714 F.

2d 1439
1983-2 Trade Cases P 65,539

FIRST AMERICAN TITLE COMPANY OF SOUTH

DAKOTA and First
American Title Insurance Company of South Dakota,
Appellants,
v.
SOUTH DAKOTA LAND TITLE ASSOCIATION, South
Dakota
Abstracter's Board of Examiners, Black Hills Land and
Abstract Company, Dennis O. Murray, Security Land and
Abstract Company, Glen M. Rhodes, Fall River County
Abstract
Company, Charles E. Clay, Custer Title Company, Betty J.
Gould, Haakon County Abstract Company, Keith Emerson,
Wayne
Roe, and Charles Nass, Appellees.
No. 82-1753.

United States Court of Appeals,

Eighth Circuit.
Submitted March 16, 1983.
Decided August 11, 1983.
1

Lynn, Jackson, Shultz & Lebrun, P.C., Donald R. Shultz, Gene N. Lebrun,
Rapid City, S.D., Burns & Figa, P.C., Hugh A. Burns, Phillip S. Figa, Denver,
Colo., for appellants.

Mark V. Meierhenry, Atty. Gen., Jeffrey P. Hallem, Asst. Atty. Gen., Pierre,
S.D., for state appellees.

Schmidt, Schroyer, Colwill & Zinter, P.C., Gary F. Colwill, Ronald G.

Schmidt, Pierre, S.D., for appellees South Dakota Land Title Ass'n, Fall River
Abstract Co., Charles E. Clay, Custer Title Co., Betty J. Gould, Haakon County
Abstract Co., Keith Emerson, Wayne Roe and Charles Nass.

Before HEANEY and FAGG, Circuit Judges, and HANSON, * Senior District
Judge.

HANSON, Senior District Judge.

This antitrust case concerns alleged anticompetitive private and regulatory

restraints on the South Dakota abstracting and title insurance businesses.
Plaintiffs/appellants, First American Title Company of South Dakota and First
American Title Insurance Company of South Dakota, contend that they were
the victims of a price-fixing conspiracy, frivolous and sham litigation, and a
conspiracy to devise and enforce statutes and regulations which served to
restrain trade in the abstracting and title insurance businesses, all in violation of
sections 1 and 2 of the Sherman Act.1 15 U.S.C. 1 and 2.
Defendants/appellees are the South Dakota Land Title Association (the
Association), a professional association of South Dakota abstracters; the South
Dakota Abstracters' Board of Examiners (the Board of Examiners), the state
board which regulates the business of abstracting; and various individual South
Dakota abstracters and title companies. The district court also permitted the
joinder of the State of South Dakota as a defendant pursuant to a motion by the
Board of Examiners.

Following a bifurcated bench trial on the issue of liability, the district court
entered judgment for defendants. The court found that there was insufficient
evidence to support a conclusion that a private price-fixing conspiracy existed
among defendant abstracters and their title companies. The court further
concluded that plaintiffs' remaining antitrust claims were barred by the
McCarran-Ferguson Act, the Noerr-Pennington doctrine, and the state action
doctrine. The First American companies appeal these holdings and we affirm.

I.
A.
8

South Dakota pervasively regulates the business of abstracting and insuring

land titles. See SDCL chs. 36-13 (Abstracters of Title) and 58-25 (Title
Insurance Rates and Policies). Until July 1, 1979, South Dakota required that
no foreign insurance company could issue a title insurance policy on property
in South Dakota unless the policy was countersigned by a licensed abstracter
who was doing business in the county where the property was located. SDCL
58-25-16.2

In order to do business in a particular county in South Dakota, an abstracter,

among other requirements, must have an approved abstract plant showing "in a
sufficiently comprehensive form, all instruments affecting the title to real estate
which are of record or on file in the office of the register of deeds...." SDCL
36-13-10. The Board of Examiners, whose duty it is to "carry out the purposes
and enforce the provisions of" the statutes governing abstracting and to "make
such rules and regulations as may be necessary to carry out the purposes of
those statutes," SDCL 36-13-6, defines by regulation what constitutes
"sufficiently comprehensive form" for an abstract plant's records. In part, this
long-standing regulation requires that the plant contain
a10complete index showing every instrument recorded in the register of deeds' office
in the county wherein [the abstracter] proposes to operate, properly listed against the
specific property which it affects, and also a separate index showing all recorded
instruments which do not affect specific property. This index ... must be made from
an actual check of each page of each book of recorded instruments in said office, and
in no case will a copy or film of the numerical index in the register's office be
accepted.
11

ARSD 20:36:04:01.

12

One of the First American companies' contentions is that the requirement that
an abstracter's index be "made from an actual check of each page of each book
of recorded instruments" imposes a financially-prohibitive burden upon anyone
who wishes to open a competing abstract plant in a given county. See Part IV
infra. The regulation's anticompetitive effect, according to appellants, is
reflected by the current situation in South Dakota in which most counties have
only one licensed abstracter, except for the more populated counties, which
have two.

B.
13

Walter J. Linderman became a licensed abstracter in Pennington County, South

Dakota in 1973 and formed First American Title Company of South Dakota in
1974. Linderman's title company served as a local agent for a foreign title
insurance company, First American Title Insurance Company of California. In
his dual capacity as abstracter and title insurance agent, Linderman was
qualified to countersign title insurance policies on property located in
Pennington County; but in insuring title on property outside Pennington
County, Linderman was required to obtain the countersignature of that county's
licensed abstracter and pay the resulting fee.

14

The anomoly in SDCL 58-25-16 which required only foreign insurance

companies to obtain countersignatures from abstracters on title insurance

policies led Linderman to form a domestic title insurance company in
December 1978--First American Title Insurance Company of South Dakota.
This would have enabled Linderman to issue title insurance policies on property
in any South Dakota county without obtaining a countersignature from that
county's licensed abstracter.
15

This was not to be, however, because in the ensuing legislative session, the
South Dakota legislature amended SDCL 58-25-16 by deleting the word
"foreign," thus extending the countersignature requirement to all title insurance
policies, whether they be issued by a foreign or domestic insurance company.3

16

Defendants' opposition to Linderman's formation of a domestic title insurance

company and their support for the amendments to 58-25-16 form bases for
two of the First American companies' antitrust claims. It is claimed that
defendants engaged in frivolous and sham litigation in violation of the Sherman
Act by appealing to state court the administrative decision by the Division of
Insurance to grant a certificate of authority to First American Title Insurance
Company of South Dakota. It is further claimed that defendants engaged in
unlawful anticompetitive conduct by lobbying in support of the amendments to
58-25-16, which included the deletion of the word "foreign" from the statute.

