First American Title Co. v. Devaugh ( 2007 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 07a0073p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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FIRST AMERICAN TITLE COMPANY, a California
COMPANY, an Arizona Corporation; LAWYERS TITLE -
Corporation; TRANSNATION TITLE INSURANCE
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No. 06-1171
INSURANCE CORPORATION, a Virginia Corporation;
,
and CHICAGO TITLE INSURANCE COMPANY, a >
Missouri Corporation, -
Plaintiffs-Appellants, -
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v.
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MELISSA R. DEVAUGH, in her capacity as the
LAPEER COUNTY REGISTER OF DEEDS; FRAN -
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FULLER, in her capacity as the EATON COUNTY
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REGISTER OF DEEDS; MILDRED DODAK, in her
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capacity as the SAGINAW COUNTY REGISTER OF
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DEEDS; VIRGINIA MCLAREN, in her capacity as the
TUSCOLA COUNTY REGISTER OF DEEDS; and LINDA -
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M. LANDHEER, in her capacity as the NEWAYGO
Defendants-Appellees. -
COUNTY REGISTER OF DEEDS,
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N
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 05-70718—John Corbett O’Meara, District Judge.
Argued: December 7, 2006
Decided and Filed: February 22, 2007
Before: BATCHELDER and GRIFFIN, Circuit Judges; PHILLIPS, District Judge.*
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COUNSEL
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 &
*
The Honorable Thomas W. Phillips, United States District Judge for the Eastern District of Tennessee, sitting
by designation.
1
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 2
McGLINCHEY, Lansing, Michigan, Marcia L. Howe, JOHNSON, ROSATI, LaBARGE,
ASELTYNE & FIELD, Farmington Hills, Michigan, Christina M. Grossi, GILBERT, SMITH &
BORRELLO, Saginaw, Michigan, for Appellees.
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OPINION
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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.” 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
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 3
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 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
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 4
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 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 M.C.L. §§ 24.401 through 24.403, which are part of
the Records Reproduction Act of 1992. In turn, M.C.L. § 24.402 provides that a Michigan
governmental entity or official may reproduce a record via photograph, photocopy,
microreproduction, optical media, data transfer, digitization, digital migration, digital imaging,
magnetic media, printing, and any other method or medium that is approved by the Department of
History, Arts, & Libraries. When a register makes a paper copy of a record, M.C.L.
§§ 600.2567(1)(b) and (4) authorizes him or her to charge $1.00 per page.
None of these statutory provisions, nor any others identified by the registers, addresses the
registers’ authority to regulate or restrict private parties’ re-sale of record copies or their sale of
unofficial copies of those record copies or of information contained therein.
III.
In February 2005, First American filed a three-count complaint in the United States District
Court for the Eastern District of Michigan. Count one alleges that the registers committed antitrust
violations under § 2 of the Sherman Act and seeks injunctive relief. Specifically, First American
alleged that the registers used their monopoly power to restrict competition in the provision of title
information in their counties by imposing license restrictions and anticompetitive contracts on title
companies and, in some cases, by refusing to provide discounted rates for the bulk purchase of title
records. First American alleged that the registers intended these restrictions to hamper the title
companies’ long-standing practice of re-selling title record copies as part of “title plants” and title
searches to companies and to people engaged in real estate transactions.
First American further alleged that the registers abused their positions as public repositories
of land title records, in contravention of Michigan statutes that are intended to make title information
readily available to buyers and sellers of real estate. First American contends that the registers’
practices have increased title insurance costs for home buyers and sellers and raised barriers to entry
into the title insurance market in these five counties, thereby preventing title insurers from offering
faster, higher-quality title searches.
Count two is a 42 U.S.C. § 1983 claim alleging that the registers violated First American’s
federal constitutional rights to procedural due process, substantive due process, and equal protection.
Count three alleges that the registers established and maintained systems of indices or tracts in
violation of M.C.L. § 53.141 et seq.
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 5
The registers moved to dismiss the plaintiffs’ claims pursuant to Federal Rule of Civil
Procedure 12(b)6) for failure to state a claim on which relief could be granted, and First American
filed opposition briefs. In June 2005, the district court dismissed First American’s Sherman Act
claims (count one) and its federal due-process and equal-protection claims (count two) for failure
to state a claim. The district court declined to dismiss First American’s state statutory claim (count
three) at that juncture.1
With regard to count one, the district court held that the registers qualified for state-action
immunity from Sherman Act antitrust liability, citing a Michigan statute that granted the registers
the general power to make contracts. Relying on Michigan Paytel Joint Venture v. City of Detroit,
287 F.3d 527 (6th Cir. 2002), the district court concluded that, because the state had granted the
registers the2general power to contract, the registers had “antitrust immunity in setting terms within
a contract.”
In June 2005, First American moved for reconsideration with regard to the dismissal of its
Sherman Act antitrust claim, contending that the district’s court’s “ruling on the State Action
Immunity doctrine established a new, virtual per se immunity rule, which is contrary to controlling
Supreme Court and Sixth Circuit precedent and confounds the basic premises of the doctrine.” In
August 2005, the district court denied reconsideration, stating that
a tension exists between the United States Supreme Court[’s] reasoning in
Community Communications Company, Inc. v. City of Boulder, 455 U.S. 40 (1982),
and the subsequent Sixth Circuit reasoning in Michigan Paytel Joint Venture v. City
of Detroit, 287 F.3d 527 (6th Cir. 2002). Given this tension, the court’s conclusion
that Defendants’ actions are protected by the state action exception to the Sherman
Act is certainly debatable. However, the court’s decision did not constitute palpable
error. It was an attempt to faithfully construe the broad language used in a recently
published Sixth Circuit decision. Plaintiffs[’] arguments, which are quite persuasive,
are best directed at the Sixth Circuit if the Plaintiffs seek appellate review and further
explanation of that court’s reasoning in Michigan Paytel.
In January 2006, First American and the other plaintiffs filed a timely notice of appeal with regard
to the dismissal of their Sherman Act claims.
IV.
We review de novo a dismissal under Federal Rule of Civil Procedure 12(b)(6) for failure
to state a claim. S.E. Texas Inns, Inc. v. Prime Hospitality Corp., 462 F.3d 666, 671 (6th Cir. 2006)
(citation omitted). To survive the 12(b)(6) motion, First American’s complaint must allege facts
which, if proved, would entitle it to relief. Id. (citing Conley v. Gibson, 355 U.S. 41, 45 (1957)).
We construe the complaint in the light most favorable to First American, accept its factual
allegations as true, and determine whether it can prove no set of facts in support of its claims that
1
The district court rejected the registers’ abstention and preclusion arguments, and the registers have not
appealed.
2
With regard to count two’s procedural due-process claim, the district court held that First American failed to
establish a liberty or property interest in the ability to purchase public records at a bulk rate with the right to resell them.
With regard to the substantive due-process and equal protection claims, the district court held that the registers’ practices
bore a rational relation to the legitimate state interest in maintaining and increasing revenue from public record sales.
Regarding count three, the district court denied summary judgment, finding “a genuine issue of material fact as to
whether the Registers are indeed illegally maintaining a system of abstract of title” in violation of Michigan statute. The
district court later issued a separate opinion dismissing count three, holding that the relevant state statute did not provide
a private right of action. First American has not appealed the dismissal of counts two and three.
