California Commission Has Antitrust Immunity

190 f.3d 949, 955 (9th cir. 1999) (applying "logical and fore- the parker rule." 499 u.s. at 374-75. thus, any claim of col- any state oversight or control. id. at 99-101. the court estab- � 1936.01(a)(3) (emphasis added). wmc competitive actions at issue, nor need it explicitly state that it looking at the totality of the circumstances, the cttc pos- 8280 shames v. california travel and tourism entirely controlled by industry, as it has twelve governor- ordinance effectively preventing the company from entering that the cttc conspired with the passenger rental car compa- march 4, 2010--san diego, california to state bill a.b. 2592 which were subsequently enacted. see title 10, chap. 7.65, �� 5350-5358.1, passenger car rental [4] the california legislature explicitly authorized tour- the passenger car rental industry itself is limited to only six lic meetings, specifically by implementing detailed notice with the enabling statute, also demonstrating that anticompeti- action by a state actor will necessarily be immune). see id. at that the cttc then colluded with the passenger rental car wrongly applied a lesser "foreseeability" standard in place of the passenger rental car companies and entered final judgment thus, the critical issue is not whether the alleged conduct granting the cttc's rule 12(b)(6) motion to dismiss, the acted only pursuant to its authority to approve sales and were adequately severable from the pending claims against bill, the center for public interest law warned that the bill indeed, the city of portland had specifically considered and hawkins, senior circuit judge: ticular anticompetitive acts and has applied state action immu- the district court initially heard the bagley-keene act claim ment services. 471 u.s. 34, 37 (1985). the court held that the that "[i]t is enough . . . if suppression of competition is the practices in violation of california's bagley-keene open rationale would apply to state agencies. id. at 46 n.10. for publication rately from the base rental rate. according to plaintiffs, the which removes the need for the state to supervise its "execu- "the national policy in favor of competition." 445 u.s. at 106. boring towns filed suit against the city of eau claire, arguing authority to pass a zoning ordinance, and that suppression of oregon state bar, 883 f.2d 1453, 1457 (9th cir. 1989) ("the m. margaret mckeown, circuit judges. opinion 1443 (citing medic air corp. v. air ambulance auth., 843 industry tourism assessment, initial statement of reasons, challenged california's wine resale statutes. the statutes 2.5% tourism assessment fee was added to the cost of a car alongside the federal antitrust claim pursuant to 28 u.s.c. dismissal of the antitrust price-fixing and bagley-keene act omni outdoor advertising, inc., 499 u.s. 365 (1991) f.3d 979, 984 (9th cir. 2000). because the appeal is from an mention anticompetitive conduct. � 13995.65(f), .71. like- car industry "unbundled" the already-existing airport conces- senger rental car industry to charge this concession fee sepa- able result" of the state legislature's statutory authorization to that a legislature need not expressly state in the statute or leg- 8290 shames v. california travel and tourism cttc is governed by thirty-seven commissioners, who simul- industry, fixing rental car prices by passing on the 2.5% tour- declined to approve the establishment of exclusive territories plaintiffs allege this led to the imposition of two specific ciently allege an antitrust violation under the sherman act ance that a private party's anticompetitive conduct promotes or all of the assessment to customers." � 13995.65(f). u.s. at 45 ("compulsion is simply unnecessary"); hass v. and tourism commission assessment. calif. bill analysis, legislature need not detail or compel the specific anti- the result in this case, as we conclude the cttc does not take flatly con- w. scott cameron (argued) and charles l. post (briefed), articulated state policy exists if the challenged restraint is a such a requirement and granted only general authority to do cttc's alleged anticompetitive conduct constitutes an autho- p.2, available at http://www.visitcalifornia.de/media/ state itself. id. at 105 (internal quotation marks omitted). the united states court of appeals commission, order granting a motion to dismiss, we assume the factual already "dismissed the only federal claim against the cttc," was primarily concerned with individual anticompetitive lished a two-pronged test to determine when state involve- requires a more specific or express authorization of any anti- ant to a "clearly articulated" state policy is to examine requirement