17

Following the amendment to the countersignature statute, the alleged

anticompetitive conspiracy continued in 1979 in the context of a controversy
over whether the Division of Insurance or the Board of Examiners had the
authority to set countersignature fees. The Board of Examiners already had at
that time clear authority to "establish a schedule of fees for doing business"
under chapter 36-13 relating to abstracters' services. SDCL 36-13-25. The
countersignature requirement, however, is in chapter 58-25, which regulates
title insurance, a business overseen by the Division of Insurance and its
director. SDCL 58-2-21. The First American companies claim that defendants
wanted the Board of Examiners to control countersignature fees to insure that
they would be sufficiently high to stem the proliferation of title insurance in
South Dakota. Presumably, the Board of Examiners' interest in setting high fees
would be greater because three of its four members are required to be
abstracters. SDCL 36-13-1.

18

Following an opinion by the South Dakota Attorney General that the Division
of Insurance had authority to set counter-signature fees, the Association
brought an ultimately unsuccessful state court action attacking the jurisdictional
basis for this authority. Fall River County Abstract Company v. Knutson, (6th
Judicial Circuit Court, Hughes County, S.D., November 6, 1979, Judge Robert

A. Miller). A basis for the state court ruling was the conclusion that the
countersigning of a title insurance policy was purely a ministerial act because
South Dakota law did not require any affirmative act by the abstracter before
signing. During the 1979 South Dakota legislative session, defendants
successfully lobbied the state legislature to pass laws which ensured that the
countersigning of a title insurance policy was to be more than a ministerial act
and which specifically gave the Board of Examiners the authority to set
countersignature fees.4 The litigation and lobbying by defendants on the
countersignature fee issue are alleged to be further unlawful anticompetitive
acts.
19

Although the Board of Examiners did in 1980 obtain authority to establish

countersignature fees, no fee schedule ever regulated countersignature fees
during the life of the First American Title Insurance Company of South Dakota.
It is claimed that Linderman, as the agent for this company, was the victim of a
private price-fixing conspiracy by the individually-named defendant abstracters
and title companies in 1979 and 1980. Allegedly, these defendants conspired to
fix countersignature fees at a level of 50% of the title insurance policy's
premium. It is claimed that this private price-fixing conspiracy, coupled with
the statutory changes, forced Linderman to dissolve First American Title
Insurance Company of South Dakota in May 1980.

II.
20

First American's5 initial claim on appeal--that the district court erred in finding
insufficient evidence of a private conspiracy to fix prices for countersignature
fees--need not long detain us. It is, of course, well-established that price-fixing
is a per se violation of 1 of the Sherman Act. United States v. SoconyVacuum Oil Co., 310 U.S. 150, 218, 60 S.Ct. 811, 841, 84 L.Ed. 1129 (1940).
In this case the district court concluded that evidence of a conspiracy to fix
countersignature fees at 50% of the title insurance policy premium was
"equivocal" and "not sufficient." First American failed to prove the presence of
a conspiracy among the individual abstracters and title companies named as
defendants, and further failed to prove that the countersignature fees charged by
these defendants were fixed at a level of 50% of the policy premium. It would
serve no purpose for this court to reiterate the district court's discussion which
reflects careful consideration of the evidence. See First American Title Co. v.
South Dakota Land Title Association, 541 F.Supp. 1147, 1154-56
(D.S.D.1982). We hold that substantial evidence in the record supports the
district court's findings; nowhere are we left with the "definite and firm
conviction that a mistake has been committed" with regard to these findings.
United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525,

541, 92 L.Ed. 746 (1948).

III.
21

First American next contends that the district court erred in holding that the
Noerr-Pennington doctrine insulates defendants from antitrust liability for their
lobbying and litigation activities. The Noerr-Pennington doctrine generally
holds that the Sherman Act does not apply to joint efforts by groups seeking to
exercise their first amendment right to petition the government, whether it be a
petition to the legislature, an administrative agency, or the courts. California
Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 92 S.Ct. 609, 30
L.Ed.2d 642 (1972); United Mine Workers v. Pennington, 381 U.S. 657, 85
S.Ct. 1585, 14 L.Ed.2d 626 (1965); Eastern Railroad Conference v. Noerr
Motor Freight, 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961). Furthermore,
such joint efforts "do not violate the antitrust laws even though intended to
eliminate competition." Pennington, supra, 381 U.S. at 670, 85 S.Ct. at 1593.
But an exception to the doctrine does hold that the Sherman Act applies if the
joint action "is a mere sham to cover what is actually nothing more than an
attempt to interfere directly with the business relationships of a competitor."
Noerr Motor Freight, supra, 365 U.S. at 144, 81 S.Ct. at 533.

A.
22

First American initially attacks the district court's holding that lobbying by
defendants in favor of the amendment to SDCL 58-25-16 which resulted in
deletion of the word "foreign" from the statute was activity which fell "squarely
within the confines of the Noerr-Pennington Doctrine." First American Title
Co., supra, 541 F.Supp. at 1157. We do not understand First American to argue
the sham exception in attacking this holding. Indeed, such a claim would not
prevail. As the district court concluded, "This is a classic case of a group of
persons petitioning their government for relief and receiving the relief they
request." Id. Cf. Alexander v. National Farmers Organization, 687 F.2d 1173,
1195 (8th Cir.1982), cert. denied, --- U.S. ----, 103 S.Ct. 2108, 2110, 77
L.Ed.2d 313, 314 (1983) ("The sham exception generally involves
governmental contacts which are not a genuine attempt to influence official
decision making, but instead are merely an attempt to interfere directly with the
business relationships of a competitor.").

