Opinion ID: 148091
Heading Depth: 4
Heading Rank: 2

Heading: Application of the Reasonably Foreseeable Test

Text: The California Legislature explicitly authorized tourism assessment fees on passenger car rentals for the funding of California tourism: [t]he California Travel and Tourism Commission shall submit a referendum to the passenger rental car industry as soon as possible ... [it] shall propose an assessment level upon the passenger rental car industry. § 13995.92(a). The CTTC was to be the beneficiary of the tourism assessment fee, and was authorized to collect the assessments from the rental car companies. §§ 13995.65-73, .92. The statute expressly allows the fees to be passed on to customers: [a]n assessed business may pass on some or all of the assessment to customers. § 13995.65(f) (emphasis added). Another statute explicitly recognizes that assessment fees are the charge[s] collected by a rental company from a renter that ha[ve] been established by the[CTTC] pursuant to Section 13995.65 of the Government Code. Cal. Civ.Code § 1936.01(a)(3) (emphasis added). Although Plaintiffs emphasize that the provisions at issue here do not require the fees to be passed on to consumers, both the Supreme Court and this circuit have made clear that for state action immunity to apply, the anticompetitive conduct need not be compelled by the state. Town of Hallie, 471 U.S. at 45, 105 S.Ct. 1713 (compulsion is simply unnecessary); Hass v. Oregon State Bar, 883 F.2d 1453, 1457 (9th Cir.1989) (The legislature need not detail or compel the specific anti-competitive actions at issue, nor need it explicitly state that it expects the regulated party `to engage in conduct that would have anticompetitive effects.') (quoting Town of Hallie, 471 U.S. at 42, 105 S.Ct. 1713). Indeed, the legislature need not even expressly permit the challenged conduct. Hass, 883 F.2d at 1457 (citing So. Motor Carriers, 471 U.S. at 63-65, 105 S.Ct. 1721). Thus, the critical issue is not whether the alleged conduct here was compelled, but whether it was authorized. [4] Plaintiffs argue that the statutory language permitting the pass through (may pass some or all) should be read not as authorizing an anticompetitive agreement to pass the fees on, but as an indication that the legislature intended for the individual car companies to make the decision whether to pass the fee on to consumers. However, the provisions here are comparable to those in which courts have found anticompetitive conduct legislatively authorized but not compelled. Similar to the statutes in Town of Hallie, which granted authority to the cities to handle sewage service, but which did not expressly mention anticompetitive, monopolistic conduct, 471 U.S. at 41-42, 105 S.Ct. 1713, the statutes in the current case grant authority to the passenger rental car companies to pass on assessment fees, and allow the CTTC to enforce and collect those fees, even if they do not expressly mention anticompetitive conduct. § 13995.65(f), .71. Likewise, in Hass, we held that the Oregon State Bar was authorized to establish a minimum legal malpractice insurance requirement and require attorneys to purchase such coverage from the State Bar, even though the statute did not contain such a requirement and granted only general authority to do whatever is necessary and convenient to implement malpractice coverage. 883 F.2d at 1458-59. Moreover, the history underlying the legislation at issue here strongly suggests that the legislature envisioned the fee being uniformly passed on to rental car customers. The proposed bill A.B. 2592 increased the assessment against rental car companies only if the bill also amended the companies' ability to separately itemize the rate, airport concession fee, and tourism commission assessment. Calif. Bill Analysis, Senate Floor, 2005-2006 Regular Session, Assembly Bill 2592, August 24, 2006 (Calif. Bill Analysis). [5] In an initial statement of reasons accompanying the proposed amendments, the Business, Transportation and Housing Agency, Office of Tourism indicated the significance of this pass-through provision: If the ability to pass the assessment on to the consumer was prohibited, the passenger car rental industry would have to pay the assessment from its revenues and it would affect net profit. This was not the intent of the legislation. Title 10, Chap. 7.65, §§ 5350-5358.1, Passenger Car Rental Industry Tourism Assessment, Initial Statement of Reasons, p. 2, available at http://www.visitCalifornia. de/media/ uploads/files/InitialStatementofReasons.RentalCar Assessment.pdf. Several provisions refer to the tourism fee being collected from the renter, and the Legislature also gave an express grant of state antitrust immunity to state actors complying with the enabling statute, also demonstrating that anticompetitive conduct was foreseeable at the time the provisions were enacted. § 13995.90. The legislature was also expressly advised of the likely impact to consumers: in opposition to the bill, the Center for Public Interest Law warned that the bill would lead to an industry-wide price hike because companies would merely maintain their current price levels, but instead of including the airport concession fee in the initial charge, it is now added on at the end, on top of a charge that historically included it. Calif. Bill Analysis, A.B. 2592 Senate, 8/24/2006; see Springs Ambulance Serv., Inc. v. Rancho Mirage, 745 F.2d 1270, 1273 (9th Cir. 1984) (a sufficiently articulated state policy exists if the challenged restraint is a necessary or reasonable consequence of engaging in the authorized activity) (internal quotation marks, citation and emphasis omitted). Plaintiffs suggest that the statute nonetheless does not authorize the alleged group anticompetitive conduct orchestrated with the help of the CTTC. However, in Omni the Supreme Court was clear that there is no conspiracy exception to state action immunity, noting that it is both inevitable and desirable that public officials often agree to do what one or another group of private citizens urges upon them and that otherwise a conspiracy exception would virtually swallow up the Parker rule. 499 U.S. at 374-75, 111 S.Ct. 1344. Thus, any claim of collusion or conspiracy between the CTTC and the passenger rental car companies would not defeat immunity, so long as the CTTC otherwise qualifies for state action immunity. Because there is a clear grant of authority permitting the pass-through of the assessments to rental car customers, as well as evidence that an industry-wide add-on was surely within the contemplation of the legislature, Springs Ambulance, 745 F.2d at 1273, the CTTC's alleged conduct in facilitating this result was at the very least a foreseeable consequence of the legislative grant of authority. Hass, 883 F.2d at 1459. We therefore affirm the district court's conclusion that the CTTC's alleged anticompetitive conduct constitutes an authorized and reasonably foreseeable result, and thus satisfies Midcal 's first prong of being pursuant to a clearly articulated state policy.