US v. Title Ins. Rating Bureau of Arizona
| Decision Date | 23 June 1981 |
| Docket Number | CIV 80-996 PHX CAM,CIV 80-840A PHX CAM,No. CIV 80-769 PHX CAM,CIV 80-840 PHX CAM and CIV 80-885 PHX CAM.,CIV 80-769 PHX CAM |
| Citation | 517 F. Supp. 1053 |
| Parties | UNITED STATES of America, Plaintiff, v. TITLE INSURANCE RATING BUREAU OF ARIZONA, INC., Defendant. In re ARIZONA ESCROW FEE ANTITRUST LITIGATION. STATE of Arizona, et al., Plaintiffs, v. TITLE INSURANCE RATING BUREAU OF ARIZONA, INC., et al., Defendants. Eric and Leslie VAUGHN, Plaintiffs, v. TITLE INSURANCE RATING BUREAU OF ARIZONA, INC., et al., Defendants. Dwight C. LUNDELL, Plaintiff, v. TITLE INSURANCE RATING BUREAU OF ARIZONA, INC., et al., Defendants. |
| Court | U.S. District Court — District of Arizona |
Gordon L. Lang, David A. Blotner, Antitrust Division, U. S. Dept. of Justice, Washington, D. C., for United States.
Alison B. Swan, Chief Counsel, Mark Freitag, Asst. Atty. Gen., Antitrust Division, Phoenix, Ariz., Timothy Hogan, Asst. Atty. Gen., Financial Fraud Division, Phoenix, Ariz., Kenneth R. Reed, Sp. Asst. Atty. Gen., Law Offices of Kenneth R. Reed, Phoenix, Ariz., for J. Michael Low, Director of Insurance, State of Arizona.
J. Thomas Hannan, Ronald Lovitt, Lovitt & Hannan, Inc., San Francisco, Cal., for Lundell.
David L. White, Jennings, Strouss & Salmon, Phoenix, Ariz., for U. S. Life Title Ins. Co., Dallas, and defendants' Liaison Counsel.
Aaron Rosen, Associate Gen. Counsel, TICOR, Los Angeles, Cal., John A. Baade, Miller, Pitt & Feldman, Tucson, Ariz., for Pioneer National Title Ins. Co.
Philip P. Berelson, Brown & Bain, P.A., Phoenix, Ariz., for Title Ins. Rating Bureau of Arizona, and First American Title Ins. Co. of Arizona.
Kimball Corson, Lewis & Roca, Phoenix, Ariz., for Transamerica Title Ins. Co.
Phil Horvitz, Asst. Counsel, Commonwealth Land Title Ins. Co., Philadelphia, Pa., Daniel Cracchiolo, Burch & Cracchiolo, Phoenix, Ariz., Rick Klaren, Commonwealth Land Title Ins. Co., Beverly Hills, Cal., for Commonwealth Land Title Ins. Co.
Leon R. Goodrich, Oppenheimer, Wolff, Foster, Shepard & Donnelly, St. Paul, Minn., Gerard K. Knorr, Gen. Counsel, St. Paul Title Ins. Corp., St. Paul, Minn., for St. Paul Title Ins. Corp.
Russell E. Jones, Michael J. Meehan, Molloy, Jones, Donahue, Trachta, Childers & Mallamo, Tucson, Ariz., Paul J. Kennedy, Executive Vice President and House Counsel, Stewart Title & Trust of Phoenix, Phoenix, Ariz., William R. Pakalka, Fulbright & Jaworski, Houston, Tex., for Stewart Title Guaranty Co.
Edward B. Towey, Law Offices of Towey & Zak, Denver, Colo., for Title Ins. Co. of Minnesota.
John F. Graybeal, Foley, Lardner, Hollabaugh & Jacobs, Washington, D. C., for Lawyers Title Ins. Corp.
M. E. Rake, Jr., O'Connor, Cavanagh, Anderson, Westover, Killingsworth & Beshears, Phoenix, Ariz., for St. Paul Title Ins. Co., American Title Ins. Co., Chicago Title Ins. Co., and Lawyers' Title Ins. Co.
Martin R. Galbut, McLoone, Theobald & Galbut, P. C., Phoenix, Ariz., for Land Title Ass'n of Arizona.
Richard Q. Nye, Foley, Clark & Nye, Phoenix, Ariz., for Fidelity National Title.
Philip E. von Ammon, Fennemore, Craig, von Ammon, Udall, Phoenix, Ariz., for American Title Ins. Co.
John C. Christie, Jr., Bell, Boyd, Lloyd, Haddad & Burns, Washington, D. C., for Chicago Title Ins. Co.
J. Edd Stepp, Jr., Gibson, Dunn & Crutcher, Los Angeles, Cal., Dennis A. Berkey, Corporate Counsel, SAFECO Title Ins. Co., Panorama City, Cal., for SAFECO Title Ins. Co.