23

Rather First American claims that the Noerr-Pennington doctrine does not
apply because a state agency--the Board of Examiners--was an alleged
conspirator along with the private party defendants in seeking amendment to
the countersignature statute. First American relies on Duke & Co. v. Foerster,

521 F.2d 1277, 1281-82 (3d Cir.1975), in arguing for application of this
coconspirator exception to the Noerr-Pennington doctrine. In Duke & Co.,
plaintiff alleged that municipal corporations which owned the Pittsburgh Civic
Arena, Three Rivers Stadium, and the Pittsburgh International Airport
conspired with private corporations which operated these facilities to boycott
malt beverages manufactured by plaintiff. The court of appeals reversed the
district court's dismissal of the complaint, holding in part that the NoerrPennington doctrine did not shield defendants from antitrust liability.
24 Noerr and Pennington involved suits against private parties who had allegedly
Both
conspired to influence governmental action. In neither case was it alleged that the
governmental entity had collaborated to promote the conspiracy. Where the
complaint goes beyond mere allegations of official persuasion by anticompetitive
lobbying and claims official participation with private individuals in a scheme to
restrain trade, the Noerr-Pennington doctrine is inapplicable.
25

Duke & Co., supra, 521 F.2d at 1282 (emphasis in original).

26

We do not quarrel with the court's conclusion in Duke & Co. that the NoerrPennington doctrine did not apply. In our view, however, Noerr-Pennington
was inapplicable because of the nature of the conduct alleged in the complaint,
not because of the nature of the parties involved.6 The anticompetitive conduct
alleged in the complaint in Duke & Co. was a boycott of plaintiff's product;
clearly an alleged anticompetitive boycott is not first amendment conduct
which the Noerr-Pennington doctrine was formulated to protect. The Court
made this distinction in Noerr Motor Freight.

27 think it equally clear that the Sherman Act does not prohibit two or more
We
persons from associating together in an attempt to persuade the legislature or the
executive to take particular action with respect to a law that would produce a
restraint or a monopoly.... [S]uch associations ... bear very little if any resemblance
to the combinations normally held violative of the Sherman Act, combinations
ordinarily characterized by an express or implied agreement or understanding that
the participants will jointly give up their trade freedom, or help one another to take
away the trade freedom of others through the use of such devices as price-fixing
agreements, boycotts, market-division agreements, and other similar arrangements.
28

Id., 365 U.S. at 136, 81 S.Ct. at 529. Thus the Court made clear that "[t]he
proscriptions of the Act, tailored as they are for the business world, are not at
all appropriate for application in the political arena." Id., 365 U.S. at 141, 81
S.Ct. at 531. Duke & Co. and the instant case are embodiments of the Court's
distinction. Whereas Duke & Co. involved allegations of anticompetitive

government activity in the business world, the instant case concerns

government activity in the political arena. We therefore hold that Duke & Co. is
distinguishable on its facts.
29

First American further contends that defendants' lobbying campaign should not
be protected by Noerr-Pennington because it involved "a misuse of the
lobbying process" through false statements and inaccuracies that were made by
defendants to the state legislature. The focus of this complaint appears to be a
letter that the Board of Examiners sent to members of the South Dakota
legislature explaining the Board's understanding of the then-current
requirements for becoming a licensed abstracter and stating the Board's fear
that failure to amend the countersignature statute could conceivably result in a
domestic title insurance company issuing policies without performing a title
search. The district court made no specific findings in this regard, but to
characterize these statements as "misrepresentations" and to withhold NoerrPennington protection on account of this would result in undermining the
doctrine itself. This letter, which contained at most mild political hyperbole,
was well within the bounds of traditional political activity which NoerrPennington was established to protect. Cf. Westborough Mall, Inc. v. City of
Cape Girardeau, 693 F.2d 733, 746 (8th Cir.1982), cert. denied, --- U.S. ----,
103 S.Ct. 2122, 77 L.Ed.2d 1303 (1983) (holding that illegal or fraudulent
actions employed in conjunction with legitimate lobbying went beyond
traditional political activity protected by Noerr-Pennington ).

30

Even assuming that misrepresentations may have appeared in the Board's letter,
this would not preclude application of the Noerr-Pennington doctrine--at least
in the context of legislative lobbying. The Supreme Court in California Motor
Transport made the following comments regarding the bounds of
constitutionally-protected conduct in the political arena:

31

The political campaign operated by the railroads in Noerr to obtain legislation

crippling truckers employed deception and misrepresentation and unethical
tactics. We said:

32
"Congress
has traditionally exercised extreme caution in legislating with respect to
problems relating to the conduct of political activities, a caution which has been
reflected in the decisions of this Court interpreting such legislation. All of this
caution would go for naught if we permitted an extension of the Sherman Act to
regulate activities of that nature simply because those activities have a commercial
impact and involve conduct that can be termed unethical." 365 U.S., at 141 [81 S.Ct.
at 531].

33

Id. 404 U.S. at 512, 92 S.Ct. at 612.

34

Finally, we note that First American had equal access to the legislature to lobby
against the amendment and to correct any "misrepresentations" which may have
been made by defendants. Accordingly, we hold that the district court properly
applied the Noerr-Pennington doctrine to defendants' activities in lobbying the
South Dakota legislature to amend the countersignature statute.

B.
35

First American also attacks the district court's application of the NoerrPennington doctrine to the state court litigation which arose during the period
when Linderman formed and operated his domestic title insurance company.
First American claims that certain defendants in two instances engaged in
baseless and sham litigation intended to harass and interfere with First
American's business relations. The Association opposed the granting of a
certificate of authority by the Division of Insurance to First American Title
Insurance Company of South Dakota and appealed the subsequent grant of the
certificate to state court. This appeal resulted in affirmance of the Division of
Insurance's decision to grant the certificate. Also, in Fall River County Abstract
Co. v. Knutson, supra, the Association and the Fall River County Abstract
Company sought a writ of prohibition in state court to prohibit the director of
the Division of Insurance from establishing a fee schedule for the
countersigning of title insurance policies. First American Title Insurance
Company of South Dakota intervened in this litigation as a defendant. The
district court held that the Noerr-Pennington doctrine protected the Association
and the Fall River County Abstract Company from antitrust liability for their
participation in these actions.

