Document: 112 S.Ct. 2169 504 U.S. 621 119 L.Ed.2d 410 FEDERAL TRADE COMMISSION, Petitioner,v.TICOR TITLE INSURANCE COMPANY, et al. No. 91-72. Argued Jan. 13, 1992. Decided June 12, Syllabus Petitioner Federal Trade Commission filed an administrative complaint charging respondent title insurance companies with horizontal price fixing in setting fees for searches and examinations violation of § 5(a)(1) the Act. In each four States at issue—Connecticut, Wisconsin, Arizona, Montana—uniform rates were established by a rating bureau licensed State authorized to establish joint its members. Rate filings made state office became effective unless rejected them within specified period. The Administrative Law Judge held, inter alia, that had been fixed all States, but that, Wisconsin Montana, respondents' anticompetitive activities entitled state-action immunity, as contemplated Parker v. Brown, 317 341, 63 307, 87 L.Ed. 315, progeny. Under this doctrine, law or regulatory scheme can be basis antitrust immunity if (1) has articulated clear affirmative policy allow conduct (2) provides active supervision undertaken private actors. California Retail Liquor Dealers Assn. Midcal Aluminum, Inc., 445 97, 105, 100 937, 943, 233. Commission, which conceded first part test was met, held on review none conducted sufficient warrant immunity. Court Appeals reversed, holding existence program, staffed, funded, empowered law, satisfied requirement. Thus, it concluded, Held: 1. State-action is not available under schemes Montana Wisconsin. Pp. 632-640. (a) Principles federalism require federal laws subject supersession programs. Parker, supra, U.S., 350-352, S.Ct., 312-14; Midcal, supra; Patrick Burget, 486 94, 108 1658, 83. two-part confirms may confer persons fiat. Actual involvement precondition conferred out respect State's ongoing regulation, economics restraint. purpose inquiry determine whether exercised independent judgment control so details prices have product deliberate intervention. Although doctrine developed actions brought Sherman Act, issue applies action Act need determined, since does assert any superior pre-emption authority here. 632-635. (b) 34 other correctly contend broad interpretation would serve their best interests. impede, rather than advance, States' freedom required act shadow such whenever they entered realm economic regulation. Insistence real compliance both parts serves make are responsible only sanctioned control. Respondents' contention concerns better addressed misapprehends close relation between two elements, directed ensuring particular mechanisms operate because intended policy. A statement ensures did through inadvertence, approved conduct. Sole reliance articulation requirement flexibility. 635-637. (c) Where initially set parties, veto chooses, party claiming must show officials necessary steps specifics price-fixing ratesetting scheme. mere potential adequate substitute decision. standard relied case insufficient requisite level supervision. Commission's findings fact demonstrate realized either Montana. While most rate checked mathematical accuracy, some unchecked altogether. Moreover, one filing despite bureau's failure provide requested information, additional information provided after seven years, during time another remained effect. Absent supervision, there no what otherwise arrangements. And judicial cannot fill void. See Patrick, 103-105, 1664-65. This Court's decision Southern Motor Carriers Conference, Inc. United 471 48, 105 1721, 85 36, involved similar negative option regime, contrary, question met. involves vague imprimatur form agency inaction fact, should read light gravity offense, actors throughout, absence 637-640. 2. opportunity reexamine determinations Connecticut Arizona order address accorded proper deference factual extent those States. P. 640. 922 F.2d 1122 (CA3 1991), reversed remanded. KENNEDY, J., delivered opinion Court, WHITE, BLACKMUN, STEVENS, SCALIA, SOUTER, JJ., joined. concurring opinion. REHNQUIST, C.J., dissenting opinion, O'CONNOR THOMAS, O'CONNOR, Lawrence G. Wallace, Washington, D.C., argued, petitioner. John C. Christie, Jr., respondents. Justice KENNEDY Court. 