-
USCA1 Opinion
February 25, 1993
UNITED STATES COURT OF APPEALS
For The First Circuit
____________________
No. 92-1856
SANDY RIVER NURSING CARE, ET AL.,
Plaintiffs, Appellants,
v.
AETNA CASUALTY, ET AL.,
Defendants, Appellees.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Morton A. Brody, U.S. District Judge]
___________________
____________________
Before
Selya, Circuit Judge,
_____________
Coffin, Senior Circuit Judge,
____________________
and Stahl, Circuit Judge.
_____________
____________________
K. Craig Wildfang with whom Wood R. Foster, Jr., Anne K.
___________________ ______________________ ________
Weinhardt, Sidney St. F. Thaxter, John D. Gleason, Vance K. Opperman,
_________ _____________________ _______________ _________________
Robert J. Schmit, Patrick N. McTeague, and Barnet D. Skolnik were on
________________ ____________________ _________________
brief for appellants.
Richard G. Parker with whom Paul W. Chaiken, James E. Kaplan,
__________________ ________________ ________________
Mark F. Horning, Paul Macri, Fredric W. Yerman, Lewis V. Vafiades,
_______________ __________ _________________ __________________
Michael L. McCluggage, Harold J. Friedman, Carl F. Rella, Stanley B.
_____________________ ___________________ _____________ __________
Block, Robert S. Frank, Robert F. Hanson, William A. Montgomery,
_____ ________________ _________________ ______________________
Michael A. Nelson, James van R. Springer, George Z. Singal, Joseph E.
_________________ _____________________ _________________ _________
Coughlin, Paul H. Friedman, Randall B. Weill, Alfred C. Frawley, Peter
________ ________________ ________________ _________________ _____
J. Rubin, Lewis V. Vafiades, and Lewis A. Noonberg were on brief for
_________ _________________ __________________
appellees.
Stephen L. Wessler, Deputy Attorney General, Francis E. Ackerman,
__________________ ____________________
Assistant Attorney General, and Thomas D. Warren, Deputy Attorney
_________________
General, on brief for the State of Maine, amicus curiae.
____________________
February 25, 1993
____________________
COFFIN, Senior Circuit Judge. Plaintiffs are a group of
_____________________
Maine employers who claim that the defendant insurance companies
illegally conspired to fix prices and conduct a boycott in a
successful effort to coerce the state legislature into permitting
higher rates for workers' compensation insurance.1 The district
court granted summary judgment for defendants based on the
doctrines established in Parker v. Brown, 317 U.S. 341 (1943),
______ _____
and Eastern R.R. Presidents Conference v. Noerr Motor Freight,
____________________________________ ____________________
365 U.S. 127 (1961).2 The court concluded that plaintiffs'
claimed damage -- the additional cost of their insurance -- was
attributable to the legislation rather than to the alleged
conspiracy, and that, consequently, federal antitrust laws
provide no relief.
On appeal, plaintiffs contend that the court erred both in
construing their claims and in immunizing defendants' actions.
After carefully reviewing the record and pertinent caselaw, we
conclude that the district court properly granted summary
judgment for defendants. Although we depart somewhat from the
court's analysis -- finding that the alleged conspiracy
constituted a per se violation of the Sherman Act, 15 U.S.C. 1
___ __
____________________
1 Plaintiffs sued fifteen insurance companies and the
National Council on Compensation Insurance (NCCI), a voluntary
association of insurers that is a state-licensed rating
organization.
2 In briefest summary, these doctrines exempt from antitrust
liability anticompetitive actions attributable to the state,
Parker, 317 U.S. at 350-52, and political activity by individuals
______
seeking to influence the passage or enforcement of laws, Noerr,
_____
365 U.S. at 136-40.
-- we affirm the court's holding that the Parker doctrine bars
______
plaintiffs' requested relief.3
I.4
Workers' compensation insurance has long been an extremely
sensitive issue in Maine. Regulation is strict. All employers
who do not self-insure are required to purchase such insurance.
Insurers are "required by Maine Law to charge only those rates
for workers' compensation insurance which have been filed with,
and approved by, the Maine Superintendent of Insurance in
conformance with Maine Law." Complt. 32. The businesses and
the insurers both have been dissatisfied with the system.