The plaintiffs herein, the United States of America, the State of Arizona, and two private plaintiffs, seek a summary determination that defendants, a title insurance rating bureau and its individual members and subscribers, are guilty of price fixing as proscribed by Section 1 of the Sherman Act. 15 U.S.C. § 1.
In response, defendants have filed a Motion for Summary Judgment and a Motion to Dismiss, arguing that they are immune from antitrust liability. Defendants are of the position that they are engaged in the business of insurance and that their activities are regulated by the State of Arizona, bringing them within two of the traditional exemptions from the sweep of the Sherman Act. One defendant has submitted a Motion to Dismiss, asserting that theirs is protected Noerr-Pennington activity,1 and it is therefore immune from antitrust liability.
The parties agree that there are no material issues of fact; they simply seek a judicial determination as to whether the defendants are within an exemption to the antitrust laws.
In 1977 the Arizona Legislature passed House Bill 2316 requiring, inter alia, that title insurance companies file a schedule of rates for the escrow services they were performing. See A.R.S. § 20-376(A & B). The Director of Insurance was charged with the review and approval of such rates when satisfied that they served the public welfare. A.R.S. § 20-376(D), § 341. The legislation required that the filings be submitted within ninety (90) days of its date of effect, August 27, 1977.
Defendant Title Insurance Rating Bureau of Arizona, Inc., TIRBA, is a title insurance rating organization licensed under Arizona law. It has thirteen members and a greater number of subscribers, all of which are engaged in the business of title insurance.
As part of their services, most of the defendant insurance companies provide escrow services. In October and November, 1977, the TIRBA Board of Directors held a series of meetings at which escrow rates and services for the title insurers and their agents were discussed and classified. On November 9, 1977, the TIRBA Board of Directors approved the "Schedule of Escrow Services Rates, Manual of Classifications and Rules and Plans Relating Thereto" and authorized its submission to the Arizona Department of Insurance. On November 14, 1977, TIRBA delivered its Schedule to the Department as its initial filing of escrow rates. The schedule stated that it was filed "on behalf of members and subscribers to the services of said Rating Bureau." As per Arizona law, the filing became effective fifteen days after it was filed. A.R.S. § 20-376(E). Subsequently, in December, 1977 and January of 1978, TIRBA, on behalf of its members, filed amendments to its escrow rates, which amendments have been accepted by the Department. In April of 1978, TIRBA, again on behalf of its members and subscribers, submitted a correction of certain earlier filed rates and additional rates for certain services. In December of 1978, TIRBA filed a revised Schedule which recoded certain escrow classifications or rates.
The effect of these filings is that since at least 1977, a uniform price has been charged for escrow services by the title insurance companies in Arizona. Although authorized by A.R.S. § 20-379, none of the companies has filed deviations from the rating bureau schedule or chosen to subscribe to only some of the rating bureau's filings, but all of the companies have charged the same price for their services.
On September 23, 1980, the United States Department of Justice filed suit against TIRBA, alleging that the rating bureau and its members had engaged in an unlawful conspiracy in restraint of interstate trade and commerce in violation of Section 1 of the Sherman Act. The complaint sought injunctive relief preventing the continuation of the conspiracy and cancelling the joint escrow rate filings.
On December 1, 1980, the State of Arizona, on its own behalf, as representative of governmental entities within the State that have purchased escrow services, and as parens patriae on behalf of all natural persons residing in the State who had purchased escrow services, filed a complaint similar to the one filed by the United States. In addition to praying for injunctive relief against TIRBA and its members, the complaint sought treble damages as provided by Section 4 of the Clayton Act. 15 U.S.C. § 15.
During October 1980, two private actions were filed by individual plaintiffs on their own behalf and as representatives of a class of all others similarly situated. These actions sought injunctive relief and treble damages. The private complaints also named the Arizona Director of Insurance as a defendant and sought to enjoin him from implementing any of the provisions of Arizona law which related to the setting, filing, posting or adherence to escrow rates by title insurers. The Director has subsequently been dismissed from the suits.
The defendants' answers have framed two defenses which they still maintain: first, that the complaint concerns activities constituting the business of insurance, a business exempted from the antitrust laws by the McCarran-Ferguson Act, 15 U.S.C. § 1011 et seq.; and second, that the defendants' activities were undertaken pursuant to a scheme of state regulation as required by state law.
On March 26, 1981, defendant Transamerica Title Insurance Company filed a Motion for Partial Judgment on the Pleadings which essentially raised a third defense: that the activities of the defendant companies in response to Arizona law could not be the basis for liability under the Sherman Act because the actions were protected expression and thereby insulated from liability by the Noerr-Pennington Doctrine.
Section 2(b) of the McCarran-Ferguson Act provides that the federal antitrust laws shall not be applicable to the business of insurance so long as that business is state regulated. 15 U.S.C. § 1012(b). In this case, there is no dispute that the insurance business is regulated by the State of Arizona. The issue in contention is whether...
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