The Supreme Court/The Supreme Court.iso/pc/ascii/1991/91_72/91_72.zd1

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SUPREME COURT OF THE UNITED STATES
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No. 91-72
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FEDERAL TRADE COMMISSION, PETITIONER v.
TICOR TITLE INSURANCE COMPANY et al.
on writ of certiorari to the united states court of
appeals for the third circuit
[June 12, 1992]

  Chief Justice Rehnquist, with whom Justice O'Con-
nor and Justice Thomas join, dissenting.
  The Court holds today that to satisfy the -active supervi-
sion- requirement of state action immunity from antitrust
liability, private parties acting pursuant to a regulatory
scheme enacted by a state legislature must prove that -the
State has played a substantial role in determining the
specifics of the economic policy.-  Ante, at 11.  Because this
standard is neither  supported by our prior precedent, nor
sound as a matter of policy, I dissent.
  Immunity from antitrust liability under the state action
doctrine was first established in Parker v. Brown, 317 U. S.
341 (1943).  As noted by the majority, in Parker we relied
on principles of federalism in concluding that the Sherman
Act did not apply to state officials administering a regulato-
ry program enacted by the state legislature.  We concluded
that state action is exempt from antitrust liability, because
in the Sherman Act Congress evidences no intent to
-restrain state action or official action directed by a state.-
Id., at 351.  -The Parker decision was premised on the
assumption that Congress, in enacting the Sherman Act,
did not intend to compromise the States' ability to regulate
their domestic commerce.-  Southern Motor Carriers Rate
Conference, Inc. v. United States, 471 U. S. 48, 56 (1985)
(footnote omitted).
  We developed our present analysis for state action
immunity for private actors in California Retail Liquor
Dealers Assn. v. Midcal Aluminum, Inc., 445 U. S. 97
(1980).  We held in Midcal that our prior precedent had
granted state-action immunity from antitrust liability to
conduct by private actors where a program was -clearly
articulated and affirmatively expressed as state policy [and]
the policy [was] actively supervised by the State itself.-  Id.,
at 105 (internal quotation marks and citation omitted).  In
Midcal, we found the active supervision requirement was
not met because under the California statute at issue,
which required liquor retailers to charge a certain percent-
age above a price -posted- by area wholesalers,  -[t]he State
has no direct control over wine prices, and it does not
review the reasonableness of the prices set by wine deal-
ers.-  Id., at 100.  We noted that the state action defense
does not allow the States to authorize what is nothing more
than private price fixing.  Id., at 105.
  In each instance since Midcal in which we have concluded
that the active supervision requirement for state action
immunity was not met, the state regulators lacked authori-
ty, under state law, to review or reject the rates or action
taken by the private actors facing antitrust liability.  Our
most recent formulation of the -active supervision- require-
ment was announced in Patrick v. Burget, 486 U. S. 94
(1988), where we concluded that to satisfy the -active
supervision- requirement, -state officials [must] have and
exercise power to review particular anticompetitive acts of
private parties and disapprove those that fail to accord with
state policy.-  Id., at 101.  Until today, therefore, we have
never had occasion to determine whether a state regulatory
program which gave state officials authority--power--to
review and regulate prices or conduct, might still fail to
meet the requirement for active state supervision because
the state's regulation was not sufficiently detailed or
rigorous.
  Addressing this question, the Court of Appeals in this
case used the following analysis:
-`Where, as here, the state's program is in place, is
staffed and funded, grants to the state officials ample
power and the duty to regulate pursuant to declared
standards of state policy, is enforceable in the state's
courts, and demonstrates some basic level of activity
directed towards seeing that the private actors carry
out the state's policy and not simply their own policy,
more need not be established.'-  922 F. 2d 1122, 1136
(CA3 1991), quoting New England Motor Rate Bureau,
Inc. v. FTC, 908 F. 2d 1064, 1071 (CA1 1990).
The Court likens this test to doing away all together with
the active supervision requirement for immunity based on
state action.  But the test used by the Court of Appeals is
much more closely attuned to our -have and exercise power-
formulation in Patrick v. Burget than is the rule adopted by
the Court today.  The Court simply doesn't say just how
active a State's regulators must be before the -active
supervision- requirement will be satisfied.  The only
guidance it gives is that the inquiry should be one akin to
causation in a negligence case; does the State play -a
substantial role in determining the specifics of the economic
policy.-  Ante, at 11.  Any other formulation, we are told,
will remove the active supervision requirement all together
as a practical matter.
  I do not believe this to be the case.  In the States at
issue here, the particular conduct was approved by a state
agency.  The agency manifested this approval by raising no
objection to a required rate filing by the entity subject to
regulation.  This is quite consistent with our statement that
the active supervision requirement serves mainly an
-evidentiary function- as -one way of ensuring that the
actor is engaging in the challenged conduct pursuant to
state policy. . . .-  Hallie v. Eau Claire, 471 U. S. 34, 46
(1985).
  The Court insists that its newly required -active supervi-
sion- will -increase the States' regulatory flexibility.-  Ante,
at 12.  But if private actors who participate, through a joint
rate filing, in a State's -negative option- regulatory scheme
may be liable for treble damages if they cannot prove that
the State approved the specifics of a filing, the Court makes
it highly unlikely that private actors will choose to partici-
pate in such a joint filing.  This in turn lessens the States'
regulatory flexibility, because as we have noted before, joint
rate filings can improve the regulatory process by ensuring
that the state agency has fewer filings to consider, allowing
more resources to be expended on each filing.  Southern
Motor Carriers Rate Conference, Inc. v. United States,
supra, at 51.  The view advanced by the Court of Appeals
does not sanction price fixing in areas regulated by a State
-not inconsistent with the antitrust laws.-  Ante, at 11.  A
State must establish, staff, and fund a program to approve
jointly set rates or prices in order for any activity undertak-
en by private individuals under that program to be immune
under the antitrust laws.
  The Court rejects the test adopted by the Court of
Appeals, stating that it cannot be the end of the inquiry.
Instead, the party seeking immunity must -show that state
officials have undertaken the necessary steps to determine
the specifics of the price-fixing or ratesetting scheme.-
Ante, at 14.  Such an inquiry necessarily puts the federal
court in the position of determining the efficacy of a
particular State's regulatory scheme, in order to determine
whether the State has met the -requisite level of active
supervision.-  Ante, at 13.  The Court maintains that the
proper state action inquiry does not determine whether a
State has met some -normative standard- in its regulatory
practices.  Ante, at 10.  But the Court's focus on the actions
taken by state regulators, i.e., the way the State regulates,
necessarily requires a judgment as to whether the State is
sufficiently active-surely a normative judgment.
  The Court of Appeals found-properly, in my view-that
while the States at issue here did not regulate respondents'
rates with the vigor the petitioner would like, the States'
supervision of respondents' conduct was active enough so as
to provide for immunity from antitrust liability.  The Court
of Appeals, having concluded that the Commission applied
an incorrect legal standard, reviewed the facts found by the
Commission in light of the correct standard and reached a
different conclusion.  This does not constitute a rejection of
the Commission's factual findings.
  I would therefore affirm the judgment below.