At least since 1981, NCCI and its members have taken
affirmative steps to challenge the allowable rates as unfairly
low. They have sought review of the Superintendent's rate
decisions in court, see, e.g., National Council on Compensation
___ ____ _________________________________
Ins. v. Superintendent of Ins., 481 A.2d 775 (Me. 1984)
____ ________________________
(affirming Superintendent's disapproval of a requested rate
increase of 27.5%; NCCI had claimed that statistical evidence
showed that a 110% increase was warranted), and consistently have
lobbied for legislation that would reduce statutory benefits and
permit insurers to charge higher rates. Neither their litigation
____________________
3 The complaint sought injunctive relief in addition to
damages, but neither the district court nor the parties devoted
attention to this request. We note only that, in light of our
analysis, we see no basis upon which plaintiffs may be awarded
injunctive relief.
4 We draw heavily from the district court's well-stated
description of the recent history of the Maine workers'
compensation system.
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nor lobbying proved successful during the period relevant to this
litigation.
Indeed, to the contrary, the Maine legislature in 1985
enacted the "Workers' Compensation Competitive Rating Act," which
directed that workers' compensation insurance rates be rolled
back at least 8% and frozen at that level until 1987. Me. Rev.
Stat. Ann. tit. 24-A, 2331-2357 (1985) (repealed). Under the
Act, insurers were prohibited from requesting rate increases
exceeding 10% in 1987, 1988 and 1989. Id. at 2355. In
___
addition, the 1985 Act declared that it was intended, inter alia:
_____ ____
1. . . . To prohibit price fixing agreements and other
anticompetitive behavior by insurers.
. . .
3. . . . To promote price competition among insurers .
. . .
Id. at 2332.
___
The insurers challenged the 1985 act in court. Although the
Maine Superior Court determined that the rate ceilings were so
low that they were confiscatory, the court held that the ceilings
were not unconstitutional because insurers were free to withdraw
from the market for workers' compensation insurance in Maine.
National Council on Compensation Ins. v. Superintendent of Ins.,
______________________________________ ______________________
CV-85-459 (Sup. Ct. May 14, 1987) (Alexander, J.), appeal
______
dismissed, 538 A.2d 759 (Me. 1988) (dismissed as moot because
_________
1987 legislation repealed 1985 Act).
In this lawsuit, plaintiffs assert that defendants, unable
to achieve their goals legally, resorted to improper means.
Plaintiffs contend that defendants allegedly conspired to fix
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prices at a higher-than-lawful rate and to conduct a boycott of
the Maine workers' compensation market to induce legislation
authorizing rate increases. As early as 1986, plaintiffs claim,
defendants jointly began refusing to insure employers
voluntarily, requiring them to obtain workers' compensation
coverage through the "residual" or "involuntary" system. Every
insurer authorized to write workers' compensation policies in
Maine is required by state law to participate in the "involuntary
market" and, thus, to share the underwriting responsibility for
employers otherwise unable to obtain coverage.5 The
conspirators allegedly increased the pressure on the Maine
legislature to act when, between late summer and October 1987,
virtually all workers' compensation insurers in Maine prepared to
withdraw from the state.
To avert the crisis that would occur if all workers'
compensation insurers left, Governor John McKernan convened a
special session of the legislature devoted exclusively to
reviewing and reforming Maine's workers' compensation system. In
short order, the legislature approved the "Workers' Compensation
Rating Act" (deleting the word "competitive" that had been in the
title of the 1985 Act), Me. Rev. St. Ann. tit. 24-A, 2361-2374
(West 1990 and 1992 Supp.). The 1987 Act removed the limitations
on rate increases contained in the 1985 Act. It authorized NCCI
to act as agent for its member insurance companies by submitting
____________________
5 Plaintiffs seem to suggest that the shift of employers
from the voluntary to the involuntary market was in some way
detrimental to them, but they do not explain how.
-5-
joint rate proposals on their behalf to the Superintendent of
Insurance, who is the ultimate decisionmaker on the rates
insurers may charge. Insurers are permitted, however, to deviate
below the rate approved by the Superintendent.