36

It is established that "[t]he right of access to the courts is indeed but one aspect
of the right of petition"; accordingly, groups do not violate the Sherman Act by
"us[ing] the channels and procedures of state and federal agencies and courts to
advocate their causes and points of view respecting resolution of their business
and economic interests vis-a-vis their competitors." California Motor Transport,
supra, 404 U.S. at 510-11, 92 S.Ct. at 611-12. The sham exception to this
doctrine holds that litigation of baseless claims which "may be characterized as
a sham cover for what is really just an attempt to directly interfere with the
business relations of a competitor," is subject to scrutiny under the Sherman
Act. Alexander v. National Farmers Organization, supra, 687 F.2d at 1200; see
California Motor Transport, supra, 404 U.S. at 513, 92 S.Ct. at 613.

37

In Alexander v. National Farmers Organization, supra, the parties initiated

37

In Alexander v. National Farmers Organization, supra, the parties initiated

reciprocal antitrust actions arising out of competition in the milk industry
between the NFO and certain large midwest dairy cooperatives. The court held
that certain lawsuits initiated by the other dairy cooperatives against NFO were
not actionable under the antitrust laws by application of the Noerr-Pennington
doctrine, even though "the litigation directly against NFO was intended in part
to hamper NFO's ability to compete." Id., 687 F.2d at 1200. The court
concluded that "[t]here were genuine disputes regarding NFO's solicitation
methods," id.; thus the sham exception did not apply.

38

Similarly in this case we do not doubt that the litigation was intended in part to
hamper First American's ability to carry on the title insurance business with a
domestically-formed company. But both causes of action also involved genuine
disputes. The controversy over who was the proper party to establish a
countersignature fee schedule was certainly genuine. When the Association lost
in the judicial forum, it continued to assert its position before the South Dakota
legislature and ultimately achieved the result it sought--the Board of Examiners
was vested with authority to establish the fee schedule.

39

Likewise, the Association's effort to prevent Linderman's domestic title

insurance company from receiving a certificate of authority to operate in South
Dakota was not a baseless claim or sham cover for an attempt to interfere with
First American's business.7 The Association had a genuine interest in
preventing a domestic title insurance company from operating in South Dakota-at least while South Dakota law had the effect of permitting a domestic
insurance company to issue title insurance policies without securing a title
search from an abstracter who was licensed in the county where the property to
be insured was located.8 Clearly the Association had a first amendment right of
access both to the administrative and the judicial forums to press its opposition.
We discern no abuse of these processes which was intended to produce an
illegal result. Cf. California Motor Transport, supra (in which the Court held
that the sham litigation exception applied to allegations that defendants abused
administrative and judicial processes to produce the illegal result of barring
plaintiffs from access to the agencies and courts). We thus affirm the district
court's application of the Noerr-Pennington doctrine to these litigation episodes.

IV.
40

First American also challenges the district court's application of the state action
doctrine of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943).
First American's rather unclear claims in its complaint state that defendants
violated the Sherman Act by "enforc[ing] and attempt[ing] to enforce" the
countersignature statute (SDCL 58-25-16) and the regulation setting out the

requirements for an abstract plant (ARSD 20:36:04:01), as well as that

defendants violated the Sherman Act by attempting to establish a fee schedule
for countersignatures pursuant to SDCL 36-13-25. The district court held that
these particular claims were barred from federal antitrust scrutiny on account of
the state action doctrine under which federal law impliedly defers to "state
action" when the state program at issue satisfies certain requirements. P. Areeda
& D. Turner, Antitrust Law p 207 at 58 (1978).
41

It appears, however, that First American shifted its focus somewhat during the
course of the district court proceedings by dropping its challenge to defendants'
authority to establish a countersignature fee schedule and arguing that the
Sherman Act preempts the countersignature statute and certain regulations. See
Clerk's Record (C.R.) at 74-75. The district court did not address this particular
argument. The challenged regulations are those setting out the abstract plant
requirements (ARSD 20:36:04:01), requiring the abstracter to search both the
official records and the abstracter's title plant before countersigning a title
insurance policy (ARSD 20:36:07:01), and requiring that the search on behalf
of a title insurer be made under the direction of the licensed abstracter (ARSD
20:36:07:02).

42

First American claimed before the district court that the challenged statute and
regulations produce the following anticompetitive effect. The challenged
provisions impose a rigorous abstract plant requirement which must be satisfied
in each county in which an abstracter seeks to be licensed to do business. ARSD
20:36:04:01. Coupled with this is the countersignature requirement, which
states that a title insurance policy must be countersigned by an abstracter who
is licensed in the county where the property to be insured is located. SDCL
58-25-16. Because First American has satisfied the state's abstract plant
requirements only in Pennington County, the anticompetitive effect is to
prevent First American from performing title searches on a statewide basis,
which in turn prevents First American from countersigning title insurance
policies on a statewide basis.

43

First American reiterates this argument on appeal and adds that a further
anticompetitive result of the regulatory scheme is to create a horizontal division
of territories under which each abstracter is assured of a monopoly of the
abstracting business in the county where the abstracter is licensed to operate.
See United States v. Topco Associates, Inc., 405 U.S. 596, 608, 92 S.Ct. 1126,
1133, 31 L.Ed.2d 515 (1972) ("One of the classic examples of a per se violation
of 1 is an agreement between competitors at the same level of the market
structure to allocate territories in order to minimize competition.") We take this
latter argument to be directed mainly at the abstract plant requirement which

states that the plant must contain an index and that the index "must be made
from an actual check of each page of each book of recorded instruments in [the
register of deeds'] office, and in no case will a copy or film of the numerical
index in the register's office be accepted." ARSD 20:36:04:01.9 According to
First American, these anticompetitive effects require preemption of the
challenged statute and regulations under the Sherman Act.
44

In arguing for preemption, First American claims neither to seek "any sweeping
repudiation of state statutory and regulatory provisions," nor to "seek a finding
of unconstitutionality of any state statutes." Brief of First American at 43. On
the contrary, the result of a successful preemption attack upon a state statute is
that the statute is stricken down as unconstitutional under the Supremacy
Clause. See, e.g., Seagram & Sons v. Hostetter, 384 U.S. 35, 45, 86 S.Ct. 1254,
1260-61, 16 L.Ed.2d 336 (1966). Accordingly, it is clear that First American is
making a facial challenge to the above-indicated statute and regulations which
are said to conflict with the Sherman Act. We also clarify that although First
American's preemption argument appears to be directed against all defendants
without differentiation, the only defendants against whom the argument
necessarily can be directed are the State of South Dakota and the Board of
Examiners. The state (in the form of its legislature) and the Board promulgated
and enforce10 the challenged statute and regulations; consequently, it is they
who would be enjoined from enforcing the challenged aspects of the regulatory
scheme if First American were to prevail. We trouble to clarify these points
because they are important to our ensuing discussion of the preemption/state
action issues.