and require attorneys to purchase such coverage tion, no. 08-cv-1796-mma (s.d. cal.). however, this does not impact competition was a foreseeable consequence of passing such plaintiffs contend, however, that even if the cttc is a state own interests as opposed to the interests of the state. id.; see the adopted changes allowed the companies to "pass on some lie, 471 u.s. at 46. in town of hallie, the court reasoned that conduct was " `authorized, but not compelled.' " id. at 1444 being uniformly passed on to rental car customers. the pro- for the utilities, and the opuc-approved agreement purported of california tourism: "[t]he california travel and tourism facts and procedural history hold that the oregon state bar did not need to satisfy mid- [3] thus, in light of these precedents, the standard to apply state supervision, private parties would act to further their ate, 8/24/2006; see springs ambulance serv., inc. v. rancho claim without prejudice. [1] the court revisited the doctrine in california retail although there are twenty-four industry-appointed commis- explicitly permits the displacement of competition," and held for the ninth circuit revenues and it would affect net profit. this was not the intent of the legislation. second prong because the state did not "actively supervise" uploads/files/initialstatementofreasons.rentalcar ism assessment fees on passenger car rentals for the funding through regulating lawyers, combined with its records and ism assessment fee to customers. second, the passenger rental enacted. � 13995.90. the legislature was also expressly among the parties over the proper standard in evaluating mid- however, the wine dealers themselves set the prices without meeting act, cal. gov't code �� 11120-11132. the district tion of . . . a properly delegated function." id. at 47 (emphasis panies to make the decision whether to pass the fee on to 8288 shames v. california travel and tourism tive conduct was foreseeable at the time the provisions were tourism industry itself.2 in the current case grant authority to the passenger rental car the billboard market. id. at 368-69. the city allegedly passed ("omni"), a billboard company sued the city for passing an b. midcal's second prong: active state supervision before: michael daly hawkins, sidney r. thomas and 28 u.s.c. � 1367(c)(1), (3); bryant v. adventist health weintraub genshlea chediak, sacramento, california, and state oversight in the form of the governor-appointed commis- i. state action immunity from antitrust liability eral antitrust laws.") (emphasis added). charge, it is now added on at the end, on top of a charge that sewage service, but which did not expressly mention anticom- authorize the alleged group anticompetitive conduct orches- stated and allowed resale price maintenance, satisfying the determine the reach of the antitrust immunity (since not every ("opuc") had authorized their non-competitive conduct raised by the cttc in related case in re tourism assessment fee litiga- added). another statute explicitly recognizes that assessment nonetheless properly dismissed the plaintiffs' claim against ii. bagley-keene act clearly articulated and affirmatively expressed as state poli- passing the 9% concession fee on to customers as an uniform cal's active state supervision prong to qualify for state action trated with the help of the cttc. however, in omni the first prong of the test, the price maintenance system failed the state of california, los angeles, california, for the omitted). in a footnote, the court also suggested that the same ("plaintiffs") appeal the dismissal of their claims against the for the foregoing reasons, we affirm the district court's � 1367(a). after dismissing the antitrust claim against the of the assessment to customers." � 13995.65(f) (emphasis 8278 shames v. california travel and tourism no. 08-56750 the foreseeability test understandably had little application in colum- agreement against non-complying rental car companies, and we are instead called to determine whether the district court that the city needed to show the state had "compelled" it to sumer was prohibited, the passenger car rental indus- [6] plaintiffs suggest that the statute nonetheless does not the rental car companies and the cttc constituted price- state bar were nonlawyers). ing the cttc engaged in antitrust price-fixing in violation of here strongly suggests that the legislature envisioned the fee statutory authorization. for example, in city of columbia v. court reasoned that the city acted within its state-given similarly, in town of hallie v. city of eau claire, neigh- because there is a clear grant of authority permitting the pass- the cttc scheme and agreed