In 1988, 1989 and 1990, the insurers collectively applied
for rates beyond the limits allowed in the 1985 Act. Each year,
the Superintendent rejected the requested rate increases, but
authorized lower increases that still exceeded the 10% caps set
by the 1985 legislation. Plaintiffs contend that, as part of the
insurers' continuing price-fixing conspiracy, defendants
unlawfully agreed to charge only the maximum rates allowed by the
Superintendent.
Through this lawsuit, plaintiffs seek recovery of damages in
the amount of the increased premiums they have paid since the
1987 Act was passed and defendants began charging higher rates.
The district court concluded that this relief was barred because
the alleged harm was directly traceable to the 1987 legislation
and the approval of rate increases by the Maine Superintendent of
Insurance. The court relied on the well-established Parker
______
principle, see 317 U.S. at 350-52, that injury caused by
___
anticompetitive state action is not compensable under the
antitrust laws. The court further believed that defendants'
actions were protected by the Noerr doctrine, see 365 U.S. at
_____ ___
136-40, which exempts from antitrust liability the collective
efforts of private actors to promote anticompetitive legislation.
-6-
Plaintiffs argue on appeal that the district court erred
because it mistakenly attributed their asserted injury to state
action. They contend that they were harmed not by the
legislation itself but by defendants' ongoing conspiracy to
obtain and charge higher rates. Parker, they insist, is
______
therefore inapplicable. They further assert that Noerr provides
_____
no immunity for defendants because the alleged conspiracy
involved classic anticompetitive economic conduct -- a boycott
and price-fixing -- rather than political activity such as
lobbying or petitioning.
Defendants respond that, regardless of the nature of the
conspiracy, which they admitted solely for purposes of the
summary judgment proceedings, they cannot be assessed damages
based on the premium increases authorized by state law. Because
that is the only injury for which plaintiffs seek relief,
defendants maintain that the district court correctly granted
summary judgment.
II.
The issues we face on this appeal are matters of law, and
our standard of review is therefore de novo. Liberty Mutual Ins.
___________________
Co. v. Commercial Union Ins. Co., 978 F.2d 750, 757 (1st Cir.
___ __________________________
1992). Although plaintiffs repeated at oral argument a complaint
earlier made to the district court that they had had inadequate
time to develop the facts through discovery, we do not see how
additional investigation could have affected the summary judgment
decision. Defendants have admitted, for purposes of their
-7-
motion, that they conspired to withdraw from the Maine workers'
compensation market. Plaintiffs identify no other possibly
discoverable fact that would be material to the legal issues
before us. We note, moreover, that they have not appealed the
district court's denial of their motion for additional discovery
time.
Plaintiffs make a related claim that the district court
erred in repeatedly failing to construe their complaint in the
light most favorable to them, arguing that this standard of
scrutiny -- normally applicable to motions to dismiss -- applies
here because defendants conceded the material factual allegations
of the complaint. This claim also is irrelevant to our
disposition. As our analysis in the following sections will
demonstrate, plaintiffs' appeal fails no matter how liberally
their allegations concerning defendants' conspiracy are construed
because the specific relief they seek is barred as a matter of
law.
III.
We begin our analysis with an aspect of the case that has
engendered some confusion, but apparently no real disagreement
among the parties. In the concluding paragraph of its opinion,
the district court stated that "[t]he defendants' conspiracy to
press for legislation permitting them to charge higher rates --
which in and of itself caused Plaintiffs no injury -- is immune
under Noerr." Opinion at 22. The State of Maine construed this
_____
statement and similar references elsewhere in the opinion as
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holding that private actors lawfully may employ a concerted
economic boycott to influence a legislative determination.
Disturbed by this specific holding, the State sought and was
granted permission to file an amicus brief limited to urging that
we reverse the ruling.
We have some doubt that the district court intended the
broad statement attributed to it by the State. Regardless, at
this point, the State's position meets with no opposition from
any party. Plaintiffs and defendants all agree that private
actors who conduct an economic boycott violate the Sherman Act
and may be held responsible for direct marketplace injury caused
_________________________
by the boycott, even if the boycotters' ultimate goal is to
obtain favorable state action. This view, we find, clearly
reflects Supreme Court precedent.