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 6
would entitle it to relief. Id. “Although this is a liberal pleading standard, it requires more than the
bare assertion of legal conclusions. Rather, the complaint must contain either direct or inferential
allegations respecting all the material elements to sustain a recovery under some viable legal
theory.” Id. at 671-72 (citation omitted).
V.
First American brings its claim under § 2 of the Sherman Act, which provides that “[e]very
person who shall monopolize, or attempt to monopolize, or combine or conspire with any other
person or persons, to monopolize any part of the trade or commerce among the several States, or
with foreign nations, shall be deemed guilty of a felony . . . .” 15 U.S.C. § 2. The sole issue on
appeal is whether these registers’ challenged practices are exempt from the Sherman Act under the
“state action” immunity doctrine, which was first set forth in Parker v. Brown, 317 U.S. 341 (1943).
Parker held that
nothing in the language of the Sherman Act or in its history . . . suggests that its
purpose was to restrain a state or its officers or agents from activities directed by its
legislature. In a dual system of government in which, under the Constitution, the
states are sovereign, save only as Congress may constitutionally subtract from their
authority, an unexpressed purpose to nullify a state’s control over its officers and
agents is not lightly to be attributed to Congress.
The Sherman Act makes no mention of the state as such, and gives no hint that it was
intended to restrain state action or official action directed by a state. The act is
applicable to “persons” including corporations . . . .
There is no suggestion of a purpose to restrain state action in the Act’s legislative
history. The sponsor of the bill which was ultimately enacted as the Sherman Act
declared that it prevented only “business combinations.” [citations to Cong. Rec.
omitted] That its purpose was to suppress combinations to restrain competition and
attempts to monopolize by individuals and corporations, abundantly appears from its
legislative history.
Parker, 317 U.S. at 351 (citations omitted). The Parker doctrine “exempts ‘anticompetitive conduct
engaged in as an act of government by the state as sovereign, or, by its subdivisions, pursuant to
state policy to displace competition with regulation or monopoly public service’ from Sherman Act
control.” Brentwood Acad. v. Tenn. Secondary Sch. Athletic Ass’n, 442 F.3d 410, 440-41 (6th Cir.
2006) (quoting City of No. Olmsted v. Greater Cleveland Reg’l Transit Auth., 722 F.2d 1284, 1287
(6th Cir. 1983) (quoting City of Lafayette v. La. Power & Light Co., 435 U.S. 389, 413 (1978)
(Brennan, J.3) (“Lafayette”))), cert. granted on other grounds, — U.S. —, 127 S. Ct. 852 (2007).
The Supreme Court later “established a two-part test for determining whether [Parker state-
action immunity] saves a state statute [or a county practice] from preemption by the Sherman Act:
‘First, the challenged restraint must be one clearly articulated and affirmatively expressed as state
policy; second, the policy must be actively supervised by the State itself.’” Tritent Int’l Corp. v.
Cmnwlth. of Ky., 467 F.3d 547, 554-55 (6th Cir. 2006) (quoting Calif. Retail Liquor Dealers Ass’n
3
In Parts II and III of his opinion, which we quote and rely on here, Justice Brennan spoke only for four
Justices: himself and Justices Marshall, Powell, and Stevens. Several of the registers attack Lafayette as “merely a
plurality opinion having no precedential force.” Their attempt to escape Lafayette is unavailing. As the Supreme Court
noted twenty-five years ago, the Lafayette plurality’s “standard has since been adopted by a majority of the Court.” City
of Boulder, 455 U.S. at 51 (citing New Motor Vehicle Bd. of Calif. v. Orrin W. Fox Co., 439 U.S. 96, 109 (1978) and
Midcal, 445 U.S. at 105).
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 7
v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980) (“Midcal”)); see also Brentwood, 442 F.3d at
441. Both Midcal elements “are directed at ensuring that particular anticompetitive mechanisms
operate because of a deliberate and intended state policy.” FTC v. Ticor Title Ins. Co., 504 U.S. 621,
636 (1992) (“Ticor”) (citing Patrick v. Burget, 486 U.S. 94, 100 (1988)).
The Supreme Court has held that Midcal’s second prong does not apply to municipalities:
[T]he requirement of active state supervision [Midcal’s second prong] serves
essentially an evidentiary function: it is one way of ensuring that the actor is
engaging in the challenged conduct pursuant to state policy. In Midcal we stated that
the active state supervision requirement was necessary to prevent a State from
circumventing the Sherman Act’s proscriptions “by casting . . . a gauzy cloak of state
involvement over what is essentially a private price-fixing arrangement.” 445 U.S.,
at 106 . . . . Where a private party is engaging in the anticompetitive activity, there
is a real danger that he is acting to further his own interests, rather than the
governmental interests of the State. Where the actor is a municipality, there is little
or no danger that it is involved in a private price-fixing arrangement. The only real
danger is that it will seek to further purely parochial public interests at the expense
of more overriding state goals. This danger is minimal, however, because of the
requirement that the municipality act pursuant to a clearly articulated state policy
[Midcal’s first prong]. Once it is clear that state authorization exists, there is no need
to require the State to supervise actively the municipality’s execution of what is a
properly delegated function.
Town of Hallie v. City of Eau Claire, 471 U.S. 34, 46-47 (1985) (“Hallie”).
Finally, like other judicially-imposed exemptions from the antitrust laws, the state-action
immunity doctrine must be narrowly construed. Brentwood, 442 F.3d at 441 (citing Ticor, 504 U.S.
at 636) (“[W]e have held that state-action immunity is disfavored . . . .”)).
VI.
We hold that the challenged practices of the Saginaw County, Eaton County, Lapeer County,
and Newaygo County registers do not qualify for Parker state-action immunity because they are not
“clearly articulated and affirmatively expressed as state policy,” Midcal, 445 U.S. at 105.
First, the registers do not claim that the state of Michigan requires them to follow the
challenged practices. The registers do not claim that a state statute or regulation requires them to
prohibit purchasers from re-selling or otherwise providing title record copies or information to other
private parties.4 They do not claim that a state statute or regulation prohibits them from offering a
bulk discount on paper copies without a no-resale restriction. Nor do they claim that a state statute
or regulation prohibits them from making title records available in more convenient and readily
searchable non-paper formats, such as microfiche or digital images or information on a compact disc
or “memory key,” without a no-resale restriction.
4
As a condition for continuing to sell title records to First American, the Lapeer register required First American
to sign an agreement that prohibited it from using the documents for any purpose other than internal underwriting. First
American signed the agreement for 2001 but refused to renew for 2002. The Lapeer register then refused to sell title
records to First American at a bulk discount and in non-paper form as it had previously done. Beginning in 2003, the
Eaton register required First American to sign a similar agreement and likewise stopped providing title records at a bulk
discount and in non-paper formats when First American refused to agree to the restrictions on resale. The Newaygo and
Saginaw registers took similar measures beginning in December 2004 and January 2005, respectively.
