Opinion ID: 148091
Heading Depth: 3
Heading Rank: 2

Heading: Midcal's Second Prong: Active State Supervision

Text: Midcal 's second prong ensures that private price-fixing agreements with little or no state involvement do not displace the national policy in favor of competition. 445 U.S. at 106, 100 S.Ct. 937. The Court was primarily concerned that without adequate state supervision, private parties would act to further their own interests as opposed to the interests of the state. Id.; see also Patrick v. Burget, 486 U.S. 94, 101, 108 S.Ct. 1658, 100 L.Ed.2d 83 (1988) (stating that without active state supervision, there is no realistic assurance that a private party's anticompetitive conduct promotes state policy, rather than merely the party's individual interests). However, when municipalities or other state entities (as opposed to purely private actors) are acting under the direction of state law, the Court has held that they do not need to satisfy Midcal 's active state supervision prong. Town of Hallie, 471 U.S. at 46, 105 S.Ct. 1713. In Town of Hallie, the Court reasoned that where a municipality is concerned, there is very little danger that it is involved in a private price-fixing arrangement, which removes the need for the state to supervise its execution of ... a properly delegated function. Id. at 47, 105 S.Ct. 1713 (emphasis omitted). In a footnote, the Court also suggested that the same rationale would apply to state agencies. Id. at 46 n. 10, 105 S.Ct. 1713. In Hass, we relied on that footnote in Town of Hallie to hold that the Oregon State Bar did not need to satisfy Midcal 's active state supervision prong to qualify for state action immunity. 883 F.2d at 1459-61. We reasoned that the Oregon State Bar was similar in nature to a municipality, noting that the Oregon State Bar's purpose in benefitting the public through regulating lawyers, combined with its records and accounts being open for public inspection and subject to audits, pointed to it being a public body. Id. at 1459-60. Likewise, here, the CTTC is not a private party, but a state agency created by statute, designed to promote tourism which the California legislature found is vital to the state's economy. § 13995.1(d)(1). The CTTC was organized to promote a state purpose, namely to increase travel and tourism in the state of California. § 13995.41. The CTTC and the Oregon State Bar in Hass also share organizational similarities in that they are both subject to independent audits, must give public notice of their meetings, and benefit the public interest. Hass, 883 F.2d at 1460; §§ 13995.40, .50. Plaintiffs contend, however, that even if the CTTC is a state agency for some purposes, it is still industry-controlled, and thus is distinguishable from Hass. However, the CTTC is not entirely controlled by industry, as it has twelve governor-appointed commissioners and a governor-appointed Secretary. Although there are twenty-four industry-appointed commissioners, these positions come from five different tourism industry categories whose interests will not always align, and the passenger car rental industry itself is limited to only six commissioners. § 13995.40.5(a). See Hass, 883 F.2d at 1460 (noting that only three of the fifteen members of the Oregon State Bar were nonlawyers). Moreover, the CTTC is also under the oversight of the state via a gubernatorially-appointed Secretary. The Secretary has the power to remove elected commissioners found guilty of abuse of office or moral turpitude. § 13395.40(e). Additionally, the Secretary holds veto power over the CTTC in various circumstances, including the use of state funds and situations in which the Secretary determines there is a conflict of interest. § 13995.51(b). The CTTC's annual marketing plan must be reviewed and approved by the Secretary before adoption, and may only be overridden by a three-fifths majority vote. § 13995.45(d). Despite the mix of public and private interests at play, looking at the totality of the circumstances, the CTTC possesses enough of the qualities of a state agency, coupled with state oversight in the form of the governor-appointed commissioners and Secretary, to hold that the CTTC is analogous to the Oregon State Bar in Hass and also exempt from Midcal 's active state supervision requirement. We therefore affirm the district court's determination that the CTTC is entitled to state action immunity from antitrust suit.