In Noerr, the Supreme Court held that the defendant
_____
railroads could associate for the purpose of waging a publicity
campaign designed to secure legislative action harmful to the
truckers with whom they competed, without implicating the Sherman
Act prohibition against combinations in restraint of trade. 365
U.S. at 136-37. The Court observed that, in a representative
democracy, individuals must have the ability to "freely inform
the government of their wishes," id. at 137, and they are
___
permitted to do so even if their motives are entirely
anticompetitive, id. at 139-40. Any other conclusion "would
___
impute to the Sherman Act a purpose to regulate, not business
activity, but political activity, a purpose which would have no
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basis whatever in the legislative history of the Act." Id. at
___
137.
Noerr does not protect from antitrust liability, however,
_____
all actions designed to influence government. The Court has made
___
it clear that certain "combinations normally held violative of
the Sherman Act," id. at 136, including price-fixing agreements
___
and boycotts, are not "outside the coverage of the . . . Act
simply because [their] objective was the enactment of favorable
legislation," FTC v. Superior Court Trial Lawyers Ass'n, 493 U.S.
___ __________________________________
411, 424 (1990). See also Allied Tube & Conduit Corp. v. Indian
___ ____ ____________________________ ______
Head, Inc., 486 U.S. 492, 503-04 (1988); Noerr, 365 U.S. at 136.
__________ _____
In other words, a classic economic restraint of trade is
actionable even if its primary purpose is political.
This limitation on the Noerr doctrine was fully explored in
_____
Trial Lawyers, a case closely analogous to the one before us.
_____________
Trial Lawyers involved a boycott organized by members of the
______________
District of Columbia criminal defense bar. The attorneys agreed
not to accept any court appointments to represent indigent
criminal defendants in order to force the District's City Council
to raise the hourly rate of pay for court-appointed criminal
defense work. The Supreme Court held that the boycott
constituted a "plain violation of the antitrust laws," 493 U.S.
at 428, and that "[o]ur decision in Noerr in no way detracts from
_____
this conclusion," id. at 424. Noerr, the Court emphasized,
___ _____
involved "mere attempts to influence the passage or enforcement
of laws," id. (quoting Noerr, 365 U.S. at 135), not an actual
___ _____
-10-
restraint on price and output, id. at 423. The Noerr exception
__ _____
to antitrust liability thus was inapplicable to the lawyers'
boycott. Id. at 428.
___
The district court here sought to distinguish Trial Lawyers
_____________
from the case before it, at least in part, because the
anticompetitive conspiracy there was directed at the government,
the District of Columbia City Council, as a commercial
participant. Opinion at 20-21. The court appeared to view the
government's role as a purchaser as significant to the Supreme
Court's conclusion that Noerr immunity was unavailable:
_____
The goal of the trial lawyers' conspiracy was to
inflict economic pain on the government, forcing it to
pass legislation. In this case, however, the
Defendants' alleged conspiracy was not intended to harm
the government as a commercial participant in the
marketplace, only to prompt it to pass anticompetitive
legislation.
Opinion at 21. Consequently, the district court seemed to say,
the conspiracy in this case was protected by Noerr.
_____
Trial Lawyers does not establish a "government-as-market-
______________
participant" exception to Noerr. What was significant about the
_____
concerted activity there was not that the government was the
purchaser, but that the defendants had sought to influence the
government through an economic boycott that directly affected the
marketplace by, inter alia, constricting the supply of lawyers
_____ ____
available to represent indigent criminal defendants. The Court
emphasized that Noerr provides immunity when the alleged
_____
restraint of trade is imposed by the government as the intended
_________________
consequence of the defendants' concerted activity. It is
___________
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inapplicable when private actors impose the challenged restraint
of trade through a boycott or other traditionally unlawful
economic measure, even when the boycott's sole purpose is to
instigate favorable governmental action.
Whether the boycotted purchaser is the government or a
private individual is irrelevant; the significant factor is
direct market effect.
The restraint of trade that was implemented while the
boycott lasted would have had precisely the same
anticompetitive consequences during that period even if
no legislation had been enacted. In Noerr, the desired
_____
legislation would have created the restraint on the
truckers' competition; in this case the emergency
legislative response to the boycott put an end to the
restraint.
Trial Lawyers, 493 U.S. at 425.