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 8
Nonetheless, in order to establish that the challenged practices are “clearly articulated and
affirmatively expressed as state policy” per Midcal, the registers need not show that the Legislature
required the practices. McCarthy v. Middle Tenn. Elec. Membership Corp., 466 F.3d 399, 414 n.25
(6th Cir. 2006) (“With regard to the first prong of the Midcal test, we do not require explicit
authorization . . . .”) (citations and quotation marks omitted).5
In Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975), the Supreme Court stated that “[t]he
threshold inquiry in determining if an anticompetitive activity is state action of the type the Sherman
Act was not meant to proscribe[,] is whether the activity is required by the State acting as
sovereign.” Id. at 790. The Supreme Court later cited Goldfarb with approval in Midcal, 445 U.S.
at 104. The Supreme Court has since clarified that:
Goldfarb, however, is not properly read as making compulsion a sine qua non [of]
state action immunity. In that case, [it was undisputed that] the Virginia State Bar,
a state agency, compelled Fairfax County lawyers to adhere to a minimum fee
schedule. 421 U.S., at 776-78 . . . . The Goldfarb court therefore was not concerned
with the necessity of compulsion – its presence in the case was not an issue. The
focal point of the Goldfarb opinion was the source of the anticompetitive policy,
rather than whether the challenged conduct was compelled. The Court held that a
State Bar, acting alone, could not immunize its anticompetitive conduct. Instead, the
Court held that private parties, acting alone, were entitled to Parker immunity only
if the State “acting as sovereign” intended to displace competition. 421 U.S., at 790
....
Although Goldfarb did employ language of compulsion, it is beyond dispute that the
Court would have reached the same result had it applied the two-pronged test later
set forth in Midcal. . . . Although we recognize that the language in Goldfarb is not
without ambiguity, we do not read that opinion as making compulsion a prerequisite
to a finding of state action immunity.
Southern Motor Carriers Rate Conference, Inc. v. U.S., 471 U.S. 48, 105 S. Ct. 1721, 1728-29
(1985) (“Southern Motor”). In short, “a state policy that expressly permits, but does not compel,
anticompetitive conduct may be ‘clearly articulated’ within the meaning of Midcal.” Southern
Motor, 105 S. Ct. at 1729. Thus, the registers “need not point to a specific, detailed legislative
authorization for [their] challenged conduct.” Southern Motor, 105 S. Ct. at 1730 (citation and
internal quotation marks omitted). But the registers must show that “the State as sovereign [the
Legislature] clearly intends to displace competition in a particular field with a regulatory structure
. . . .” Id.
The parties’ disagreement can be seen as a divergence on how to define the relevant
“particular field” in which the Legislature “clearly intend[ed] to displace competition,” id. As noted
above, it is effectively impossible for private parties (such as the plaintiff companies) to induce the
parties to all real estate transactions in a county to provide them with grantor/grantee and other title
information. And all parties to a real estate transaction must report the transaction and record the
change of title with the register, who alone keeps the original documents thus generated. The
Legislature understood these obvious and uncontested realities when it enacted the legislation that
defined the powers and responsibilities of the registers. Therefore, we conclude that for purposes
5
On a related note, First American cannot defeat state-action immunity by showing that the registers’ imposition
of a no-resale condition was a misuse of or exceeded their legal authority. Stringham v. Hubbard, No. Civ-S-05-0898,
– F. Supp. 2d –, 2006 WL 3053079, at *3 (E.D. Cal. Oct. 26, 2006) (U.S.M.J.) (citing Lancaster Cmty. Hosp. v. Antelope
Valley Hosp. Dist., 940 F.2d 397, 402 & n.10 (9th Cir. 1991)), R&R adopted, – F. Supp. 2d –, 2006 WL 3498405 (E.D.
Cal. Dec. 5, 2006) (U.S.D.J.).
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 9
of the Sherman Act, the Legislature intended that the registers have a monopoly on (1) mandatory
acquisition of real estate transaction information from the parties to the transaction, and
(2) recordation of the transaction and possession of the original, official title documents thus
generated. We hold that the Legislature “clearly intend[ed] to displace competition” with the
registers to that extent.
However, we cannot conclude from this that the Legislature further intended to displace
competition in the provision of unofficial duplicate title documents or title information, which is all
that First American seeks to do. On the contrary, if the Legislature wished to grant the county
registers a broader monopoly – a monopoly on the provision even of duplicate title documents or
mere title information – it could have done so. It has not.
This does not yet conclude the inquiry in First American’s favor. The question remains, even
though the Legislature has not expressly given the registers a monopoly on the provision of duplicate
title documents and title information, does such a monopoly “logically result from” the powers that
the State did expressly give the registers? Put another way, is the imposition of a no-resale condition
by these registers a “foreseeable result” of the monopoly or anticompetitive powers that the
Legislature did expressly give the registers?
The “foreseeable result” and “logical result” formulations stem from the Supreme Court’s
opinion in Hallie. There, the Supreme Court considered a Wisconsin statute that authorized cities
to build, add to, alter, and repair sewage systems, including the power to “describe with reasonable
particularity the district to be served.” Hallie, 471 U.S. at 41. The Wisconsin Legislature had also
enacted a statute providing that a city operating a public utility “may by ordinance fix the limits of
such service in unincorporated areas. Such ordinance shall delineate the area within which service
will be provided and the municipal utility shall have no obligation to serve beyond the area so
delineated.” Id. A third Wisconsin statutory provision authorized the Department of Natural
Resources (“DNR”) to require a city to construct its sewage system so that other areas could connect
to it. Id. It also provided, however, that the DNR’s order would be void if the area seeking to
connect to the sewer system refused to be annexed by the municipality; in other words, the
Wisconsin Legislature effectively authorized municipalities to condition connection to its sewage
system on an agreement to be annexed. Id.
The city of Eau Claire refused to provide sewer service to neighboring townships unless they
agreed to be annexed, and the townships contended that this violated the Sherman Act. The
Supreme Court held that the city’s practice qualified for state-action immunity from antitrust
liability:
The Towns contend that these statutory provisions do not evidence a state policy to
displace competition in the provision of sewage services because they make no
express mention of anticompetitive conduct. [But] . . . the statutes clearly
contemplate that a city may engage in anticompetitive conduct. Such conduct is a
foreseeable result of empowering the City to refuse to serve unannexed areas. . . .
[I]t is sufficient that the statutes authorized the City to provide sewage services and
also to determine the areas to be served. We think it is clear that anticompetitive
effects logically would result from this broad authority to regulate.
Hallie, 471 U.S. at 41-42 (internal citations omitted).
Here, by contrast, it was decidedly not foreseeable that the powers expressly granted to the
registers would result in any of these four registers’ challenged practices. In reaching this
conclusion, we have considered Michigan statutes governing county powers generally, statutes
governing access to public records, and statutes governing county register records specifically.
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 10
First, the Legislature authorized and required the registers to record deeds and related
instruments7that affect or pertain to8 real property title – such as mortgage satisfactions,6 tax liens or
certificates, and court judgments – and to store the original records thus generated. See M.C.L.
§ 53.94 (providing, in pertinent part, “The board of supervisors of each county shall, from time to
time, provide suitable books, at the expense of the county, for the entering and recording of all deeds
and matters required by law to be entered and recorded by the register of deeds.”). The Legislature
also authorizes county boards to authorize registers to make copies of the records and keep the
copies on hand. See M.C.L. § 691.1102 (if the county board of commissioners instructs the register
to do so, the register may make copies of the original records in her possession, keeping one copy
in her office, and storing one copy in a separate building).