A.
45

A due regard for federalism led the Supreme Court to create what is referred to
as the state action doctrine in Parker v. Brown, supra. A raisin producer
attempted to use the Sherman Act in Parker to strike down a marketing program
enacted by the California legislature to create price supports for raisins. The
Court assumed that the program would have violated the Sherman Act if it had
been devised and carried out by private individuals or corporations. But because
the marketing program "derived its authority ... from the legislative command
of the state," id., 317 U.S. at 350, 63 S.Ct. at 313, the program was not
prohibited by the Sherman Act. The Court found no intent in the Sherman Act
to occupy a field so broad that it precluded the states, acting in their sovereign
capacities, from exercising their broad police powers to effect economic
regulations.11 "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." Id. 317 U.S. at
351, 63 S.Ct. at 313.
46

Of late, the state action doctrine has become a road well-traveled by the
Court.12 Its signposts, however, remain less than clear. We know, for example,
that when a state legislature enacts an otherwise unlawful anticompetitive
system of regulation, such regulation is "outside the reach of the antitrust laws
under the 'state action' exemption" provided that the regulations reflect a state
policy "clearly articulated and affirmatively expressed, designed to displace
unfettered business freedom" with regulation. New Motor Vehicle Bd. of Cal.
v. Orrin W. Fox Co., 439 U.S. 96, 109, 99 S.Ct. 403, 411, 58 L.Ed.2d 361
(1978). This state policy must be articulated by the state acting in its sovereign
capacity; this much is clear from Parker itself. Naturally the question arises-what constitutes an articulation of the state in its sovereign capacity? Certainly
enactments of a state legislature qualify as the state acting in its sovereign
capacity. Orrin W. Fox, supra; Parker, supra. Also, the state supreme court
acting in its supervisory capacity over the practice of law qualifies as the state
acting in its sovereign capacity. Bates v. State Bar of Arizona, 433 U.S. 350,
359-60, 97 S.Ct. 2691, 2696-97, 53 L.Ed.2d 810 (1977); Goldfarb v. Virginia
State Bar, 421 U.S. 773, 789-90, 95 S.Ct. 2004, 2014, 44 L.Ed.2d 572 (1975).

47

On the other hand, "state agencies or subdivisions of a State ... simply by

reason of their status as such," apparently do not qualify as the state acting in its
sovereign capacity. City of Lafayette v. Louisiana Power & Light Co., 435 U.S.
389, 408, 98 S.Ct. 1123, 1134, 55 L.Ed.2d 364 (1978). Actions by such bodies,
however, may reflect a state policy to displace competition with regulation.
Such actions will not be subject to scrutiny under the Sherman Act provided
that "an adequate state mandate for anticompetitive activities exists." Id., 435
U.S. at 415, 98 S.Ct. at 1138. This mandate exists "when it is found 'from the
authority given a governmental entity to operate in a particular area, that the
legislature contemplated the kind of action complained of.' " Id.

48

Finally, we observe that conduct by a private party may be cloaked with state
action immunity provided that the conduct was pursuant to a "clearly
articulated and affirmatively expressed" state policy and that the conduct was
"actively supervised"13 by the state itself. California Retail Liquor Dealers
Assn. v. Midcal Aluminum, Inc., 445 U.S. 97, 105, 100 S.Ct. 937, 943, 63
L.Ed.2d 233 (1980).

B.
49

We therefore see the state action doctrine to be a construct developed by the

Court and based upon principles of federalism which permits the coexistence of
the Sherman Act and apparently conflicting state economic regulation. Absent
the state action doctrine, the Sherman Act preempts the conflicting state
regulation. Rice v. Norman Williams Co., --- U.S. ----, 102 S.Ct. 3294, 3299, 73
L.Ed.2d 1042, 1049 (1982) (The Sherman Act will preempt a state statute if
"there exists an irreconcilable conflict between the federal and state regulatory
schemes."). It is then self-evident that application of state action principles
follows the antitrust court's initial determination that there is truly a conflict
between the Sherman Act and the challenged regulatory scheme. See, e.g.,
Midcal, supra, 445 U.S. at 102, 100 S.Ct. at 941 ("The threshold question is
whether California's plan for wine pricing violates the Sherman Act."); Parker,
supra, 317 U.S. at 350, 63 S.Ct. at 313 ("We may assume for present purposes
that the California prorate program would violate the Sherman Act ....").
50

In Rice, supra, the Court set out how the antitrust court is to analyze whether a
state regulatory scheme conflicts with the Sherman Act when aspects of the
state scheme are challenged in the abstract.