_____________
Here, too, the defendants allegedly employed an economic
boycott that beyond doubt "`constituted a classic restraint of
trade within the meaning of Section 1 of the Sherman Act,'" id.,
___
493 U.S. at 422 (quoting Court of Appeals, 856 F.2d 226, 234
(1988)). Had these or other plaintiffs sought injunctive relief
during the boycott period, or had they sought damages based on
the boycott's direct market effects (such as reduced availability
of insurance or higher prices resulting from reduced competition
during the boycott period), they would have had a viable
antitrust claim. These plaintiffs, however, explicitly have
disclaimed any request for relief based on injury occurring while
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the boycott was in place, before the Maine Legislature passed the
1987 Act.6
In all likelihood, it was the plaintiffs' decision to pursue
only post-legislation damages that influenced the district court
to state broadly that defendants were immune from liability. The
court correctly recognized that a conspiracy to press for
legislation permitting defendants to charge higher rates was
permissible unless it was implemented through an actual restraint
on trade. Because plaintiffs sought no direct market damages
from the boycott, the court evidently treated the boycott not as
a prohibited restraint of trade but as a lobbying effort
equivalent to the unethical and deceptive publicity campaign
waged by the defendants in Noerr.
_____
In so doing, the court may have overstated its holding
unintentionally, permitting the inference drawn by the government
that the boycott itself was being held immune under Noerr. As we
_____
have explained, such a holding would conflict with Supreme Court
caselaw. Defendants' boycott plainly constituted a per se
___ __
violation of the Sherman Act even though plaintiffs seek no
marketplace damages resulting from it.
IV.
The central issue before us is whether plaintiffs may
recover damages based on the higher rates they have paid for
workers' compensation insurance since enactment of the 1987
____________________
6 We offer no view as to whether plaintiffs would have been
able to prove damages from a constriction of supply or absence of
price competition resulting from the conspiracy.
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legislation. The district court ruled that the state action
doctrine of Parker v. Brown, 317 U.S. 341, precluded such relief
______ _____
because the rate increases were authorized by the Maine
Legislature, and adopted and implemented by the state's
Superintendent of Insurance.
In Parker, "[r]elying on principles of federalism and state
______
sovereignty, [the Supreme Court] held that the Sherman Act did
not apply to anticompetitive restraints imposed by the States `as
an act of government.'" City of Columbia v. Omni Outdoor
__________________ _____________
Advertising, Inc., 111 S. Ct. 1344, 1349 (1991) (quoting Parker,
_________________ ______
317 U.S. at 352). The district court believed that the actions
of the legislature and Superintendent of Insurance superseded
defendants' previous conduct, rendering the rate hikes "an act of
government" immune under Parker rather than an injury inflicted
______
by defendants' conspiracy.
Plaintiffs offer two reasons why the Parker doctrine does
______
not bar the relief they seek. First, in an argument more heavily
utilized in the district court, plaintiffs maintain that the
defendants' use of unlawful activity to coerce the favorable
legislation makes the Parker doctrine inapplicable. Because the
______
legislature unlawfully was pressured to act, they contend, the
statute may not be used to insulate defendants from
responsibility. Second, plaintiffs argue that it was not the
legislation simply permitting rate hikes that harmed them, but
the defendants' longstanding conspiracy to charge the maximum
possible rates.
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Neither of these arguments is persuasive. The first
contention, that the defendants' coercive conduct circumscribes
the effect of the legislature's actions, is directly contradicted
by Supreme Court precedent. In a recent case, Omni, 111 S. Ct.
____
at 1352, the Court reaffirmed its previously stated determination
that Parker immunity turns on who imposed the challenged
______ ___
restraint, not why:
___
"[W]here the action complained of . . . was that of the
State itself, the action is exempt from antitrust
liability regardless of the State's motives in taking
the action."
Id. at 1352-53 (quoting Hoover v. Ronwin, 466 U.S. 558, 579-80
___ ______ ______
(1984)).
Omni rejected a proposed conspiracy exception to the Parker
____ ______
doctrine that would have denied immunity when government
employees were involved as conspirators with private actors in
the challenged restraint of trade. The Court considered possible
methods for defining a conspiracy exception, including an
approach that would make Parker inapplicable only if, in
______
connection with the governmental action in question, bribery or
some other violation of state or federal law were established.
