480 F.3d 438 (6th Cir. 2007), 06-1171, First American Title Co. v. Devaugh

Docket Nº:06-1171.
Citation:480 F.3d 438
Party Name:FIRST AMERICAN TITLE COMPANY, a California Corporation; Transnation Title Insurance Company, an Arizona Corporation; Lawyers Title Insurance Corporation, a Virginia Corporation; and Chicago Title Insurance Company, a Missouri Corporation, Plaintiffs-Appellants, v. Melissa R. DEVAUGH, in her capacity as the Lapeer County Register of Deeds; Fran Full
Case Date:February 22, 2007
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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480 F.3d 438 (6th Cir. 2007)

FIRST AMERICAN TITLE COMPANY, a California Corporation; Transnation Title Insurance Company, an Arizona Corporation; Lawyers Title Insurance Corporation, a Virginia Corporation; and Chicago Title Insurance Company, a Missouri Corporation, Plaintiffs-Appellants,

v.

Melissa R. DEVAUGH, in her capacity as the Lapeer County Register of Deeds; Fran Fuller, in her capacity as the Eaton County Register of Deeds; Mildred Dodak, in her capacity as the Saginaw County Register of Deeds; Virginia McLaren, in her capacity as the Tuscola County Register of Deeds; and Linda M. Landheer, in her capacity as the Newaygo County Register of Deeds, Defendants-Appellees.

No. 06-1171.

United States Court of Appeals, Sixth Circuit.

Feb. 22, 2007

         Argued: Dec. 7, 2006.

Page 439

         ARGUED:

         David A. Ettinger, Honigman, Miller, Schwartz & Cohn, Detroit, Michigan, for Appellants.

         Bonnie G. Toskey, Cohl, Stoker, Toskey & McGlinchey, Lansing, Michigan, for Appellees.

          ON BRIEF:

         David A. Ettinger, Honigman, Miller, Schwartz & Cohn, Detroit, Michigan, for Appellants.

         Bonnie G. Toskey, Cohl, Stoker, Toskey & McGlinchey, Lansing, Michigan, Marcia L. Howe, Johnson, Rosati, LaBarge, Aseltyne & Field, Farmington Hills, Michigan, Christina M. Grossi, Gilbert, Smith & Borrello, Saginaw, Michigan, for Appellees.

         Before: BATCHELDER and GRIFFIN, Circuit Judges; PHILLIPS, District Judge. [*]

         OPINION

         GRIFFIN, Circuit Judge.

         The plaintiffs-appellants are four title insurance companies that do business in Michigan: First American Title Company (a subsidiary of First American Corporation), Transnation Title Insurance Company (a subsidiary of LandAmerica Financial Group, Inc.), Chicago Title Insurance Company (a subsidiary of Fidelity National Financial, Inc.), and Lawyers Title Insurance Company (a subsidiary of LandAmerica Financial Group, Inc.), collectively referred to as "First American."

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The defendants-appellees are the Registers of Deeds of five counties in Michigan: Lapeer, Eaton, Saginaw, Tuscola, and Newaygo, collectively referred to as "the registers."

         First American alleges that the Lapeer, Eaton, Saginaw, and Newaygo County registers refuse to provide duplicate records in non-paper formats, or to provide duplicate paper records at a bulk discount, unless First American agrees not to sell or give the duplicate records, unofficial copies of the copies, or the information therein, to anyone else. First American contends that this no-resale condition is an anticompetitive practice that violates the Sherman Antitrust Act, 15 U.S.C. § 1 et seq. First American also alleges that the Tuscola County Register violated the Sherman Act by refusing to provide official title record copies in non-paper format, and by refusing to provide paper copies at a bulk discount; First American does not allege that the Tuscola County Register imposed a no-resale condition on the availability of such copies.

         The registers moved to dismiss the Sherman Act claims for failure to state a claim on which relief can be granted, FED.R.CIV.P. 12(b)(6), on the ground that the challenged practices qualify for state-action immunity. The district court granted the registers' motion, and First American appeals. For the reasons that follow, we affirm the dismissal of the Sherman Act claims with regard to the challenged practices of the Tuscola County Register because those practices are covered by state-action immunity from antitrust liability. But we reverse the dismissal of the Sherman Act claims with regard to the challenged practices of the other four county registers and remand for further proceedings consistent with this opinion.

         I.