51 state statute, when considered in the abstract, may be condemned under the
[A]
antitrust laws only if it mandates or authorizes conduct that necessarily constitutes a
violation of the antitrust laws in all cases, or if it places irresistible pressure on a
private party to violate the antitrust laws in order to comply with the statute. Such
condemnation will follow under 1 of the Sherman Act when the conduct
contemplated by the statute is in all cases a per se violation. If the activity addressed
by the statute does not fall into that category, and therefore must be analyzed under
the rule of reason, the statute cannot be condemned in the abstract. Analysis under
the rule of reason requires an examination of the circumstances underlying a
particular economic practice, and therefore does not lend itself to a conclusion that a
statute is facially inconsistent with federal antitrust laws.
52

Id., 102 S.Ct. at 3300, 73 L.Ed.2d at 1051. The challenged statute in Rice
empowered liquor distillers to designate which California wholesalers may
import the distiller's product into the state. The Court characterized the conduct
allowed by the statute as a vertical nonprice restraint; such restraints have been
held not to be per se violations of the Sherman Act. Continental T.V., Inc. v.
GTE Sylvania Inc., 433 U.S. 36, 57-59, 97 S.Ct. 2549, 2561-62, 53 L.Ed.2d
568 (1977). Accordingly, the Court held that there was no irreconcilable
conflict between the state statute and the Sherman Act; hence, there was no
preemption by the Act.14 The Court noted that "Because of our resolution of the
preemption issue, it is not necessary for us to consider whether the statute may
be saved from invalidation under the doctrine of Parker v. Brown ...." Rice,
supra, 102 S.Ct. at 3301 n. 9, 73 L.Ed.2d at 1052 n. 9.

C.
53

Applying the above principles to the instant case, we arrive at the following
conclusions. Initially, the district court, in analyzing First American's Sherman
Act challenges to aspects of South Dakota's regulation of the business of
abstracting, applied the two Midcal criteria and concluded that the state action
doctrine immunized the regulatory scheme from Sherman Act scrutiny. As we
have stated, however, the Midcal criteria apply only in the context of whether a
private party's conduct is immunized from Sherman Act scrutiny by the state
action doctrine. See Gold Cross Ambulance & Trans. v. City of Kansas City,
705 F.2d 1005, 1014 (8th Cir.1983).

54

More fundamentally, we do not perceive that the aspects of South Dakota's

regulatory scheme which are challenged by First American "irreconcilably
conflict" with the Sherman Act under the principles of Rice, supra. We are told
by First American that an irreconcilable conflict does exist because the rigorous
abstract plant requirement of ARSD 20:36:04:01 effectively forecloses
competition in the abstracting business within a county and creates a horizontal
division of territories, which is a per se violation of 1 of the Sherman Act. See
note 9 supra and accompanying text. But Rice states that for an irreconcilable
conflict to arise, the challenged regulatory provision must contemplate conduct
that "is in all cases a per se violation." Id., 102 S.Ct. at 3300, 73 L.Ed.2d at
1051. Regardless of whether the challenged regulation tends to have the
anticompetitive effect claimed by First American, it cannot be said that the
regulation mandates or authorizes conduct that in all cases constitutes a 1
violation. First American and its principal, Linderman, exemplify this. In 1973,
Linderman became a licensed abstracter in Pennington County which indicates
that Linderman was able to fulfill the abstract plant requirement and thus
compete on an equal footing with the other licensed abstracter in Pennington
County at that time, Theresa Burke. Accordingly, we hold that because no
irreconcilable conflict exists between the Sherman Act and the abstract plant
requirement, the Sherman Act does not preempt the requirement.

55

Furthermore, even if we assumed that the challenged aspects of the regulatory

scheme conflicted with the Sherman Act sufficiently to require preemption, we
would hold that the scheme reflects a clearly articulated and affirmatively
expressed state policy to replace unfettered business freedom with regulation.
See Orrin W. Fox, supra, 439 U.S. at 109, 99 S.Ct. at 411. Thus the state action
doctrine would apply to preclude preemption. The state as sovereign enacted
the challenged countersignature statute, SDCL 58-25-16, and although it is
within the code chapter regulating the business of title insurance, it
undoubtedly regulates the business of abstracting as well. In fact, First

American's complaint about the statute relates to its anticompetitive effect on

the business of abstracting.
56

The statutory requirement that a title insurance policy be signed by a licensed

abstracter who, by regulation, has searched both his own title plant and the
official county records (ARSD 20:36:07:01) before countersigning ensures
that someone whom the State of South Dakota deems qualified has performed a
professional title search before title to property is transferred. Indeed, First
American at oral argument appeared to have no quarrel with this policy, stating
that it did not really object to the countersignature requirement, but only
objected to the regulations which precluded Linderman, a licensed abstracter,
from searching official county records outside of Pennington County and
countersigning title insurance policies based on his search of those records.
According to First American, the state's requirement that an abstracter have an
abstract plant in each county in which the abstracter wishes to do business
serves only anticompetitive ends. The State of South Dakota at trial justified its
abstract plant requirement by introducing evidence which indicated the poor--in
some cases illegible--condition of many counties' official records. Thus the
state requires an actual check, in lieu of copies, of each page of the official
county records in constructing an index for the abstract plant.

57

We do not fulfill our role as the antitrust court by determining whether the
manner in which the State of South Dakota regulates the business of abstracting
is wise or appropriate. This type of judicial inquiry by the federal courts has
long been repudiated in the context of due process. See Ferguson v. Skrupa, 372
U.S. 726, 731, 83 S.Ct. 1028, 1031, 10 L.Ed.2d 93 (1963) (The Due Process
Clause does not empower the judiciary "to sit as a 'superlegislature to weigh the
wisdom of legislation' ...."). Rather we fulfill our role by determining whether
the state as a sovereign, in the broad exercise of its police powers, has chosen
"to displace competition with regulation ...." City of Lafayette, supra, 435 U.S.
at 413, 98 S.Ct. at 1137.

58

Certainly regulation of the business of title insurance falls within the state's
broad police powers. As the South Dakota Supreme Court observed in response
to a due process challenge to the fee schedule for abstracters' services, which at
the time was established by state statute:

59
Because
the abstractors' product is an indispensable part of real property transfers
and due to the reliance which must necessarily be placed upon it by the vendor and
vendee alike, the legislature has properly exercised its police power by the
enactment of Ch. 36-13 [Abstracters of Title]. It is evident that there does exist a real
and substantial relation between the regulatory means adopted in regard to price

regulation and the actual or manifest evil possible due to the monopolistic nature of
the business.
60

Siefkes v. Clark Title Co., 88 S.D. 81, 215 N.W.2d 648, 652 (1974). 15 The
pervasiveness of South Dakota's regulation--to the point of mandating the
fixing of prices for abstracters' services, SDCL 36-13-25--indicates that the
state has indeed chosen to displace competition with regulation in the business
of abstracting.