As the Lapeer register correctly points out, “Based on this myriad of statut[es], the register
is the only official with the authority to store and make a copy from its [original] record . . . . The
Plaintiffs, as with all the public, may obtain a copy of the register’s record . . . , but they can never
store or copy the official record . . . .” But none of these powers and obligations of the register
foreseeably or logically results in the registers conditioning non-paper copies or bulk-discounted
paper copies on a no-resale restriction – let alone on the sale of unofficial (uncertified) copies (i.e.
“copies of copies”) or of the title information contained therein.
Second, the Legislature authorized the registers to “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.” M.C.L. § 565.551(1). The registers present no evidence or reason to believe that
the sale of unofficial copies of the certified copies, or the sale of the information contained therein,
would somehow affect the integrity of the originals or interfere with the registers’ discharge of their
duties. Therefore, we hold that it is not foreseeable that the powers granted in M.C.L. § 565.551(1)
would logically result in the challenged practices. Cf. Lapeer Cty. Abstract & Title Co. v. Lapeer
Cty. Register of Deeds, 691 N.W.2d 11, 16 (Mich. Ct. App. 2004) (“MCL 565.551(1) generally
pertains only to the in-office inspection of records, [not] . . . the reproduction of those records. More
specifically, the ‘reasonable rules and regulations’ language . . . only pertains to the inspection and
examination of records, not their reproduction and distribution. . . . It has nothing to do with the
making of contracts for the sale of copies, let alone entering into contracts that provide only for the
restricted use of such copies.”).
Third, when a party requests a copy of a record held by a register, the Legislature authorizes
the register to choose whether to reproduce the record itself or provide equipment for the requestor
6
See M.C.L. § 565.42 (“Any mortgage shall also be discharged upon the record thereof by the register of deeds,
in whose custody it shall be, whenever there shall be presented to him a certificate executed by the mortgagee . . .
specifying that such mortgage has been paid, or otherwise satisfied or discharged; or upon the presentation to such
register of deeds of the certificate of the circuit court . . . certifying . . . that said mortgage has been duly paid, or upon
the presentation to such register of deeds of a certificate of the register in chancery of the county . . . certifying that a
decree of foreclosure of any such mortgage has been duly entered in his office, and that the records in his office shows
[sic] that such decree has been fully paid and satisfied.”).
M.C.L. § 565.43 provides, in part, “Every certificate described in [M.C.L. § 565.42], and the proof or
acknowledgment of the certificate, shall be recorded at full length, and a reference shall be made to the book and page
containing the certificate, in the minute of the discharge of the mortgage made by the register upon the mortgage.”
7
See M.C.L. § 211.135 (before recording deed or contract, register must obtain certificates confirming that taxes
have been paid and all tax liens satisfied on the property for past five years).
8
See M.C.L. §§ 600.6055(1) and (2) (whenever real estate is sold by execution of a judgment, the executing
officer must file a certificate of sale with the county register within ten days, and the register must record it).
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 11
to make the reproduction. See M.C.L. §§ 565.551(2)(a) and (b). It is not foreseeable that granting
the registers this discretion would logically result in the challenged practices.
Fourth, when a party requests a copy of a record held by a register, the Legislature authorizes
the register to choose whether to reproduce the record on paper or in some other format. See M.C.L.
§ 565.551(2)(a) (register may “[r]eproduce the record or file for the individual pursuant to . . .
[M.C.L. §§ 24.401 - 24.403], using a medium selected by the register of deeds.”). That is, a register
may permissibly have a policy of not making non-paper copies available to anyone. It is not
foreseeable, however, that merely granting registers discretion as to the medium of the copies would
result in the registers discriminating between purchasers who wish to use the information in the
marketplace and purchasers who do not. That is, the discretion to provide all purchasers with only
paper copies does not logically result in providing some purchasers with non-paper copies but
denying them to others who might compete with the registers in the provision of title information.
Fifth, the Legislature authorizes the registers to charge a statutorily fixed fee for each copy.
For paper copies, the registers may charge $1.00 per 8.5-inch by 11-inch single-sided page, M.C.L.
§§ 600.2567(1)(b) and (4), and, for non-paper copies, the register may charge enough to recoup its
“reasonable costs,” M.C.L. §§ 565.551(2)(a) and (b). It is not foreseeable that granting a register
the discretion to charge a fee to cover its costs would result in the register refusing to make non-
paper copies, despite payment of the fee, unless the purchaser agreed to relinquish his right to re-sell
the copies or the information they contain.
Sixth, in 1996, the Legislature enacted the Enhanced Access to Public Records Act, M.C.L.
§§ 15.441 - 15.443 (“the enhanced access act”). The enhanced access act provides that, “[u]pon
authorization of the governing body of the public body, [a public body may] provide enhanced
access for the inspection, copying, or purchasing of a public record that is not confidential or
otherwise exempt by law from disclosure.” M.C.L. § 15.443(1)(a). The act defines enhanced access
as “a public record’s immediate availability for public inspection, purchase, or copying by digital
means,” and it cautions that “[e]nhanced access does not include the transfer of ownership of a
public record.” M.C.L. § 15.442(a) (emphasis added). The act further provides that if a public body
does provide enhanced (i.e., digital) access to a public record, it may “charge a reasonable fee
established by the public body’s governing body” for doing so, M.C.L. § 15.443(1)(b), which is
defined as “a charge calculated to enable a public body to recover over time only those operating
expenses directly related to the public body’s provision of enhanced access.” M.C.L. § 15.442(g).
We first note our uncertainty with regard to whether the enhanced access act even applies
to county registers.9 The enhanced access act claims blanket coverage of all entities that are
considered public bodies and all records that are considered public 10records under the Michigan
Freedom of Information Act (“FOIA”), see M.C.L. § 15.442(e) and (f). By contrast, the Inspection
of Records Act, M.C.L. § 565.551, by its terms, applies specifically and only to county registers.
This difference in the two statutes’ coverage is significant. “One of the most basic canons
of statutory interpretation is that a more specific provision takes precedence over a more general
one.” United States v. Perry, 360 F.3d 519, 535 (6th Cir. 2004) (citations omitted); see also Simpson
9
The Michigan courts have not yet had occasion to provide guidance on this issue.
10
The Michigan FOIA definition of public body excludes the judiciary but includes every state officer,
employee, or agency in the executive branch, except the Governor and Lieutenant Governor and their executive offices
and executive office employees; every agency or other body in the legislative branch; and every county, regional, or local
body or agency. M.C.L. §§ 15.232(i-v). It defines public record as “a writing prepared, owned, used, in the possession
of, or retained by a public body in the performance of an official function, from the time it is created” and defines
“writing” to include every “means of recording or retaining meaningful content.” M.C.L. §§ 15.232(e) and (h).
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 12
v. United States, 435 U.S. 6, 15 (1978)11 (referring with approval to “the principle that gives
precedence to the terms of the more specific statute where a general statute and a specific statute
speak to the same concern, even if the general provision was enacted later”) (emphasis added).12
This is true even when there is no direct conflict between the general statute and the specific one.
