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Cardtoons, a manufacturer of parody trading cards featuring major league baseball players, contracted with Champs Manufacturing, Inc. to print cards. The Major League Baseball Players Association (MLBPA) sent letters to both Cardtoons and Champs, threatening litigation against each for their respective roles in the production and sale of the cards. The MLBPA claimed that the sale of such cards "Œviolat[ed] the valuable property rights of the MLBPA and its players.'"

Four days later, Cardtoons filed for a declaratory judgment on the issue of whether the cards violated the publicity and intellectual property rights of the MLBPA. In addition, Cardtoons sought injunctive relief to bar the MLBPA from interfering with third parties involved in the manufacturing and sale of the cards, namely Champs. Cardtoons further claimed that the MLBPA had tortuously interfered with Cardtoons' contractual relationship with Champs.

The district court found Cardtoons parody cards to be protected under the First Amendment, and thus vacated its initial decision in the favor of the MLBPA, entering declaratory judgment for Cardtoons. The Tenth Circuit affirmed the decision.

Subsequently, Cardtoons returned to district court to pursue its claim for tortious interference against the MLBPA and added claims in tort, negligence and libel. These claims stemmed from letters the MLBPA sent to Cardtoons and other card producers. The district court found both letters immune from liability under the "Noerr-Pennington" doctrine, dismissed Cardtoons' claims, and granted summary judgement for the MLBPA. Cardtoons appealed the grant of summary judgment, challenging the applicability of the Noerr-Pennington doctrine.

The Tenth Circuit initially explained that the Noerr-Pennington doctrine provides, "general immunity from antitrust liability to private parties who petition the government for redress, not withstanding the anticompetitive purpose or consequences of their petitions." Despite providing broad immunity, the doctrine does not protect conduct that disguises interference with business relations under the cloak of a legally viable lawsuit.

As the court explained, the Supreme Court has established a two-part definition of sham litigation: (1) the lawsuit must be objectively baseless - no reasonable litigant could realistically expect success on the merits; and (2) the baseless lawsuit conceals an attempt to interfere directly with the business relationships of a competitor through the use of the governmental process as an anticompetitive weapon. This two-tiered process requires that an antitrust plaintiff prove the threatened lawsuit is legally baseless before a court will consider evidence of its anticompetitive effects.

As the court explained, the focus of the standard's first prong is whether there is probable cause. If so, the defendant's conduct is protected by Noerr-Pennington immunity, and the second prong is irrelevant. Following the law in other Circuits the Tenth Circuit extended Noerr-Pennington immunity to prelitigation threats and held that such threats enjoy the same level of protection from liability as litigation.

The court found that the MLBPA had probable cause in threatening litigation against Cardtoons because its infringement suit was premised on a reasonable argument that its publicity rights outweighed Cardtoons' First Amendment rights. Probable cause for the MLBPA's claims existed even though Cardtoons had prevailed on this issue.

The court found also found probable cause for the MLBPA's litigation threats against Champs as a third party. Therefore, the MLBPA's letter to Champs is protected by Noerr-Pennington immunity. In addition, the court found that this immunity extended to Cardtoons' claim of libel against the MLBPA.

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