Id. at 1353. It ultimately concluded that any such limitation
___
would be, at best, an imprecise way to determine which
anticompetitive state actions should be exempted from antitrust
liability.
Such unlawful activity has no necessary relationship to
whether the governmental action is in the public
interest. A mayor is guilty of accepting a bribe even
if he would and should have taken, in the public
interest, the same action for which the bribe was paid.
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. . . To use unlawful political influence as the test
of legality of state regulation undoubtedly vindicates
(in a rather blunt way) principles of good government.
But the statute we are construing is not directed to
that end.
Id.
___
The holding in Omni fully embraces plaintiffs' tendered
____
coercion exception. Allegations of coercion, like those of
conspiracy, implicate only the off-limits issue of the
legislators' motivation. Omni reaffirms that the state action
____
protection provided by Parker is not vulnerable to such claims.
______
Plaintiffs' second theory bears down more closely on the
1987 legislation. Because the statute does not mandate that
_______
insurers charge the maximum rates allowed by the Superintendent,
but merely eliminated the caps imposed by the repealed 1985 Act,
plaintiffs maintain that the higher rates by which they were
damaged resulted from defendants' conspiracy to charge the
maximum rates and not from the legislature's adoption of the
statute. We detect two problems with this argument.
First, the manner in which plaintiffs asserted this theory
before the district court differed in a subtle, yet significant,
way from the approach adopted on appeal. Throughout the
proceedings before the district court, plaintiffs emphasized that
they alleged injury from a conspiracy initiated in the summer and
fall of 1987 to violate the 1985 legislation, which promoted open
____
competition in the workers' compensation market.
Plaintiffs do not claim that they were injured by
actions mandated by the 1987 legislation. Indeed,
plaintiffs allege not only that the conspiracy began
before the 1987 legislation was even enacted, but that
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the objective of the conspiracy was that very
_________
enactment. Plaintiffs in fact allege that they were
injured by defendants' conspiracy to violate the 1985
____
legislation. It is therefore the 1985 legislation
against which state action claims must be tested.
Plaintiffs' Memorandum in Opposition to Defendants' Joint Motion
for Summary Judgment, at 18 n.11 (emphasis in original).
At oral argument on the summary judgment motion, plaintiffs
again asserted that it had been unlawful for the defendants to
conspire to increase prices while the 1985 legislation governed.
See App. at 720. When the district court asked why the
___
defendants' actions were not protected in light of their "acting
within the framework set up by the legislature in the enactment
of rates," plaintiffs' counsel responded that "one needs to be
clear on the time frame." Id. at 729. He continued:
___
At the time the conspiracy was hatched and effectuated
in summer and fall of 1987, the policy of the State of
Maine was open competition in workers' comp. The
policy of the State of Maine was, "Go compete with each
other."
And these defendants had a private agreement, in
effect, not to compete and to boycott consumers and the
state.
Id.
___
Thus, the argument to the district court focused on conduct
leading up to the 1987 act: the defendants unlawfully conspired
to charge higher rates, and obtained permission to do so through
unlawful means, making the new rates wholly a result of
defendants' unlawful conduct. Moreover, the plaintiffs argued,
even though the specific harm for which they sought damages did
not occur until after the law was changed and higher rates
-17-
authorized, defendants had to be held responsible so that their
past illegal conduct would not be immunized retroactively.
Failing to hold them liable, plaintiffs argued,
would lead to the anomalous result that unsuccessful
____________
boycotts (i.e. boycotts which do not successfully
____
coerce governmental action) would be antitrust
violations, but that successful boycotts (i.e. boycotts
__________ ____
to which government succumbs in order to avoid chaos or
disaster) would be immunized.
Plaintiffs' Memorandum in Opposition, at 35-36 (emphasis in
original) (footnote omitted).7
The argument on appeal unquestionably adds a new dimension.
Plaintiffs now contend that, after passage of the 1987 act,
defendants again violated antitrust laws by conspiring to refuse
to sell below the new maximum rates established by the
Superintendent of Insurance. That agreement is not entitled to
state action immunity, plaintiffs suggest, because the provision
in the 1987 Act allowing independent ratesetting demonstrates
that state policy still favors competition. Consequently,
plaintiffs contend that defendants should be held liable for the
rate increases.8
____________________
7 As we made clear in Section III, the response to this
argument is that unlawful boycotts with direct marketplace impact
will result in accountability for the market injury, regardless
______
of their success in inducing governmental action.