See Green v. Bock Laundry Mach. Co., 490 U.S. 504, 524 (1989) (“A general statutory rule usually
does not govern unless there is no more specific rule.”) (citing D. Ginsberg & Sons, Inc. v. Popkin,
285 U.S. 204, 208 (1932)).
Because the question of whether the enhanced access act applies to county registers is a
question of state law, we note that the Michigan courts follow this same rule of statutory
construction. See People v. Bewersdorf, 450 N.W.2d 271, 272 (Mich. Ct. App. 1989) (holding that
the Motor Vehicle Code’s specific sentencing scheme applicable to convictions for operating under
the influence of intoxicating liquor “prevails to the exclusion of the general habitual-offender
statute”), aff’d in pt & rev’d in pt on other grounds, 475 N.W.2d 231 (Mich. 1991) (reading general
provision and specific provision not to conflict with one another). It seems, then, that the enhanced
access act may not apply to county registers.13
Even assuming, without deciding, that the enhanced access act applies to county registers,
it does not help the registers’ case for state-action immunity.14 The registers emphasize that “the
Enhanced Access to Records Act . . . permits, but does not mandate Counties to provide ‘enhanced
access’ to public records.” That is correct,15 but irrelevant. It does not change the fact that it is not
reasonably foreseeable that simply allowing a register to make records available for digital copying
would lead a register to refuse to do so unless the purchaser gives up his right to sell unofficial
copies of those copies or the information therein.
11
Simpson was superseded by statute, but on other grounds. See United States v. Moore, 917 F.2d 215 (6th Cir.
1990).
12
See, e.g., Sherrod v. Genzyme Corp., 170 F. App’x 375, 378 (6th Cir. 2006) (“M.C.L. § 445.774a(1)’s
specific authorization of non-compete agreements trumps the other statutes’ inclusion of such agreements within their
general prohibition on ‘consideration’ as a condition of employment.”).
13
The Lapeer register admits as much: “Actually, the more specific statute, MCL 565.551, controls. * * *
MCL 15.443 is not relevant.”
14
Conversely, we are not persuaded by First American’s argument that the enhanced access act shows that the
registers are not entitled to state-action immunity.
First American asserts, “The Enhanced Access Act not only did not contemplate pricing structures to punish
competition . . . it prohibits them.” But the enhanced access act does no such thing; it authorizes public bodies to provide
copies to other public bodies free of charge, not to private parties free of charge, and it says nothing about prohibiting
or allowing private parties to re-sell copies or the information therein.
First American also asserts, “The language in the Enhanced Access Act relating to pricing confirms that
restrictions against resale not only were not contemplated by the Legislature, but are contrary to the goals of the Act.
This Act limits the fees public bodies may charge to ‘an amount that enables the public body providing access to or
output from its system to recover over time its operating expenses directly related to providing access to output from its
system to a third party.’” We fail to see how a limitation on the fees that public bodies may charge for digital copies
evinces an intent to prohibit public bodies from imposing no-resale conditions on private purchasers of those copies.
15
The last subsection of the act provides: “This act does not require a public body to provide enhanced access
to a specific public record if that public body has not established an enhanced access policy in accordance with
subsection (5) with respect to that specific record.” M.C.L. § 15.443(6).
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 13
Several of the registers seize upon the enhanced access act’s statement that “[e]nhanced
access does not include the transfer of ownership of a public record.” Registers Fuller, McLaren,
and Landheer argue, “Plaintiffs ignore that the Enhanced Access to Records Act not only foresees
such restrictions on sale or transfer, but, actually, specifically contemplates them.” They also argue
that “the requestor does not, by statute, secure an ownership interest in the documents, and the
requestor thus cannot convey or sell to others what it does not own.” But this provision of the
enhanced access act has nothing to do with registers’ right to restrict the sale or transfer of certified
copies (provided by a register), let alone the sale or transfer of uncertified “copies of copies” (made
by a title insurance company from the certified copy) or the title information therein. M.C.L.
§ 15.442(a)’s caveat about ownership of public records obviously refers to the original public
record, which remains owned and possessed by the public body, regardless of how many digital
copies of the record are sold. First American uses in the marketplace only what it owns – not the
original public record, but unofficial “copies of copies” and the title information contained therein.
The registers also attempt to bolster their case for state-action immunity by reference to yet
another provision of the enhanced access act. M.C.L. § 15.443(d) authorizes public bodies to
[p]rovide another public body with access to or output from its geographical
information system for the official use of that other public body, without charging
a fee to that other public body, if the access to or output from the system is provided
in accordance with a written intergovernmental agreement that contains all of the
following:
(i) A statement specifying that the public body receiving access to or output
from the system without charge is prohibited from providing access to the system’s
output to a third party unless that public body does both of the following:
(A) Collects from the third party a fee described in subsection (2), or waives that
fee in accordance with the written terms of the intergovernmental agreement.
(B) Conveys to the providing public body that [a] portion of any fee collected
under subsection (2) that is directly attributable to the operating expenses of the
providing public body in furnishing the output from the system to the third party.
....
(iii) A statement specifying the portion of any fee collected under subsection
(2) and collected from a third party that the receiving public body shall convey to the
providing public body.
Id. (emphasis added). The registers’ reliance on this provision is misplaced. The existence of this
provision actually undermines the registers’ argument that the Legislature “specifically
contemplate[d]” restrictions on private purchasers’ sale or transfer of uncertified record copies
(“copies of copies”) or the title information therein. The Legislature authorized public bodies to
enter into such agreements only with other public bodies. That is why M.C.L. § 15.443(d)
repeatedly refers to intergovernmental agreements, and only intergovernmental agreements, through
which a public body can obtain geographical information without a fee if it promises either not to
resell the information or to turn over part of any monies it receives by reselling the information.
The existence of M.C.L. § 15.443(d) shows that, when the Legislature wished to authorize
a public body to impose a no-resale condition to the provision of public record copies, the
Legislature knew how to do so and did so explicitly. Cf. Marx v. Centran Corp., 747 F.2d 1536,
1545 (6th Cir. 1984) (after noting that 12 U.S.C. § 93(a) contained an express cause of action and
§ 93(b) did not, this court remarked, “[t]his difference between the two subsections leads to the
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 14
conclusion that ‘when Congress wishes to provide a private damages remedy, it knew how to do
so and did so expressly.’”) (quoting Touche Ross & Co. v. Redington, 442 U.S. 560, 572 (1979)).
If anything, the registers’ case is undermined by the fact that the Legislature chose not to
enact a similar provision authorizing public bodies to impose a no-resale condition on the provision
of public record to private parties. This reasoning comports with the long-established canon of
statutory construction, expressio unius est exclusio alterius, “the mention of one thing implies the
exclusion of another.” See Millsaps v. Thompson, 259 F.3d 535, 546 (6th Cir. 2001) (“Under the
expressio unius principle, ‘[w]hen a statute limits a thing to be done in a particular mode, it includes
the negative of any other mode.’”) (quoting Nat’l R.R. Passenger Corp. v. Nat’l Ass’n of R.R.
Passengers, 414 U.S. 453, 458 (1974)).16 The Michigan courts also follow this canon of
construction. See People v. Jahner, 446 N.W.2d 151, 155 n.3 (Mich. 1989) (citing, inter alia,
Stowers v. Wolodzko, 191 N.W.2d 355 (Mich. 1971)).