1 against six nation's largest companies, alleging examinations. One company settled consent decree, while five firms continue contest matter. charged violating 38 Stat. 719, 15 U.S.C. 45(a)(1), prohibits "[u]nfair methods competition affecting commerce." principal defenses from prosecution, line cases beginning 315 (1943). defense, re Ticor Title Ins. Co., F.T.C. 344 (1989), sought Third Circuit. Ruling question, reversed. (1991). We granted certiorari. 502 ----, 47, 116 25 2 * business insuring record property interest estate, including owners, occupiers, lenders. insures certain losses damages sustained reason defect shown report refers. Before issuing policy, agents performs search examination. produces chronological list public documents chain property. examination critical analysis condition revealed disclosed search. 3 major components company's services. There variances brief summary functions performed given. exclude coverage defects uncovered search; is, insurers inform insured reduce own liability identifying excluding known risks. protected resulting discoverable records, forgery, missing heirs, previous marriages, impersonation, confusion names. They also errors mistakes Negligence proved recover. includes obligation defend event sued scope policy's guarantee. 4 industry earned $1.35 billion gross revenues 1982, respondents accounted 57 percent amount. Four companies: Insurance 16.5 market; Chicago 12.8 percent; Lawyers 12 SAFECO Co. (now operating name Security Union Co.), 10.3 percent. Stewart Guarantee 5.4 market, country's eighth insurer, strong position West Southwest. 5 issued 1985. Horizontal alleged these terms: 6 " 'Respondents agreed services settlement bureaus various states. Examples states more Respondents competitors Connecticut, Idaho, Louisiana, New Jersey, Mexico, York, Ohio, Oregon, Pennsylvania, Wyoming.' F.T.C., 346. 7 challenge insurers' practice uniform risk loss defective titles, search, examination, settlement, aspects which, alleges, do involve insurance. 8 (ALJ), defended three related grounds. First, maintained challenged exempt scrutiny McCarran-Ferguson 59 34, 1012(b), confers over "business insurance" regulated law. Second, argued collective ratemaking Noerr-Pennington places "[j]oint efforts influence officials" beyond reach laws. Mine Workers Pennington, 381 657, 670, 1585, 1593, 14 626 (1965); Eastern Railroad Presidents Conference Noerr Freight, 365 127, 136, 81 523, 529, 464 (1961). Third, contended permits supervised officials. Aluminum 233 (1980); As State, bureau. 9 practices thirteen initial complaint. matter decided ALJ, declined pursue regard Wyoming. Upon recommendation Idaho Ohio. left found violations, Jersey certiorari here, regimes before us. remain violations alleged: 10 ALJ For reasons we pause examine, defenses. then turned his attention ALJ's extensive point full understanding decisions reached proceedings case. 11 Rating entities organized evidence way pooling information. Indeed, he insurer sets according actuarial experience. Instead, usual profitability studies focus costs conducting Uniform notwithstanding differences efficiencies among individual described still issue. one, Each used come called "negative option" system approve bureaus. system, office. period, 30 days. theoretical mechanism substantive review, making detailed regarding operation minimal regulators. 13 Department audit hold hearings rates, done so. increases, 1966 1981. circumstances behind increase somewhat obscure. asked submit justifying increase, later although provided. 1981 20 increase. background though testimony inconsistent. official testified reviewed care discussed same testified, however, lacked expense data considered quite high. Commissioner examine regular intervals reject process hearings. Neither done. 1971, 1981, 1982. 1971 supporting justification, Commissioner, until 1978. accuracy. No inquired into expenses, possible without inquiry. 1982 received cursory reading Commissioner. materials objection agency, went Director least once every years. It 1980 announced comprehensive investigation conducted. spent escrow rates. Following civil suit challenging having filings, proposed minor adjustments. 16 1983. connection it, representative met Department. He told could go immediate effect further profit furnished. 17 To complete background, observed now active. abandoned 1985 response numerous treble damage suits, formal 1985, dismantled. moot, though, nothing preclude resuming Commission. W.T. Grant 345 629, 632-633, 73 894, 897, 97 1303 (1953). 