8 We note that some portions of plaintiffs' appellate brief
retain the focus on the 1985 legislation:
Plaintiffs do not challenge the Defendants'
"participation in ratesetting proceedings" in 1988
after the 1987 legislation was enacted repealing the
1985 Competitive Rating Act. What Plaintiffs challenge
is Defendants' conspiracy begun in 1986 and 1987, at a
__________
time when Maine law specifically prohibited such
-18-
This link between plaintiffs' conspiracy allegation and the
1987 Act never was offered to the district court; indeed, as
noted above, plaintiffs expressly disclaimed the new statute's
relevance to the Parker issue. The conspiracy achieved success,
______
plaintiffs asserted, when the State enacted the law allowing
higher premiums. See Memorandum in Opposition to Summary
___
Judgment, at 2-3 (quoted in District Court Opinion, at 3). Led
by these arguments, the district court never considered whether
the defendants could be held responsible for the rate increases -
- despite authorization of those rates by the state -- if they
had conspired not to deviate below the maximum rate.
Whether plaintiffs sufficiently preserved this argument need
not unduly detain us, however, because the theory is in any event
unavailing. When the legislature enacted the 1987 statute, it
did not simply eliminate the ceiling on the permissible rates for
workers' compensation insurance, but it also moved away from the
state's previous pro-competitive policy toward ratesetting. The
1987 Act provided for joint rate filings9 and, in our view, it
____________________
conspiracies, to constrict supply, to fix prices, and
to boycott consumers in order to coerce the removal of
__________________________________
the existing price ceiling.
__________________________
Plaintiffs' Brief at 31 (additional emphasis added).
9 It did so somewhat indirectly through repeal of the 1985
Act, which meant that the joint ratemaking provisions that then
existed for all lines of insurance sold in Maine again were
applicable to workers' compensation insurance. In 1989, the
legislature revised the general insurance ratemaking system to
encourage competition, leaving the joint ratemaking provisions
applicable only to the workers' compensation providers. Compare
____ _______
Me. Rev. Stat. Ann. tit. 24-A, 2309 (West 1990) with Me. Rev.
____
Stat. Ann. tit. 24-A, 2309 (West Supp. 1992).
-19-
must be construed as implicitly condoning an agreement among
insurers to charge the rates they jointly propose, subject to
approval by the Superintendent. When insurers work together
within a state regulatory system to advocate rates that they all
presumably believe are appropriate for workers' compensation
insurance, we fail to see how it could be illegal price fixing
for them also subsequently to agree to charge the rates allowed
by the state, particularly when the approved rates fall below the
jointly proposed rates.
At a minimum, it must be lawful for insurers to agree to
charge the approved rate where, as here, the Superintendent's
obligation is to establish rates that are "[j]ust and reasonable"
and "[b]ased only on a just and reasonable profit." Me. Rev.
Stat. Ann. tit. 24-A, 2363 (7)(A)(1), (2). Thus, while the
statute stipulates that these rates set the upper limit on
permissible charges, id. at 2362, the expectation clearly is
___
that the Superintendent's rates are the ones that generally will
be appropriate for, and thus used by, all insurers. In this
context, the legislature evidently viewed the sort of "price
fixing" alleged by plaintiffs as benign; notably absent from the
1987 statute is a provision contained in the 1985 Act prohibiting
insurers from agreeing "to adhere to or use a rate or rating
plan," id. at 2347 (2) (1985) (repealed).
___
Plaintiffs rely on the provision allowing downward rate
deviation to support their claim that defendants' conspiracy to
charge a uniform rate was unauthorized and, consequently, not
-20-
immunized under Parker. But the fact that insurers may charge
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less than the approved rate is of little significance when it is
juxtaposed with the uniform approach to ratemaking that is the
overriding characteristic of the reformed system. On its own,
the permissive provision certainly does not establish a state
policy favoring competitive pricing. Moreover, the Supreme
Court, in Southern Motor Carriers Rate Conference v. United
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States, 471 U.S. 48 (1985), explicitly held that Parker immunity
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is available to private parties acting pursuant to a regime of
collective ratemaking that is authorized, though not compelled,
by the state.