In any event, the rationale of M.C.L. § 15.443(d) is inapposite when the recipient of public
records is a private party. That provision contemplates that a public body give up its right to resell
public record information (or agree to share the fee from such resale) precisely because the public
body received the information free of charge. Here, by contrast, First American is not entitled to
receive, and does not seek to receive, title record copies for free in any quantity or format.
Moreover, the registers should hope that the enhanced access act does not apply to them
because one of its provisions recognizes and assumes that private parties sell information obtained
from digital copies of public records. Section 4 provides that “[a]n individual elected or appointed
to a board of governing body of a city, village, township or county shall not have an ownership
interest in, or accept compensation from, a person who sells information that is obtained from a
public record of that city, village, township or county.” M.C.L. § 15.444 (emphasis added). As
First American points out, one can obtain an “ownership interest” in a private company, but not in
a local or county government.
Finally, even if the enhanced access act does not apply to county registers, its fourth section
still undermines the registers’ claim that the Legislature contemplated restrictions on the resale of
public record copies or information contained therein. At least for digital copies provided under the
enhanced access act, the Legislature contemplated precisely the opposite, i.e., that private parties
would buy copies and sell them (or their information) as they have long done.
The district court began its Sherman Act discussion by correctly noting that the state
Legislature’s “intention to authorize [the challenged] anticompetitive behavior need not be express
in a statute. It is enough that it is the foreseeable result of acts [that] the statute [expressly]
authorizes.” June 13, 2005, Dist. Ct. Op. at 7 (citing City of Columbia v. Omni Outdoor Advertising,
Inc., 499 U.S. 365, 373 (1991) and Michigan Paytel Joint Venture v. City of Detroit, 287 F.3d 527,
535-36 (6th Cir. 2002)). But the district court did not meaningfully discuss, let alone apply, the
standard for state-action immunity enunciated by the Supreme Court in Omni and Hallie and by this
court in Michigan Paytel.17
Namely, the district court did not independently determine whether, for purposes of the
Sherman Act, the challenged anticompetitive practices were a foreseeable or logical result of the
statutory authority that the Legislature did give the registers. Rather, the district court simply
followed a Michigan Court of Appeals decision that did not involve the Sherman Act or any antitrust
16
See, e.g., Cavanaugh v. Cardinal Local Sch. Dist., 409 F.3d 753, 756 (6th Cir. 2005) (“Applying the canon
of exclusio unius est exclusio alterius . . . we conclude . . . .”).
17
The district court did not cite Southern Motor, 471 U.S. 48 (1985).
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 15
statute, Lapeer Cty. Abstract & Title Co. v. Lapeer Cty. Register of Deeds, 691 N.W.2d 11 (Mich.
Ct. App. 2004). As the Michigan Court of Appeals remarked, “The complaint also alleged an
antitrust violation and a violation of federal constitutional rights contrary to 42 USC 1983, but those
claims are not at issue in this appeal.” Id., 691 N.W.2d at 14 n.2 (emphasis added).
The district court uncritically adopted Lapeer as follows:
The Michigan Inspection of Records Act provides that the Registers have the option
to produce requested records using a medium the Registers select. M.C.L. § 545.551
[sic, § 565.551(2)]. The Registers can also make reasonable regulations regarding
their examination. Id. The Registers argue that these statutory provisions give them
the authority to make conditions on bulk sales of records. However, the Michigan
Court of Appeals expressly rejected the notion that M.C.L. § 545.551 [sic,
§ 565.551] gave Registers the authority to enter contracts that restrict the resale of
public records. . . . At the same time, [however,] the court found that this statute did
not prohibit Registers from entering into such contracts. [citation omitted] The
Court held that Registers have the ability to restrict the dissemination of information
provided in bulk form under a county government’s general power to make contracts
and a county’s general18power to19manage its own business affairs. Id. at 176-77
(citing M.C.L. §§ 45.3[ ], 46.11[ ]). The court noted,
Simply as an exercise of the general power to contract, defendant has
the authority to propose and enter into contracts in which it provides
concessions, such as a reduced bulk rate fee or copies in microfilm
form, in return for a purchaser agreeing to special conditions, such as
a restriction on the use of the copies provided. Such a quid pro quo
arrangement is a usual and inherent part of the contracting process.
Further, the negotiation of such contracts is within the broad statutory
grant of authority provided for the care and management of the
property and business concerns of a county.
Id. This court will not question the judgment of the Michigan Court of Appeals
regarding the statutory authority under which the Registers are acting when they
make conditions on bulk sales. The very policy reason behind the Parker [state-
action] exception, respect for state sovereignty, cautions the court against delving too
deeply into state law matters to determine whether the Parker exception applies.
June 13, 2005, Dist. Ct. Op. at 7-8.
If this were a question of state law, the federal courts would indeed be obligated to defer to
the decisions of the Michigan courts. But we are not deciding a question of state law; as noted
above, First American has not appealed the dismissal of its state-law claim. A state court’s opinion
18
M.C.L. § 45.3 is extremely general, providing, “Each organized county shall be a body politic and corporate,
for the following purposes . . . to make all necessary contracts, and to do all other necessary acts in relation to the
property and concerns of the county.” This provision does not refer to the register of deeds, let alone to the provision
of duplicate title records or title information.
19
M.C.L. § 46.11(l) provides that a county board of commissioners may “[r]epresent the county and have the
care and management of the property and business of the county if other provisions are not made.” M.C.L. § 46.11(m)
provides that a county board of commissioners may “[e]stablish rules and regulations in reference to the management
of the interest and business concerns of the county as the board considers necessary and proper in all matters not
especially provided for in this act or under the laws of this state.” These provisions do not refer to the register of deeds,
let alone to the provision of duplicate title records or title information.
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 16
on an issue of federal law – or, in our case, a state court’s opinion on a state-law issue that also
arises in federal law – is entitled to no deference whatsoever. See Wallace v. Cranbrook Educ.
Cmty., No. 05-73446, – F. Supp. 2d –, 2006 WL 2796135, *6 (E.D. Mich. Sept. 27, 2006)
(“Although federal courts must defer to a state court’s interpretation of its own law, federal courts
‘owe no deference’ to a state court’s interpretation of federal law.”) (quoting United States v. Miami
Univ., 294 20
F.3d 797, 811 (6th Cir. 2002)); accord Hawkman v. Parratt, 661 F.2d 1161, 1166 (8th
Cir. 1981).
As a matter of Michigan law as interpreted by the Michigan Court of Appeals, a county’s
state-granted general powers to make contracts and manage its own business affairs implicitly
encompass the power to condition bulk public record sales on relinquishment of the right to re-sell
the records. That tells us nothing, however, about whether a county’s exercise of that latter power
qualifies for state-action immunity from Sherman Act liability. See, e.g., Philip Areeda & Herbert
Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application 455 (2d ed.
2000) (“We would therefore disagree . . . with decisions holding . . . that the bare power to make
contracts implies the power to enter into anticompetitive exclusive arrangements [for purposes of
federal antitrust law].”).
Because the Michigan Court of Appeals was interpreting only Michigan law in Lapeer
County Abstract, it was not bound by the principles and presumptions that govern federal antitrust
law. Following the Supreme Court, this court has emphasized that the state-action immunity
doctrine, like other judicially imposed exemptions from the antitrust laws, must be narrowly
construed. Brentwood, 442 F.3d at 441 (citing Ticor, 504 U.S. at 636). The Michigan Court of
Appeals labored under no such stricture when it decided what implicit powers can be inferred from
the registers’ explicit powers under Michigan law.