         Because First American asserted claims under section 2 of the Sherman Act, 15 U.S.C. § 2, and the United States Constitution, the district court had federal-question jurisdiction under 28 U.S.C. § 1331. The district court had supplemental jurisdiction over First American's state-law claims under 28 U.S.C. § 1367(a) because they "so related" to First American's federal-law claims as to "form part of the same case or controversy." Id.; Davet v. City of Cleveland, 456 F.3d 549, 553 (6th Cir.2006). Because the appellants filed timely notices of appeal, we have jurisdiction pursuant to 28 U.S.C. § 1291.

         II.

         In general, a register of deeds ("register") is a government official charged with the tasks of (1) recording all deeds, mortgages, and other instruments that convey an interest in land in the register's county, and (2) maintaining copies of those records for public inspection and reproduction. In Michigan, a register operates only in the county in which she has been elected; each county register therefore has an effective monopoly because obtaining a complete listing of real estate title documents otherwise entails obtaining title records directly from every person and entity engaged in real estate transactions within the county. As First American explains without contradiction from the registers, this "task would be essentially impossible, since there would be no incentive for individuals to identify themselves or provide documents concerning their transactions to a private party [such as plaintiff title companies], and the cost of collecting this data would be prohibitive."

         As a title insurer, First American's business includes compiling, inspecting, and researching each document that is recorded and maintained by the registers in the

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counties where First American provides title insurance. Based on information in those documents, First American creates, maintains, and provides indices and abstracts of that information. The development of such a document index--called a tract index or a title plant--enables First American to retrieve title documents more quickly and accurately than it could if it used the registers' grantor-grantee indices. This is because a tract index, unlike a register's grantor-grantee index, lists records by parcel of real estate. First American provides its tract indices to title insurance customers and to other companies that do not have their own indices, thus providing a superior source of title information. This enables title insurers and parties to real estate transactions to identify and resolve defects in title.

         The Michigan Legislature ("the Legislature") requires registers, upon payment of a fee, to record "reproductions ... of all deeds, mortgages, maps, and instruments or writings authorized by law to be recorded in his or her office, and left with him or her for that purpose." M.C.L. § 565.491; see also M.C.L. § 565.583. Since 1921, the Legislature has authorized the counties by statute

to purchase or make, establish and maintain a system of abstracts of title to all lands in said county; to make and sell abstracts of title and furnish information concerning the conditions of title to such lands and to charge such fees therefor as shall be from time to time determined by the proper authorities of said counties as hereinafter provided.

M.C.L. § 53.141; see also M.C.L. § 565.201(1) (specifying the information that an instrument must contain in order to be recorded with a register of deeds); M.C.L. §§ 565.411 and 565.412 (register may receive and record a sealed, certified copy of any final judgment by a court of competent jurisdiction that affects or relates to the title of real estate that is situated within his county, and it may collect the same fee as charged for recording a conveyance).

         Perhaps most relevant, the statute governing reproduction of registers' records, now M.C.L. § 565.551, provides, in full:

Sec. 1. (1) A register of deeds shall furnish proper and reasonable facilities for the inspection and examination of the records and files in his or her office, and for making memorandums or transcripts from the records and files during the usual business hours, to an individual having a lawful purpose to examine the records and files. However, the custodian of the records and files may make reasonable rules and regulations with reference to the inspection and examination of the records and files as is necessary to protect the records and files and to prevent interference with the regular discharge of the duties of the register of deeds.

(2) If an individual requests a reproduction of a record or file of a register of deeds, the register of deeds shall do 1 of the following, at the register of deeds' option:

(a) Reproduce the record or file for the individual pursuant to ... sections 24.401 to 24.403 of the Michigan Compiled Laws, using a medium selected by the register of deeds. Unless a different fee is provided for by law, the fee for a reproduction under this subdivision other than a paper copy shall not exceed the reasonable costs to the register of deeds.

(b) Provide equipment for the individual to reproduce the record or file pursuant to [same statutory sections noted above], using a medium selected by the register of deeds. Unless a different fee is provided for by law, the fee for a reproduction

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under this subdivision other than a paper copy shall not exceed the reasonable costs to the register of deeds.

(c) Authorize the individual to reproduce the record or file on the premises using equipment provided by that individual. This subdivision does not apply unless the individual requests authorization to reproduce the record or file using equipment provided by that individual.

(3) A register of deeds may prohibit the reproduction of an instrument temporarily left with the register of deeds to be recorded in the register of deeds' office.

M.C.L. §§ 565.551(2)(a) and (b) incorporate...

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