FTC v. Ticor Title Insurance Co

504 U.S. 621 (1992)

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Nature of the Case

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Facts

A title insurance policy insures against certain losses or damages sustained by reason of a defect in title not shown on the policy or title report to which it refers. Before issuing a title insurance policy, the insurance company or one of its agents performs a title search and examination. The search produces a chronological list of the public documents in the chain of title to the real property. The examination is a critical analysis or interpretation of the condition of title revealed by the documents disclosed through this search. The insured is protected from some losses resulting from title defects not discoverable from a search of the public records, such as forgery, missing heirs, previous marriages, impersonation, or confusion in names. They are protected also against errors or mistakes in the search and examination. Title insurance also includes the obligation to defend in the event that an insured is sued by reason of some defect within the scope of the policy's guarantee. Ds are the nation's largest title insurance companies. P issued an administrative complaint in 1985 against the practice of setting uniform rates for the title search, examination, and settlement, aspects of the business which, P alleges, do not involve insurance. Ds argued that their collective ratemaking activities are exempt under the Noerr-Pennington doctrine. Ds also contend their activities are entitled to state-action immunity, which permits anticompetitive conduct if authorized and supervised by state officials. Four States remain in which violations were alleged: Connecticut, Wisconsin, Arizona, and Montana. Each of the four States used what has come to be called a 'negative option' system to approve rate filings by the bureaus. Under a negative option system, the rating bureau filed rates for title searches and title examinations with the state insurance office. The rates became effective unless the State rejected them within a specified period, such as 30 days. P alleged that any state supervision through ratings agencies were a mere rubber stamp with no active supervision. P rejected the state action defense. The court of appeals reversed, and the Supreme Court granted certiorari.