Moreover, in the Sherman Act context, the Supreme Court has made clear that a “neutral”
state view towards a state subdivision’s allegedly anticompetitive conduct is insufficient to trigger
state-action immunity. This, too, is a rule of law that did not apply to the Michigan Court of
Appeals’s interpretation of Michigan law in Lapeer County Abstract.
The Supreme Court has provided a helpful contrast between a “neutral” state view of
anticompetitive conduct and a state’s requirement or endorsement of the anticompetitive conduct.
Considering whether a Mississippi agency’s setting of transportation prices was exempt from the
Sherman Act, the Supreme Court explained,
The Mississippi statute stands in sharp contrast to the Colorado Home Rule
Amendment, which we considered in Community Communications Co. v. Boulder,
455 U.S. 40 . . . (1982). In Boulder, the State Constitution gave municipalities
extensive powers of self-government. Id., at 43-44 . . . . Pursuant to this authority,
the city of Boulder prohibited a cable television company from expanding its
operations. The Court held that because the Home Rule Amendment did not
evidence an intent to displace competition in the cable television industry, id. at 55
. . . , Boulder’s anticompetitive ordinance was not enacted pursuant to a clearly
articulated state policy. This holding was premised on the fact that Boulder, as a
“home rule municipality,” was authorized to elect free-market competition as an
alternative to regulation. Id. at 56 . . . .
In this case, on the other hand, the Mississippi Public Service Commission is not
authorized to choose free-market competition. Instead, it is required to prescribe
20
See Wayne v. Vill. of Sebring, 36 F.3d 517, 526 (6th Cir. 1994) (“We reject the state court of appeals’
interpretation of federal law.”).
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 17
rates for motor common carriers on the basis of statutorily enumerated factors. [state
statutory citation omitted] These factors bear no discernible relationship to the prices
that would be set by a perfectly efficient and unregulated market. Therefore, the
Mississippi statute clearly indicates that the legislature intended to displace
competition in the intrastate trucking industry with a regulatory program.
Southern Motor, 471 U.S. at 65 n.25, 105 S. Ct. at 1731 n.25 (emphasis added).
The registers’ situation here is akin to the situation in City of Boulder: Michigan statute
gives the counties the power to make contracts, but it leaves the counties free to allow competition
in the provision of duplicate title records and the information contained therein. In other words,
Michigan statutory law leaves the counties free to provide duplicate title records to purchasers, in
any format or quantity, without mandating that the purchasers give up their right to re-sell the
official copies (or to sell unofficial copies of those copies, or the information therein). Unlike
Hallie, the state statutes do not “plainly show that ‘the legislature contemplated the kind of action
complained of.’” Hallie, 471 U.S. at 44 (quoting Lafayette, 435 U.S. at 415). So far as Michigan
statutory law shows, the Legislature is neutral towards the anticompetitive condition these registers
have imposed on purchasers of title records. The Legislature does not contemplate the displacement
of competition in the unofficial-copy / title information market any more than it contemplates free
competition in that secondary market.
This is fatal to the Rule 12(b)(6) motion to dismiss for failure to state a claim with regard to
these four registers because the Supreme Court holds that “plainly the requirement of ‘clear
articulation and affirmative expression’ is not satisfied when the State’s position is one of mere
neutrality respecting the . . . actions challenged as anticompetitive.” City of Boulder, 455 U.S. at
55. Contrary to the district court’s conclusion, granting counties the general power to contract or
manage their business affairs cannot imply state authorization to impose this anticompetitive
restriction: “[a]cceptance of such a proposition – that the general grant of power to enact ordinances
necessarily implies state authorization to enact specific anticompetitive ordinances – would wholly
eviscerate the concepts of ‘clear articulation and affirmative expression’ that our precedents
require.” Id. at 56.21
The district court appears to have acknowledged that the Supreme Court’s decision in City
of Boulder rendered the registers ineligible for state-action immunity:
In Community Communications Company, Inc. v. City of Boulder, 455 U.S. 40
(1982), the Supreme Court held that the City of Boulder was not immune to the
Sherman Act when its alleged anticompetitive actions were made pursuant to the
general Home Rule Amendment to the Colorado Constitution. A general grant of
power to a local government was not a sufficiently articulated state policy that would
make its actions immune to Sherman Act prohibitions. Id. . . . The general power
to make contracts is a general grant of authority similar to Home Rule authority.
June 13, 2005, Dist. Ct. Op. at 8-9 (emphasis added). The district court went on to assert,
“[h]owever, more recent decisions of the Supreme Court and the Sixth Circuit have broadened
Parker immunity for local governments since the City of Lafayette and City of Boulder decisions.”
Id. at 9. For this proposition, the district court cited Hallie, 471 U.S. 34; Omni Outdoor Advertising,
499 U.S. 365; and Michigan Paytel, 287 F.3d 527.
21
See also Hertz Corp. v. NYC, 1 F.3d 121 (2d Cir. 1994) (holding that in Sherman Act § 1 action, state-action
immunity did not apply to city ordinance that prohibited basing vehicle rental fees and decisions on the renter’s
residence; city acted pursuant to general home-rule powers, not any specific grant of authority over vehicle rentals).
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 18
The district court provides no explanation, however, as to how these two Supreme Court
decisions overruled or modified City of Boulder. We conclude that neither Hallie nor City of
Columbia expanded City of Boulder’s standard for municipal/county state-action immunity so as to
cover the allegedly anticompetitive conduct challenged here.
As discussed above, Hallie predicates municipal/county state-action immunity on whether
the particular anticompetitive conduct was a foreseeable or logical result of the powers actually
expressly granted to the municipality/county, and the imposition of a no-resale condition was not
a foreseeable or logical result of the powers that the Legislature granted to the registers.
The district court’s reliance on our decision in Michigan Paytel to sustain state-action
immunity here is also unpersuasive. First, to the extent that a Sixth Circuit decision allegedly
conflicts with a Supreme Court decision, the district court is obligated to follow the Supreme Court
decision. See, e.g., Harries v. Bell, 417 F.3d 631, 635 (6th Cir. 2005).
In any event, our decision in Michigan Paytel is consistent with the Supreme Court decisions
discussed above: Lafayette (1978), City of Boulder (1982), Southern Motor (1985), Hallie (1985),
Omni (1991), and Ticor (1992). In Michigan Paytel, we reaffirmed the rule that “[g]rants of general
or neutral authority to govern local affairs will not satisfy the ‘clear articulation’ component of the
state action exemption from antitrust liability.” 287 F.3d at 534. There, Michigan Paytel and
Ameritech submitted competing bids for an exclusive contract to provide the Detroit Police
Department with in-cell telephones for use by prisoners. Ameritech won the contract, and Paytel
sued under the Sherman Act, contending that Ameritech and the City of Detroit had acted “to
maintain Ameritech’s dominance in the pay telephone service market in the Detroit metropolitan
area” by entering into the exclusive contract. Id. The Michigan Paytel panel reasoned that
[n]o Michigan statute expressly authorizes the City to execute an exclusive contract
with a telephone service provider for telephone service in its prisons. However, the
Home Rule City Act does grant the City the authority to bid out public contracts and
to contract for the maintenance of its prisons. Under the Michigan Constitution,
these provisions must be “liberally construed in the[] favor” of municipalities. We
therefore conclude that the City is immune from antitrust liability because
anticompetitive effects are the logical and foreseeable result of the City’s broad
authority under state law and the Michigan Constitution to bid out public contracts
for the maintenance of City prisons. As the district court observed, “Under the
bidding process, there would be only one successful bidder. Thus, only one bidder
would have the right to install and service the pay telephones.”
