sham litigation requires “indiscriminately filed” actions “without regard for the merits.” The Fourth Circuit found that the TCPA suits turned on a genuinely contested question—whether Navient’s dialing system qualified as an Automated Telephone Dialing System (“ATDS”)—and that defendants reasonably pursued that statutory-interpretation issue. Navient had conceded the issue was unsettled, courts were split, and Navient itself settled many suits based on win–loss ratios. Because the TCPA actions were not objectively baseless, Noerr-Pennington immunity attached. Navient also only sought damages tied to the TCPA cases themselves. The court thus concluded that Rule 50(b) judgment for defendants was proper and affirmed the district court’s order vacating the jury verdicts.

Analysis

1. Precedents Cited

Noerr Motor Freight, Inc. v. Eastern R.R. Presidents Conference (1961): Established that petitioning the government is First Amendment protected and generally immune from antitrust liability.
United Mine Workers v. Pennington (1965): Extended Noerr immunity to state and local government petitioning.
California Motor Transport Co. v. Trucking Unlimited (1972): Recognized the “sham litigation” exception—immunity does not attach to a pattern of baseless actions meant to abuse the judicial process.
Waugh Chapel S., LLC v. United Food & Commercial Workers Union Local 27 (2013): Held that multi-action petitions are tested by a “holistic” series-sham standard: whether the petitioner indiscriminately filed claims without regard to merits.
Sosa v. DIRECTV, Inc. (9th Cir. 2006): Extended Noerr immunity to pre-filing and ancillary activities “incidental” to litigation.
BE & K Construction Co. v. NLRB (2002): Emphasized “breathing space” for petitioning activities.
Additional district-court cases on arbitration immunity (Eurotech and Ford Motor) illustrate unresolved issues about Noerr’s reach to private arbitration.

2. Legal Reasoning

The Fourth Circuit applied a de novo review of the Rule 50(b) grant. The key inquiry was whether Navient met its burden to show that the defendants’ TCPA petitioning was a sham. Under the series-sham test from California Motor (as adopted by Waugh Chapel), courts assess:

Whether the petitioner filed a series of claims “without regard for the merits.”
Evidence of subjective bad faith or other “signs of bad-faith litigation.”
A “holistic” evaluation—focusing on the pattern rather than dissecting each filing.

The Fourth Circuit found that:

Navient conceded the TCPA question remained unsettled; courts were divided on the statutory definition of ATDS.
Defendants brought each action to resolve that dispute, not merely to harass or multiply proceedings.
Settlements by Navient further showed it viewed the TCPA claims as meritorious in part.
Navient sought damages only for actual litigation/arbitration expenses and canceled-debt costs tied to the TCPA suits.

Because each action rested on a plausible statutory argument rather than objective baselessness, the TCPA suits did not fall within the sham exception. Thus, First Amendment petitioning immunity applied, and Navient failed to prove an essential element of its RICO and related claims.

3. Impact on Future Cases

This decision clarifies several important points:

In the Fourth Circuit, series of cases are judged under the holistic California Motor standard rather than the two-step Professional Real Estate Investors test for single suits.
Contested statutory or regulatory questions—especially unsettled issues like ATDS—can immunize a pattern of filings from sham-litigation liability.
The decision reinforces that petitioning immunity extends at least to formal litigation costs and arguably to parallel arbitrations (though arbitration immunity remains open).
The narrow holding leaves open whether pre-suit recruiting, marketing or “fraud on the court” might ever be exempt from immunity; those issues await future cases.

Complex Concepts Simplified

Noerr-Pennington Doctrine: A First Amendment rule that protects citizens’ rights to lobby or sue government bodies—even competitors—without facing antitrust or similar liability.
Sham Litigation Exception: If a lawsuit (or series of lawsuits) is objectively baseless and brought just to harass or impose costs, it is not protected by Noerr-Pennington.
RICO: The Racketeer Influenced and Corrupt Organizations Act, which allows civil suits for patterns of racketeering conduct (e.g., mail and wire fraud).
Rule 50(b): A Federal Rule of Civil Procedure allowing a party to renew a motion for judgment as a matter of law after trial if the evidence cannot support the jury’s verdict.
Automated Telephone Dialing System (ATDS): A device that automatically dials numbers; the TCPA bans calls from an ATDS without prior consent and imposes monetary penalties per call.

Conclusion

The Fourth Circuit’s decision reaffirms robust First Amendment protection for litigants pursuing contested legal questions, even when those questions arise in mass-filing contexts. By applying the series-based “holistic” standard, the court confirms that meritorious disputes over unsettled statutory terms—like the scope of the TCPA’s ATDS prohibition—do not become “sham” simply because claimants file many suits. The decision narrows the application of RICO and related tort claims against litigation strategies and underscores the high bar plaintiffs must meet to overcome Noerr-Pennington immunity.