18 These established, laws, (1980). unless, first, conduct, second, Id., 943. issue, proceedings, upon application 19 On decision, jurisdictions. Circuit disagreed adopting approach First England Bureau, FTC, 908 1064 (1990), 1071. standard, ruled them. consider questions: correct exceeded departing adopted parties confined briefing questions focused second question. reverse remand second. II 21 preservation free market enterprise cartels essential freedom. Topco Associates, 405 596, 610, 92 1126, 1135, 31 515 (1972). national pervasive fundamental character legal separate administer protection advancement people. Continued enforcement grants freedom, less, deciding discrete economy regulations controls. Against (1943), upheld state-supervised sharing challenge. Our grounded principles federalism. 312-13. 22 principle foster preserve explains evolution our 83 (1988). invalidated statute forbidding licensees wine trade selling below producer. applicable instances where participate regime. "First, restraint clearly affirmatively expressed policy; actively itself." (internal quotation marks omitted). fiat, displace displacement implemented specific details. involvement, arrangements general auspices Immunity regulation intent restrain precision participation mechanics posting apparent Ibid. 23 rationale elaborated Burget. physicians participated peer injure destroy denying hospital privileges physician who begun competing clinic. referred preserving policies, distinct allowing foreclose competition, following passage: 24 "The stems recognition engaging activity, danger acting interests, governmental interests State. . designed ensure will shelter acts actually policies. accomplish purpose, mandates exercise ultimate presence monitoring suffice. prong requires power disapprove fail accord program realistic assurance party's promotes merely interests." 100-101, 1663 citations Because actors, committee 106, 1666. 26 normative efficiency, practices. Its intervention, simply agreement parties. Much causation inquiries, asks played substantial role determining how well works own. 27 bears mention, observe prior arises times apply 45. Bureau Consumer Protection, Staff Report Prescription Drug Price Disclosures, Chs. VI(B) (C) (1975); see Note, Action Exemption Antitrust Enforcement 89 Harv.L.Rev. 715 (1976). leading treatise skepticism view. Areeda & D. Turner, ¶ 218 (1978). statutes distinguished basis, instant 28 justify powerful refutation viewpoint briefs joined amici curiae precise point. deny rule submission. 29 If enter impede action, advance it. regulate economies many ways inconsistent example, Oregon approving 1665. Or Michigan utilities authorizing monopolization electric bulbs. Cantor Detroit Edison 428 579, 96 3110, 3120, 49 1141 So disfavored, much repeals implication. Lafayette Louisiana Power Light 435 389, 398-399, 98 1123, 1129, 55 364 By adhering accepted assumptions about benefits framework accept political responsibility intend undertake. different matter, compel result account. Federalism assign responsibility, obscure nor served policies displaced achieve limited ends. choose insistence articulate forms Midcal's elements. Both 100, 1662. case, shows little acted inadvertence; alone ensure, precedents, seems plain, moreover, referred, sole flexibility deem necessary. whose object benefit citizens attractive nuisance sphere. oppose pressures, become meaningless constraint. III 32 us, formulation Circuit: 33 'Where state's place, staffed ample duty pursuant declared standards enforceable courts, demonstrates basic activity towards seeing carry established.' F.2d, 1136, quoting 1064, 1071 (CA1 1990). Based states, liability. 1140. 35 theory might applied manner consistent us criteria forth relevance inquiry, end there. chooses standards, conclude 36 agencies so-called prevailed. time. said signified approval. proposition reconciled, findings, fact. found, agreed, Some lapse fatal attempts portray providing component whatever occur. availability agencies' participation, likewise limited. 