to pay a high assessment fee, governor, while the remaining twenty-four are elected by the not reject a foreseeability test, but clarified when it is applica- ments, the business, transportation and housing agency, the cttc because the agency's alleged conduct qualifies for argue that the statutory language permitting the pass through allegations of the complaint to be true. id. we review a dis- requirements and limiting closed sessions. �� 11120-11132; midcal's "clear articulation" requirement, which, they argue, "whatever is necessary and convenient" to implement mal- 4 duct need not be compelled by the state. town of hallie, 471 exercise supplemental jurisdiction over the bagley-keene est. � 13995.51(b). the cttc's annual marketing plan must also patrick v. burget, 486 u.s. 94, 101 (1988) (stating that 8284 shames v. california travel and tourism nia, and donald g. rez (briefed), sullivan, hill, lewin, rez 8279shames v. california travel and tourism � 13995.92(a). the cttc was to be the beneficiary of the the california legislature found is "vital" to the state's econ- instead of including the airport concession fee in the initial such fees separately from the base rental rate. significantly, appointed commissioners and a governor-appointed secretary. sioners, these positions come from five different tourism statement of reasons accompanying the proposed amend- advised of the likely impact to consumers: in opposition to the to customers: "[a]n assessed business may pass on some or all taneously serve as directors. � 13995.40(a)-(b).1 meeting act to ensure that state bodies conduct open and pub- parker state action immunity because they were an "autho- a state purpose, namely to increase travel and tourism in the although plaintiffs emphasize that the provisions at issue result was at the very least a "foreseeable consequence of the 5 action immunity because the opuc "did not specifically and 8283shames v. california travel and tourism hass, 883 f.2d at 1460; �� 13995.40, .50. conclusion ated by state legislation in order to expand and develop cali- moreover, the cttc is also under the oversight of the state sioners and secretary, to hold that the cttc is analogous to anticompetitive agreement to pass the fees on, but as an indi- office of tourism indicated the significance of this pass- disapproved the utilities' attempt to establish exclusive territories, and lake, 358 f.3d 1150, 1153 (9th cir. 2004). standard of review "abuse of office or moral turpitude." � 13395.40(e). addition- michael shames and gary petitive, monopolistic conduct, 471 u.s. at 41-42, the statutes agency created by statute, designed to promote tourism which nies would "merely maintain their current price levels, but tion to state action immunity, noting that "it is both inevitable the cttc otherwise qualifies for state action immunity. � 1. we need not consider the legality of the alleged conduct; court also held that the dismissed claims against the cttc circumstances, including the use of state funds and situations that the city held an unlawful monopoly over sewage treat- senate floor, 2005-2006 regular session, assembly bill audits, pointed to it being a public body. id. at 1459-60. & engel, san diego, california, for the plaintiffs-appellants. percentage of assessments paid to the cttc by that category. and desirable that public officials often agree to do what one commissioners. � 13995.40.5(a). see hass, 883 f.2d at 1460 car industry as soon as possible . . . [it] shall propose an the tourism industry is represented by five industry categories, one of be reviewed and approved by the secretary before adoption, try would have to pay the assessment from its and argued that the oregon public utilities commission the ordinance to favor the existing billboard company, a local we therefore affirm the district court's conclusion that the california travel and tourism "state action immunity." columbia steel, two utility companies agreed not to compete the action that was taken. id. ("we think it is clear that anti- 8289shames v. california travel and tourism the supreme court introduced the doctrine of "state action dismissed for an abuse of discretion. tritchler v. county of them eligible for state-action immunity. id. at 1433-36. we which is the passenger rental car industry, which was added in 2006. each anticompetitive conduct. id. at 1441 (citation omitted). rea- robert c. fellmeth (argued), center for public interest law, permit the challenged conduct." hass, 883 f.2d at 1457 (cit- act did not apply to state anticompetitive conduct. 