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Anti-Trust Litigation Resolved in Title Insurers' Favor
The Unites States Court of Appeals for the Third Circuit recently resolved a suit against several New Jersey title insurers in favor of the title industry. In re N.J. Title Insurance Litigation, 683 F. 3d 451 (3d Cir. 2012) affirmed the decision of the United States District Court, which had dismissed the complaint with prejudice. Plaintiffs alleged that the defendant title companies engaged in illegal activities in contravention of laws such as the Sherman Anti-Trust Act, 15 U.S.C. §§ 1 et seq.
At first glance, the collective setting of premiums would seem to constitute illegal price-fixing; however this is not the case. Under the authority of the Title Insurance Act, N.J. S.A. 17:46B-1 et seq., the title industry has established a Rating Bureau, formally known as the New Jersey
Land Title Insurance Rating Bureau [NJLTIRB], to which most of the title insurers doing business in New Jersey now belong. The Rating Bureau proposes industry-wide rates, subject to the approval of the Department of Banking and Insurance [DOBI].
Immunity from anti-trust regulation is conditioned upon the existence of an appropriate state regulatory scheme. The so-called state action doctrine (i.e., the concept that the state regulation is sufficiently strong and comprehensive to pre-empt the concerns of anti-trust regulators) is derived from the United States Supreme Court’s decision in Parker v. Brown. 317 U.S. 341 (1943). A successful application of the doctrine requires that a two-pronged test be met: (a) the State must articulate a clear and affirmative policy to allow the anti-competitive conduct; and (b) the State must provide active supervision of anti­competitive conduct undertaken by private actors. FTC v. Ticor Title Ins. Co., 504 U.S. 621, 631 (1992); see also Cal. Retail Liquor Dealers Ass’n v. Midcal Alum., 445 U.S. 97 (1980).
Therefore, in a state such as New Jersey, where the regulatory scheme meets the test set forth above, the ability (if any) of regulators or individual consumers to challenge same is extremely limited. A corollary to the state action doctrine is the so-called filed rate doctrine, which holds that payment of a filed rate does not constitute a legal injury under the anti-trust laws. Keogh v. Chicago & Nw. Ry. Co., 260 U.S. 156, 163 (1922); see also Square D Co. v. Niagra Frontier Tariff Bureau, 476 U.S. 409 (1986). Thus, the District Court, applying the filed rate doctrine, determined that plaintiffs lacked standing to challenge the filed rate structure and dismissed the complaint with prejudice. The Third Circuit affirmed.
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