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Opinion of the Court

Bonods had a "direct effect” in the United States. Respondents had designated their accounts in New York as the place of payment, and Argentina made some interest payments into those accounts before announcing that it was rescheduling the payments. Because New York was thus the place of performance for Argentina's ultimate contractual obligations, the rescheduling of those obligations necessarily had a "direct effect” in the United States: Money that was supposed to have been delivered to a New York bank for deposit was not forthcoming. We reject Argentina's suggestion that the “direct effect” requirement cannot be satisfied where the plaintiffs are all foreign corporations with no other connections to the United States. We expressly stated in Verlinden that the FSIA permits "a foreign plaintiff to sue a foreign sovereign in the courts of the United States, provided the substantive requirements of the Act are satisfied,” 461 U. S., at 489.

Finally, Argentina argues that a finding of jurisdiction in this case would violate the Due Process Clause of the Fifth Amendment, and that, in order to avoid this difficulty, we must construe the “direct effect” requirement as embodying the "minimum contacts” test of International Shoe Co. v. Washington, 326 U. S. 310, 316 (1945). Assuming, without deciding, that a foreign state is a “person" for purposes of the Due Process Clause, cf. South Carolina v. Katzenbach, 383 U. S. 301, 323–324 (1966) (States of the Union are not “persons” for purposes of the Due Process Clause), we find that Argentina possessed “minimum contacts” that would satisfy the constitutional test. By issuing negotiable debt instruments denominated in United States dollars and payable in New York and by appointing a financial agent in that

2 Argentina concedes that this issue “is before the Court only as an aid in interpreting the direct effect requirement of the Act” and that “[w]hether there is a constitutional basis for personal jurisdiction over (Argentina) is not before the Court as an independent question.” Brief for Petitioners 36, n. 33.

Opinion of the Court

city, Argentina “purposefully avail[ed] itself of the privilege of conducting activities within the [United States).' Burger King Corp. v. Rudzewicz, 471 U. S. 462, 475 (1985), quoting Hanson v. Denckla, 357 U. S. 235, 253 (1958).

We conclude that Argentina's issuance of the Bonods was a "commercial activity" under the FSIA; that its rescheduling of the maturity dates on those instruments was taken in connection with that commercial activity and had a “direct effect” in the United States; and that the District Court therefore properly asserted jurisdiction, under the FSIA, over the breach-of-contract claim based on that rescheduling. Accordingly, the judgment of the Court of Appeals is

Affirmed.

Syllabus

FEDERAL TRADE COMMISSION v. TICOR TITLE

INSURANCE CO. ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE THIRD CIRCUIT

No. 91–72. Argued January 13, 1992—Decided June 12, 1992 Petitioner Federal Trade Commission filed an administrative complaint

charging respondent title insurance companies with horizontal price fixing in setting fees for title searches and examinations in violation of $5(a)(1) of the Federal Trade Commission Act. In each of the four States at issue-Connecticut, Wisconsin, Arizona, and Montana—uniform rates were established by a rating bureau licensed by the State and authorized to establish joint rates for its members. Rate filings were made to the state insurance office and became effective unless the State rejected them within a specified period. The Administrative Law Judge held, inter alia, that the rates had been fixed in all four States, but that, in Wisconsin and Montana, respondents' anticompetitive activities were entitled to state-action immunity, as contemplated in Parker v. Brown, 317 U. S. 341, and its progeny. Under this doctrine, a state law or regulatory scheme can be the basis for antitrust immunity if the State (1) has articulated a clear and affirmative policy to allow the anticompetitive conduct and (2) provides active supervision of anticompetitive conduct undertaken by private actors. California Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445 U. S. 97, 105. The Commission, which conceded that the first part of the test was met, held on review that none of the States had conducted sufficient supervision to warrant immunity. The Court of Appeals reversed, holding that the existence of a state regulatory program, if staffed, funded, and empowered by law, satisfied the active supervision requirement. Thus, it concluded, respondents' conduct in all the States was entitled to state

action immunity Held:

1. State-action immunity is not available under the regulatory schemes in Montana and Wisconsin. Pp. 632–640.

(a) Principles of federalism require that federal antitrust laws be subject to supersession by state regulatory programs. Parker, supra, at 350–352; Midcal, supra; Patrick v. Burget, 486 U. S. 94. Midcal's two-part test confirms that States may not confer antitrust immunity on private persons by fiat. Actual state involvement is the precondition for immunity, which is conferred out of respect for the State's ongoing

Syllabus

regulation, not the economics of price restraint. The purpose of the active supervision inquiry is to determine whether the State has exercised sufficient independent judgment and control so that the details of the rates or prices have been established as a product of deliberate state intervention. Although this immunity doctrine was developed in actions brought under the Sherman Act, the issue whether it applies to Commission action under the Federal Trade Commission Act need not be determined, since the Commission does not assert any superior preemption authority here. Pp. 632–635.