317 u.s. car companies only if the bill also amended the companies' � 13995.45(d). liquor dealers association v. midcal aluminum, inc., 445 previous decisions, columbia steel casting co., inc. v. port- `foreseeable result' of what the statute authorizes." id. at 372- and may only be overridden by a three-fifths majority vote. marilyn l. huff, district judge, presiding under the "state action immunity" doctrine, and declined to the california legislature enacted the bagley-keene open state bar was similar in nature to a municipality, noting that lusion or conspiracy between the cttc and the passenger the oregon state bar's purpose in benefitting the public it was entitled to state action immunity from antitrust liability in those situations, the foreseeability approach is used to companies to "pass on" assessment fees, and allow the cttc in addressing the companies' argument that their conduct 1 bia steel because, as discussed above, the portland city council had not are denied as moot. ability to separately itemize the rate, airport concession fee, centage of assessments paid to the cttc. � 13995.40.5(a). add-on charge. plaintiffs allege that these agreements between rized to establish a minimum legal malpractice insurance state action immunity from antitrust suit. sesses enough of the qualities of a state agency, coupled with here do not require the fees to be passed on to consumers, try is specifically limited to six commission seats regardless of the per- plaintiffs also claim the cttc committed a host of bagley- greatly increasing the cttc's budget. in exchange for this industry categories whose interests will not always align, and would be unable to recoup the cost of increasing the cttc's budget." sys./west, 289 f.3d 1162, 1169 (9th cir. 2002). ble. see redwood empire life support v. county of sonoma, argued and submitted held that the companies' actions did not qualify for state thus is distinguishable from hass. however, the cttc is not remaining bagley-keene act state law claim. the district between the passenger rental car industry and the cttc, a "that it is involved in a private price-fixing arrangement," "necessary or reasonable consequence" of engaging in the district court dismissed all claims against the cttc, finding agreements with little or no state involvement do not displace satisfy midcal's active state supervision prong. town of hal- (noting that only three of the fifteen members of the oregon would lead to an "industry-wide price hike" because compa- principles in mind, we turn to their application in this case. when it previously approved a property exchange, rendering in hass, we relied on that footnote in town of hallie to here was compelled, but whether it was authorized.4 soning that when opuc approved the property exchange, it california travel and tourism commission ("cttc") alleg- court held the cttc was shielded from antitrust liability cation that the legislature intended for the individual car com- commission shall submit a referendum to the passenger rental seeable result" test post-columbia steel).3 noted. [2] the cttc, however, correctly points out that the cttc, the district court dismissed the bagley-keene act cttc de novo. knevelbaard dairies v. kraft foods, inc., 232 posed bill a.b. 2592 increased the assessment against rental assessment.pdf. .92. the statute expressly allows the fees to be "passed on" fornia's tourism industry. cal. gov't code � 13995.40(a). the cttc also colluded with the passenger rental car industry in practice coverage. 883 f.2d at 1458-59. able that this requirement can be met only if the delegating statute the conduct of the wine dealers. id. at 105-06. with these assessments from the rental car companies. �� 13995.65-73, to comply with and implement the city's decision. id. at 1433- u.s. at 42). indeed, the legislature need not even "expressly otherwise a conspiracy exception would "virtually swallow up omy. � 13995.1(d)(1). the cttc was organized to promote evidence that an industry-wide add-on was "surely within the without active state supervision, "there is no realistic assur- through of the assessments to rental car customers, as well as authorized activity) (internal quotation marks, citation and tively authorized but not compelled. similar to the statutes in ("secretary") chairs the cttc. �� 13995.20(k), conduct business on airport premises; this fee has traditionally in which courts have found anticompetitive conduct legisla- car industry became the fifth tourism industry category under � 13995.40(d). unlike the other categories, the passenger rental car indus- city's actions were immunized because they were a "foresee- for the cttc. assessment level upon the passenger rental car industry." addressed by the california courts in the first instance." see fixing of rental car rates in violation of the sherman act � 1. emphasis omitted). cy"; and (2) the policy must be "actively supervised" by the plaintiffs michael shames and gary gramkow midcal's second prong ensures that private price-fixing sion fee charged to customers to pay airports for the right to authority to regulate"). the court also rejected the contention articulate" a state policy to displace competition. id. at 1437. the secretary in contrast, plaintiffs here rely principally on one of our both the supreme court and this circuit have made clear that if the ability to pass the assessment on to the con- keene open meeting act violations, specifically, failing to municipalities to provide (or refuse to provide) sewage ser- of the business, transportation and housing agency d.c. no.plaintiffs-appellants, fees on rental car customers. first, pursuant to an agreement f.2d 1187, 1189 (9th cir. 1988)). thus, columbia steel did opposed to purely private actors) are acting under the direc- 8285shames v. california travel and tourism gramkow, on behalf of themselves 2592, august 24, 2006 ("calif. bill analysis").5 in an initial the rental car industry to propose the amendments to a.b. 2592 if they plaintiffs court held that although california's legislative policy clearly midcal's first prong of being pursuant to a "clearly articulated immunity. 883 f.2d at 1459-61. we reasoned that the oregon grant of state antitrust immunity to state actors complying trict court's decision whether to retain jurisdiction over sup- allowed to "unbundle" fees charged to customers and itemize rental car companies would not defeat immunity, so long as rental which, in turn, helped fund the cttc. plaintiffs allege supreme court has not required express authorization of par- state bar in hass also share organizational similarities in that agency "for some purposes," it is still industry-controlled, and "from the renter," and the legislature also gave an express ("may pass some or all") should be read not as authorizing an land gen. electric co., 111 f.3d 1427 (9th cir. 1997). in displace competition, we determined opuc did not "clearly vices to unincorporated areas. id. at 42. the court again noted several provisions refer to the tourism fee being collected f.2d at 1273, the cttc's alleged conduct in facilitating this 8287shames v. california travel and tourism immunity" in parker v. brown, when it held that the sherman affirmatively expressed as state policy" section 13995.65 of the government code." cal. civ. code we assume without deciding that the plaintiffs' allegations 2. application of the reasonably foreseeable test where a municipality is concerned, there is very little danger 8286 shames v. california travel and tourism contemplation of the legislature," springs ambulance, 745 or another group of private citizens urges upon them" and that islative history that it intends for the action to have anticom- petitive effects, so long as the legislature had contemplated [5] however, the provisions here are comparable to those amounted to 9% of the rental price. the bill permitted the pas- rized implementation of state policy." id. at 370-71. the the power to remove elected commissioners found guilty of tion of state law, the court has held that they do not need to notice of their meetings, and benefit "the public interest." tourism assessment fee, and was authorized to collect the � 13995.40(b)(2)-(3). the cttc is a "nonprofit mutual benefit corporation" cre- 73. act. id. at 45; see also so. motor carriers rate conf., inc. v. state policy." 341, 350-52 (1943). the court reasoned that the sherman act in these circumstances. tritchler, 358 f.3d at 1153. the dis- the district court's determination that the cttc is entitled to 8291shames v. california travel and tourism and declining to exercise supplemental jurisdiction over the 34. a. midcal's first prong: "clearly articulated and competitive effects logically would result from this broad they are both subject to independent audits, must give public for state action immunity to apply, the anticompetitive con- 8282 shames v. california travel and tourism nity when the actions were a foreseeable result of a broader university of san diego school of law, san diego, califor- in 2006, the passenger rental car industry proposed changes required wine producers to file price schedules with the state; claim. we affirm. discussion turning the 9% airport concession fee into a rate hike, suffi- opinion by judge hawkins "active state supervision" requirement. we therefore affirm clearly authorize[ ] by the relevant statutory process" their for immunity: (1) the challenged restraint must be "one all sections refer to california government code unless otherwise be compelled by a state in order to be protected from the fed- ests"). category is allotted a number of commission seats based on the weighted and, if so, whether the anticompetitive conduct was foresee- 3 13995.40(b)(1). twelve commissioners are appointed by the holding closed session meetings. historically included it." calif. bill analysis, a.b. 2592 sen- s. cal. edison co. v. peevey, 74 p.3d 795, 797 (cal. 2003). 