Southern Motor Carriers involved a challenge to the joint
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activities of motor common carrier rate bureaus in four states
where carriers were permitted to agree on rate proposals before
their submission to state agencies. In the course of its
decision, the Court reaffirmed the two-pronged test set forth in
California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc.,
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445 U.S. 97, 105 (1980), for determining whether the
anticompetitive conduct of private parties within a state
regulatory scheme is shielded from the antitrust laws:
First, the challenged restraint must be "`one clearly
articulated and affirmatively expressed as state
policy.'" Second, the State must supervise actively
any private anticompetitive conduct.
471 U.S. at 57 (citations omitted).
The justices then considered whether the actions of a
private party can be attributed to a clearly articulated state
policy, within the meaning of the Midcal test's first prong, even
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if the state does not compel the challenged anticompetitive
activity. Id. at 59-60. The Court observed that a compulsion
___
requirement would reduce the range of alternatives available to a
state that wished to regulate a given industry -- thereby
negatively affecting principles of federalism -- while perhaps
also causing greater restraints on trade -- thereby impairing the
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goal of the antitrust laws to ensure "unfettered competition in
the marketplace," id. at 61. Declining to "believe that Congress
___
intended to resolve conflicts between two competing interests
[federalism and competition] by impairing both more than
necesssary," id., the Court concluded that "a state policy that
___
expressly permits, but does not compel, anticompetitive conduct
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may be `clearly articulated' within the meaning of Midcal," id.
______ ___
(emphasis in original).
In this case, it is manifestly clear that defendants'
ratemaking activities meet both prongs of the Midcal test. The
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new scheme was adopted by the legislature, fulfilling the state
policy prong of the test, and the Superintendent's involvement in
reviewing and modifying the insurers' proposed rates
unquestionably meets prong two's requirement of active state
supervision. Indeed, plaintiffs expressly acknowledge that
Midcal is satisfied with respect to the ratemaking proceedings.
______
See Reply Brief, at 19 n.15. Plaintiffs instead hammer on
___
defendants' "converting the results of that ratemaking
proceeding, i.e. a schedule of maximum or ceiling prices, into a
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private agreement to uniformly charge the maximum price, and to
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refuse to deal at prices below that level." Id. (emphasis in
___
original).
This argument misfires because it fails to take into account
the changed landscape. Even if defendants violated the Sherman
Act in the late summer and early fall of 1987 by conspiring to
raise the maximum prices they could charge beyond those permitted
by the 1985 Act, it does not necessarily follow that it was
unlawful for them to agree to charge the rate subsequently
approved by the Superintendent pursuant to the 1987 Act. Once
the legislature acted in November 1987, defendants' conduct had
to be assessed in light of the new state policy and procedures.
As we have discussed, the 1987 Act endorsed cooperative
ratesetting and anticipated that most, if not all, insurers would
charge the newly authorized rates. Accordingly, the damages
sought by plaintiffs -- the differential between the rates
allowed under the 1985 Act and the new rates charged by
defendants under the 1987 Act -- must be viewed as a product of
state action. The district court therefore correctly concluded
that, under Parker, defendants may not be held accountable for
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this claimed injury.
V.
In summary, we hold that the economic boycott and price
fixing conspiracy allegedly conducted by defendants in the summer
and early fall of 1987 constituted a per se violation of the
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Sherman Act, and did not fall within the Noerr doctrine's
_____
protection for concerted activity designed to elicit favorable
legislation. But plaintiffs have not sought damages for direct
marketplace injury inflicted by that conspiracy.
The monetary damages alleged by plaintiffs -- the amount of
increase in their workers' compensation insurance rates under the
1987 statutory scheme allegedly coerced by defendants -- are not
recoverable from the insurers. Because the state authorized
collective ratemaking and closely supervised the setting of
higher rates, any agreement among defendants to charge the
maximum authorized rates is permissible, and defendants are
immune from liability for the increase under the Parker doctrine.
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Affirmed.
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Document Info
Docket Number： 92-1856
Filed Date： 2/25/1993
Precedential Status： Precedential
Modified Date： 9/21/2015