(b) Wisconsin, Montana, and 34 other States correctly contend that a broad interpretation of state-action immunity would not serve their best interests. The doctrine would impede, rather than advance, the States' freedom of action if it required them to act in the shadow of such immunity whenever they entered the realm of economic regulation. Insistence on real compliance with both parts of the Midcal test serves to make clear that the States are responsible for only the price fixing they have sanctioned and undertaken to control. Respondents' contention that such concerns are better addressed by the first part of the Midcal test misapprehends the close relation between Midcals two elements, which are both directed at ensuring that particular anticompetitive mechanisms operate because of a deliberate and intended state policy. A clear policy statement ensures only that the State did not act through inadvertence, not that the State approved the anticompetitive conduct. Sole reliance on the clear articulation requirement would not allow the States sufficient regulatory flexibility. Pp. 635–637.

(c) Where prices or rates are initially set by private parties, subject to veto only if the State chooses, the party claiming the immunity must show that state officials have undertaken the necessary steps to determine the specifics of the price-fixing or ratesetting scheme. The mere potential for state supervision is not an adequate substitute for the State's decision. Thus, the standard relied on by the Court of Appeals in this case is insufficient to establish the requisite level of active supervision. The Commission's findings of fact demonstrate that the potential for state supervision was not realized in either Wisconsin or Montana. While most rate filings were checked for mathematical accuracy, some were unchecked altogether. Moreover, one rate filing became effective in Montana despite the rating bureau's failure to provide requested information, and additional information was provided in Wisconsin after seven years, during which time another rate filing remained in effect. Absent active supervision, there can be no state-action immunity for what were otherwise private price-fixing arrangements. And state judicial review cannot fill the void. See Patrick, supra, at 103–105. This Court's decision in Southern Motor Carriers Rate Con

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Syllabus

ference, Inc. v. United States, 471 U. S. 48, which involved a similar negative option regime, is not to the contrary, since it involved the question whether the first part of the Midcal test was met. This case involves horizontal price fixing under a vague imprimatur in form and agency inaction in fact, and it should be read in light of the gravity of the antitrust offense, the involvement of private actors throughout, and the clear absence of state supervision. Pp. 637–640.

2. The Court of Appeals should have the opportunity to reexamine its determinations with respect to Connecticut and Arizona in order to address whether it accorded proper deference to the Commission's fac

tual findings as to the extent of state supervision in those States. P. 640. 922 F. 2d 1122, reversed and remanded.

KENNEDY, J., delivered the opinion of the Court, in which WHITE, BLACKMUN, STEVENS, SCALIA, and SOUTER, JJ., joined. SCALIA, J., filed a concurring opinion, post, p. 640. REHNQUIST, C. J., filed a dissenting opinion, in which O'CONNOR and THOMAS, JJ., joined, post, p. 641. O'CONNOR, J., filed a dissenting opinion, in which THOMAS, J., joined, post, p. 646.

Deputy Solicitor General Wallace argued the cause for petitioner. With him on the briefs were Solicitor General Starr, Assistant Attorney General Rill, Robert A. Long, Jr., James M. Spears, Jay C. Shaffer, Ernest J. Isenstadt, Michael E. Antalics, and Ann Malester.

John C. Christie, Jr., argued the cause for respondents. With him on the brief were Patrick J. Roach, John F. Graybeal, and David M. Foster. *

*A brief of amici curiae urging reversal was filed for the State of Wisconsin et al. by James E. Doyle, Attorney General of Wisconsin, and Kevin J. O'Connor, Assistant Attorney General, J. Joseph Curran, Jr., Attorney General of Maryland, and Robert N. McDonald and Ellen S. Cooper, Assistant Attorneys General, James H. Evans, Attorney General of Alabama, Charles E. Cole, Attorney General of Alaska, and James Forbes, Assistant Attorney General, Grant Woods, Attorney General of Arizona, and Jeri K. Auther, Assistant Attorney General, Winston Bryant, Attorney General of Arkansas, and Royce Griffin, Deputy Attorney General, Charles M. Oberly III, Attorney General of Delaware, Robert A. Butterworth, Attorney General of Florida, Larry Echo Hawk, Attorney General of Idaho, and Brett T. DeLange, Deputy Attorney General, Bonnie J. Campbell, Attorney General of Iowa, and John R. Perkins, Deputy Attorney General, Frederic J. Cowan, Attorney General of Kentucky, and James

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