3:07-cv-02174-h-v. opinion [9] dismissal of the claim was not an abuse of discretion wise, in hass, we held that the oregon state bar was autho- approval, we held that "foreseeability" could not be substi- expects the regulated party `to engage in conduct that would via a gubernatorially-appointed secretary. the secretary has whether the agency acted pursuant to its statutory authority, fees are "the charge[s] collected by a rental company from a action, not states acting in their sovereign capacity. id. diane shaw (briefed), office of the attorney general of the state policy, rather than merely the party's individual inter- and noting that the act "may implicate questions better filed june 8, 2010 counsel u.s. 97 (1980) ("midcal"), when a wholesale wine distributor authorized versus compelled. we grant plaintiffs' request for judicial notice regarding arguments mirage, 745 f.2d 1270, 1273 (9th cir. 1984) (a sufficiently 1. specific authorization vs. reasonably foresee- the court was primarily concerned that without adequate employ supplemental jurisdiction, reasoning that it had as a preliminary matter, we must first resolve a dispute defendant-appellee. cal's first prong. plaintiffs argue that the district court tradictory positions in the two cases regarding whether its actions were in analyzing whether the cttc's alleged conduct was pursu- adhere to detailed notice requirements and impermissibly supreme court was clear that there is no "conspiracy" excep- 2 plemental claims when the original federal claims are united states, 471 u.s. 48, 58 (1985) ("the midcal test does town of hallie, which granted authority to the cities to handle moreover, the history underlying the legislation at issue state of california. � 13995.41. the cttc and the oregon appeal from the united states district court ally, the secretary holds veto power over the cttc in various 1443. however, plaintiffs attempt to read this statement a bit from the state bar, even though the statute did not contain with each other in providing service within certain territories, defendant-appellee. [7] however, when municipalities or other state entities (as too broadly, for in columbia steel we also indicated that fore- nies to pass on cttc tourism assessments, enforcing the competitive conduct. leases, and not pursuant to statutes giving it the authority to through provision: ment in anticompetitive conduct can render a party eligible likewise, here, the cttc is not a private party, but a state cal. civil code � 1936.01. under the bill, the passenger rental the oregon state bar in hass and also exempt from midcal's rized and reasonably foreseeable result, and thus satisfies (quoting town of hallie, 471 u.s. at 36) (emphasis removed). have anticompetitive effects.' ") (quoting town of hallie, 471 was a foreseeable result of opuc's property-exchange increased funding, the passenger rental car industry was accounts being open for public inspection and subject to company with deep roots in the community. id. at 367. the in which the secretary determines there is a conflict of inter- court held that the city's actions were nonetheless entitled to tuted for midcal's "clear articulation" requirement. id. at authorized exclusive service areas for the utilities, but actually specifically trict court properly exercised its discretion and declined to to enforce and collect those fees, even if they do not expressly and all persons similarly situated, not expressly provide that the actions of a private party must claims. all pending motions not otherwise disposed of herein we review the dismissal of the antitrust claim against the seeability would apply in a situation in which anticompetitive legislative grant of authority." hass, 883 f.2d at 1459. [8] despite the mix of public and private interests at play, as the district court observed, "there would have been little reason for able given that statutory authorization. for the southern district of california approved only the exchange of utilities' properties. 111 f.3d at 1433-44. 8275 renter that ha[ve] been established by the [cttc] pursuant to ing so. motor carriers, 471 u.s. at 63-65)). 8281shames v. california travel and tourism the sherman act � 1, 15 u.s.c. � 1, and improper meeting consumers. an ordinance. id. at 373. the court rejected "the contention