61

First American argues that even if the statutes which regulate the abstracting
business are protected by the state action doctrine, the regulations promulgated
by the Board of Examiners are not because they do not qualify as enactments of
the state as sovereign. We hold that the abstract plant regulation (ARSD
20:36:04:01), the regulation requiring the abstracter to search both his own
abstract plant and the official county records before countersigning (ARSD
20:36:07:01), and the regulation requiring the search pursuant to the
countersignature requirement to be under the supervision of a licensed
abstracter (ARSD 20:36:07:02) all to be actions clearly within the
contemplation of the legislature in granting authority to the Board to regulate.
See City of Lafayette, supra, 435 U.S. at 415, 98 S.Ct. at 1138.

62

South Dakota by statute requires that an abstracter maintain an abstract plant

"showing in a sufficiently comprehensive form, all instruments affecting the
title to real estate which are of record or on file in the office of the register of
deeds ...." SDCL 36-13-10. The Board of Examiners in turn sets out by
regulation precisely what constitutes "sufficiently comprehensive form" for an
abstract plant in ARSD 20:36:04:01. South Dakota also requires by statute
that an abstracter maintain a set of records for "each county wherein said
person seeks to engage in compiling abstracts of land titles ...." SDCL 36-1310. In addition, SDCL 36-13-26.1 requires the abstracter to examine record
title and furnish a report to the title insurer before countersigning the title
insurance policy. The Board of Examiners in turn sets out that the "examination
of record title" required by SDCL 36-13-26.1 must include an examination of
both the abstracter's abstract plant and the official county records. ARSD
20:36:07:01. The Board also requires that the search pursuant to the
countersignature requirement be made "under the direction of an abstracter
licensed in the county in which the property is located," ARSD 20:36:07:02,
to ensure that the search is not improperly delegated to one who has not met the
requirements for becoming a licensed abstracter. Clearly the statutory
provisions which govern the business of abstracting indicate that the challenged
regulations of the Board of Examiners are the kind of action contemplated by
the South Dakota legislature. Cf. Areeda, Antitrust Immunity for "State Action"

After Lafayette, 95 Harv.L.Rev. 435, 445 n. 49 (1981) ("Immunity [under the

state action doctrine] for decisions of subordinate agencies or officials cannot
depend on an explicit command from the legislature; delegation of
governmental powers necessarily includes the discretion to make decisions not
compelled by the legislature."). To the extent that the challenged regulatory
provisions impose an anticompetitive restraint upon First American, such
restraint "is a necessary or reasonable consequence of engaging in the
authorized activity." Gold Cross, supra, 705 F.2d at 1013.
63

First American relies on cases from the Ninth and Fifth Circuits in arguing that
the challenged regulations were not compelled by the South Dakota legislature,
thus they are not entitled to state action immunity. Ronwin v. State Bar of
Arizona, 686 F.2d 692 (9th Cir.1981), cert. granted, --- U.S. ----, 103 S.Ct.
2084, 77 L.Ed.2d 296 (1983); United States v. Texas State Board of
Accountancy, 464 F.Supp. 400 (W.D.Tex.1978), modified, 592 F.2d 919 (5th
Cir.), cert. denied, 444 U.S. 925, 100 S.Ct. 262, 62 L.Ed.2d 180 (1979). Our
above discussion should indicate, however, that we are in fundamental
disagreement with our brethren in these circuits regarding application of the
state action doctrine to state agencies or subdivisions. In both these cases, the
courts cast the inquiry in mandatory terms--whether the challenged action by
the state agency was compelled by the state legislature. In both cases there were
vigorous dissents putting forth the view adhered to by this circuit: "that an
adequate state mandate for anticompetitive activities of cities and other
subordinate governmental units exists when it is found 'from the authority
given a governmental entity to operate in a particular area, that the legislature
contemplated the kind of action complained of.' " City of Lafayette, 435 U.S. at
415, 98 S.Ct. at 1138.

64

Accordingly, we conclude that the Sherman Act does not irreconcilably conflict
with the challenged statute and regulations, and that, even if it did, the state
action doctrine would operate to shield the regulatory provisions from antitrust
scrutiny. 16

V.
65

In conclusion we observe that the regulations challenged here by First

American undoubtedly restrained it from carrying on its business in the manner
it desired. That the regulations, in this sense, have an anticompetitive effect
does not invalidate them under the Sherman Act, "[f]or if an adverse effect on
competition were, in and of itself, enough to render a state statute invalid, the
States' power to engage in economic regulation would be effectively
destroyed." Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 133, 98 S.Ct.

2207, 2217, 57 L.Ed.2d 91 (1978).

66

For the foregoing reasons, the judgment of the district court is affirmed.

The Honorable William C. Hanson, Senior District Judge for the Northern and
Southern Districts of Iowa, sitting by designation

The district court's memorandum opinion sets out plaintiffs' basic allegations as
follows:
Plaintiffs allege that the Defendants conspired to: (a) fix the price to Plaintiffs
of abstractor countersignatures on title insurance policies; (b) engage in
frivolous and sham litigation by appealing the decision of the South Dakota
Director of Insurance to grant a certificate of authority to Plaintiff First
American Title Insurance Company to do business in South Dakota; (c) engage
in frivolous and sham litigation by participating in the case of Fall River
County Abstract Company v. Knutson, (6th Judicial Circuit Court, Hughes
County, S.D., Nov. 6, 1979, Judge Robert A. Miller, presiding); (d) engage in
efforts to influence the enactment of S.L.1979, ch. 345, amending SDCL 58-2516, which had the effect of requiring all title insurance policies issued in the
state to contain the countersignature of an abstractor; (e) enforce and attempt to
enforce SDCL 58-25-16; (f) attempt to establish a fee schedule for
countersignatures to be provided by abstractors on title insurance policies; (g)
enforce and attempt to enforce ARSD 20:36:04:01; (h) engage in a publicity
campaign directed against the Plaintiffs, ostensibly directed toward influencing
government action, which campaign was a sham to cover an attempt to interfere
with the business relationships of Plaintiffs.
First American Title Co. v. South Dakota Land Title Association, 541 F.Supp.
1147, 1150 (D.S.D.1982) (Bogue, Ch. J.).