Id. at 535-36 (emphasis added) (internal citations omitted); see M.C.L. § 117.3(j) (permitting city
to bid out services, such as prison phone service, to “a private organization”) (emphasis added). In
other words, the Legislature expressly authorized the city of Detroit to bid out contracts for city
services such as the maintenance of city jails, and it is inherent in that process that only one bidder
can win the right to provide the service. In our case, by contrast, there is no bidding process, and
the applicable statutory provisions do not inherently result in or contemplate an exclusive or favored
position for the county registers in the provision of unofficial copies or title information.
Finally, we note that allowing these four registers to be potentially held liable for violating
the Sherman Act would not thwart the purpose of the Parker state-action exception – respect for
state sovereignty. As the Supreme Court explained in Lafayette,
[T]he fact that the governmental bodies sued are cities, with substantially less than
statewide jurisdiction, has significance. When cities, each of the same status under
state law, are equally free to approach a policy decision in their own way, the
anticompetitive restraints adopted as policy by any one of them, may express its own
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 19
preference, rather than that of the State. Therefore, in the absence of evidence that
the State authorized or directed a given municipality to act as it did, the actions of
a particular city hardly can be found to be . . . restraints that “the state . . . as
sovereign” imposed.
435 U.S. at 414 (footnotes omitted) (quoting Parker, 317 U.S. at 352).
VII.
Unlike the other four registers, the Tuscola County register is not alleged to have imposed
a no-resale condition on its sale of bulk-discounted paper records or its sale of records in non-paper
format. First American alleges only that the Tuscola register “refuses to provide copies of land title
records at a reasonable rate or in a cost-effective medium. The only way for title insurers to
purchase land title records in Tuscola County today is to make copies of all records recorded, on
paper, at the much higher rate of $1.00 per page.” In the context of the rest of the complaint and the
other filings in this case, we take this to mean that the Tuscola register refuses to (1) make title
record copies available in non-paper form, such as microfiche or digital/computer format, and (2)
offer a discount for the bulk purchase of paper copies of title records. The district court correctly
held that these two practices of the Tuscola County register qualify for state-action immunity from
Sherman Act liability.
As noted above, the Legislature has expressly granted the registers discretion to determine
the medium in which original records are reproduced. M.C.L. § 565.551(2)(a). Under Hallie (U.S.),
Michigan Paytel (6th Cir.), and other precedents, the Legislature could easily foresee that a register
could exercise this discretion to refuse to provide copies in non-paper form. To put it another way,
the Legislature took more than merely a “neutral” stance toward the refusal to provide non-paper
copies; it expressly authorized and endorsed that practice as the register’s option. See Southern
Motor, 105 S. Ct. at 1729 (“a state policy that expressly permits, but does not compel,
anticompetitive conduct may be ‘clearly articulated’ within the meaning of Midcal.”) (emphasis
added). Thus, in refusing to make non-paper copies available, the Tuscola County register acted
pursuant to a clearly articulated state policy and cannot be sued under the Sherman Act.
The Tuscola County register’s alleged refusal to provide a bulk discount for paper copies
presents a less obvious question, but the answer is ultimately the same. Unlike the registers’
discretion to provide copies in paper or non-paper form, the Legislature has not expressly granted
registers the discretion whether or not to offer a bulk discount. At first blush, then, Tuscola
County’s refusal to provide a bulk discount might seem to run afoul of the rule that “the requirement
of ‘clear articulation and affirmative expression’ is not satisfied when the State’s position is one of
mere neutrality respecting the . . . actions challenged as anticompetitive.” City of Boulder, 455 U.S.
at 55.
On the other hand, the Legislature did not merely grant counties the general power to
contract; it enacted statutes that address the registers’ provision of title record copies in some detail.
The Legislature required registers to make title records available for inspection, required them to
provide certified copies of title records upon request, authorized them to provide copies in non-paper
form, and specified a $1.00 per-page fee for paper copies – yet it chose not to require them to
provide bulk discounts. In fact, of the many title record details addressed by the Legislature, it did
not even mention the registers’ discretion to offer bulk discounts, let alone specify how such
discounted rates might be calculated if the registers chose to offer them. In this context, it is
reasonably foreseeable that a register accorded the discretion to provide paper copies at such a hefty
per-page fee would choose to reap the revenues generated by that fee rather than forgo them.
Accordingly, we hold that the Tuscola register’s refusal to provide a bulk discount qualifies for
state-action immunity.
No. 06-1171 First Am. Title Co., et al. v. DeVaugh, et al. Page 20
VIII.
For the foregoing reasons, we affirm the dismissal of the Sherman Act claims with regard
to defendant Tuscola County Register of Deeds.
We reverse the dismissal of the Sherman Act claims, however, with regard to the no-resale
condition imposed by defendants Registers of Deeds of Lapeer County, Saginaw County, Eaton
County, and Newaygo County, and remand for further proceedings consistent with this opinion.
We hold only that the registers’ practice of conditioning bulk discounts, non-paper
reproduction, or reproduction of records generally, on the purchaser’s agreement not to sell the
official certified copies (or unofficial “copies of copies,” or the information therein) to third parties,
does not qualify for state-action immunity. We intimate no opinion on the merits of the Sherman
Act claims. Moreover, even if the district court determines that the registers have violated the
Sherman Act, that will mean only that the registers may not condition bulk discounts, non-paper
reproduction, or reproduction of records generally, on the purchaser giving up his right to sell the
official22certified copies (or unofficial “copies of copies,” or the information therein) to third
parties.
22
Furthermore, a finding of a Sherman Act violation will not obligate the registers to (1) reproduce records for
First American or anyone else, rather than merely providing equipment for the purchaser to reproduce the records
himself; (2) offer a bulk discount to First American or anyone else for the reproduction of paper or non-paper records;
or (3) make records available to First American or anyone else in non-paper format in the first place. The Legislature
has expressly granted the registers discretion to determine the medium in which original title records are reproduced,
i.e., paper or non-paper. M.C.L. § 565.551(2)(a). The Legislature has also expressly granted the registers discretion to
fulfill a title record request either by reproducing the record itself or by providing equipment for the purchaser to do the
reproduction (or, if the purchaser requests it, by letting the purchaser bring in his own equipment and doing the
reproduction). M.C.L. §§ 565.551(2)(a)-(c).
The registers will still have the authority, under M.C.L. § 565.551(2)(a), to offer non-paper reproduction, in
any of the formats prescribed by the records reproduction act, M.C.L. § 24.402, to all purchasers or to no purchasers.
Nor will the district court’s decision affect the registers’ authority to offer bulk discounts to all purchasers or to no
purchasers.