37 (1985), too contrary. Government's being pricing compelled. assertion undertook aspect Government 62, 66, 1729, 1731. concession district court determination submitted ordered rate-making using submissions 467 F.Supp. 471, 476-477 (ND Ga.1979). course, concedes litigates second; finding offense pernicious fixing. FTC Superior Trial Assn., 493 411, 434, n. 16, 110 768, 781, 107 851 (1990). context, decline formulate lead none. imply local ends establishment prices. Cf. Columbia Omni Outdoor Advertising, 499 111 1344, 113 382 (1991) (city billboard zoning ordinance immunity). unilateral Fisher Berkeley, 475 260, 106 1045, 206 (1986) (private liable action). here call regime sampling techniques return regulators control, infrequent 324 Corp. Duffy, 479 335, 344, 6, 720, 725, 93 667 (1987) (a specifying margin wholesale retail satisfy requirement). immune IV 39 granting incorrect disregarding Arizona. think latter views expressed. 40 remanded 41 ordered. 42 concurring. 43 my view faithful "active supervision." hand, I Chief O'Connor fertile source uncertainty (hence) litigation, produce total abandonment programs individuals take chance participating That true, just "negative-option" even context (1988): Private invited know occurred (and indeed trial completed) "active" enough. 44 am willing consequences alternative constraints supervision" here; skeptical Brown exemption state-programmed collusion place. 45 whom THOMAS join, dissenting. 46 holds today liability, enacted legislature prove "the policy." Ante, 635. neither supported precedent, sound dissent. 47 noted majority, concluding administering legislature. concluded Congress evidences "restrain state." 351, 312.1 premised assumption Congress, enacting compromise ability domestic 56, 1726, (1985) (footnote 48 present precedent "clearly [and] [was] 943 citation liquor retailers charge percentage above "posted" area wholesalers, "[t]he direct prices, reasonableness dealers." 940. defense authorize instance authority, taken facing liability.2 recent (1988), requirement, "state [must] 101, 1663. Until today, therefore, never occasion gave authority—"power"—to meet sufficiently rigorous. 50 Addressing analysis: 51 'Where, 1122, 1136 52 likens doing away together based action. But closely attuned "have power" Burget today. doesn't say satisfied. guidance gives akin negligence case; play "a Any formulation, told, remove practical 53 believe case.3 agency. manifested approval raising entity mainly "evidentiary function" "one actor ." Hallie Eau Claire, 46, 1713, 1720, (1985). 54 insists newly "increase flexibility." 636. participate, filing, makes highly unlikely filing. turn lessens flexibility, before, improve fewer consider, resources expended 51, 1723. advanced sanction areas "not laws." 2178. establish, staff, fund jointly laws.4 rejects Appeals, stating seeking "show scheme." 638.5 Such necessarily puts efficacy scheme, "requisite 637. maintains "normative standard" 634. regulators, i.e., regulates, active—surely judgment. 56 found—properly, view—that vigor petitioner like, enough facts conclusion. constitute rejection findings. therefore affirm below. 58 joins, Notwithstanding assertions diminished creating impossible situation Even when policy" behavior—which here—and establishes supervise implementation majority find "substantial" "specifics" insulate behavior Given threat damages, heeding foolhardy so; compelled comply less fortunate. today's likely eliminate universe seeks exposing 60 dispute ratemaking; rather, argues fact." 638. after-the-fact evaluation supervisory powers extremely unfair Liability enthusiastically carried her statutory duties. regulator, very idea degree receive. engage exactly structure, discover afterward resulted treble-damage 61 assure itself undertake offer declares "pla[y] ambiguous, runs counterproductive. reasonable rate, reviewing criteria. retrospective combined satisfied, unattractive regulate. 62 Finally, important remember government prosecutors. strained adding extra burden asking witnesses litigation respond allegations job. reasons, given Justice, "[c]ontinued controls" ante, 632. However, embodied grant compete implicate (1987), York failed legislation 112% wholesalers. statute, like schedules 345, 726. (1980), Liquor, lack Appeals. examples cited change result. committee; (1976), current jurisprudence clear, schemes, generally issues doctrine.

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