Section 58-25-16 of the South Dakota Codified Laws provided:

No foreign insurance company shall issue any policy of title insurance or
certificate of title or other guarantee of title, covering any property located
within the state of South Dakota, unless the same is countersigned by a person,
partnership or corporation, who has met the requirements of 36-13-8 and 3613-10. Violation of this section is a Class 2 misdemeanor.
This statute was amended by the South Dakota legislature in 1979. See Part I B
infra.

The amended 58-25-16 which became effective July 1, 1979, states:

No insurance company shall issue any policy of title insurance or certificate of
title or other guarantee of title, covering any property located within the state of
South Dakota, unless the same is countersigned by a person, partnership or
corporation, who has met the requirements of 36-13-8 and 36-13-10 in the
county in which the real property is located, or maintains an abstract plant in
the county where the real property is located and meets the requirements of
chapter 36-13. A violation of this section is a Class 2 misdemeanor.
The emphasized portion indicates language which was added by amendment in
1979.

The legislature enacted SDCL 36-13-26.1, which states, "An abstractor's

countersignature on a title insurance policy is verification that the abstracter has
furnished the insurer a report based on the examination of record title and any
other title information and services required by the insurer and 36-13-25."
The legislature also amended SDCL 36-13-25 to state in pertinent part that, "
[The Board of Examiners] shall also establish a schedule of fees and the
requirements for an abstracter's services for countersigning title insurance
policies pursuant to 58-25-16."
The Board of Examiners subsequently promulgated regulations implementing
these statutory changes. A title search--meaning a search of both the abstracter's
plant and the official county records--is required before countersigning a title
insurance policy. ARSD 20:36:07:01. Additionally, the search is to be "made
under the direction of an abstracter licensed in the county in which the property
is located." ARSD 20:36:07:02. This regulation also requires the abstracter's
full cooperation with the title insurer by forbidding any unnecessary delays in
performing the search and countersigning the policy: "Delays in the search or
reporting shall be cause for complaint and disciplinary proceedings by the
abstracters' board of examiners." Id.

We shall refer to appellants collectively as "First American" throughout the

remainder of this opinion

This circuit recently refused to rely on the Duke & Co. coconspirator exception,
noting that it has been subject to criticism. Westborough Mall, Inc. v. City of
Cape Girardeau, 693 F.2d 733, 746 (8th Cir.1982), cert. denied, --- U.S. ----,
103 S.Ct. 2122, 77 L.Ed.2d 1303 (1983); see Metro Cable Co. v. CATV of
Rockford, Inc., 516 F.2d 220, 229-30 (7th Cir.1975); Fischel, Antitrust Liability
for Attempts to Influence Government Action: The Basis and Limits of the
Noerr-Pennington Doctrine, 45 U.Chi.L.Rev. 80, 115 (1977) ("in most cases

the co-conspirator exception is unworkable and should not be recognized")

7

SDCL 58-6-8 requires the director of the Division of Insurance to hold a

hearing in order to determine whether authority to engage in the insurance
business should be granted. Part of this inquiry is a determination whether the
grant of such authority would be in the public interest. Id

Apparently, the Association's asserted public interest concern (see note 7, supra
) was that untrained individuals could issue title insurance policies without the
necessity of being supervised or trained by abstracters licensed by the State of
South Dakota. Brief of the Association at 6-7. This situation prevailed as long
as SDCL 58-25-16 required only foreign insurance companies to obtain the
countersignature of a licensed abstracter before issuing a policy of title
insurance. The Association asserted its position without success before the
Division of Insurance and before a state court. It appealed the state court's
decision to the South Dakota Supreme Court, but abandoned this appeal
following the amendment of SDCL 58-25-16 which deleted the word
"foreign" from the statute, thus extending the statute's requirements to domestic
title insurance companies

See Brief of First American at 41 (where First American claims that the
abstract plant requirement makes it "prohibitively expensive" to construct an
abstract plant and that the effect of the regulation is to give "existing abstracters
monopoly power over title services within their respective counties").
Apparently there was never any evidence offered at trial indicating exactly how
costly it would be to assemble an abstract plant in accordance with ARSD
20:36:04:01

10

The unauthorized conduct of the business of abstracting in South Dakota is a

petty offense. SDCL 36-13-9. The Board of Examiners is empowered to
commence actions for injunctions against such unauthorized business as an
alternative to the state's initiation of criminal proceedings. SDCL 36-13-9.1.
In addition, SDCL 58-25-16 states that violation of its countersignature
requirement "is a Class 2 misdemeanor."

11

Of course the state's exercise of its police powers in effecting economic

regulations may impermissibly impinge on other federal interests which do not
concern us in the instant case--notably the interest in preventing significant
burdens on interstate commerce which is protected by the Commerce Clause.
See P. Areeda & D. Turner, Antitrust Law pp 219-20 (1978)

12

See Community Communications Co. v. City of Boulder, 455 U.S. 40, 102
S.Ct. 835, 70 L.Ed.2d 810 (1982); California Retail Liquor Dealers Assn. v.
Midcal Aluminum Inc., 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980);

New Motor Vehicle Bd. of Cal. v. Orrin W. Fox Co., 439 U.S. 96, 99 S.Ct. 403,
58 L.Ed.2d 361 (1978); City of Lafayette v. Louisiana Power & Light Co., 435
U.S. 389, 98 S.Ct. 1123, 55 L.Ed.2d 364 (1978); Bates v. State Bar of Arizona,
433 U.S. 350, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977); Cantor v. Detroit Edison
Co., 428 U.S. 579, 96 S.Ct. 3110, 49 L.Ed.2d 1141 (1976); Goldfarb v.
Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975)
13

Uncertainty exists regarding whether the second Midcal criterion--the

requirement of active state supervision--applies to conduct by municipalities
and other state subdivisions as well as to conduct by private parties. The Court
expressly declined to address this issue in Community Communications Co. v.
City of Boulder, 455 U.S. 40, 51 n. 14, 102 S.Ct. 835, 841 n. 14, 70 L.Ed.2d
810 (1982) ("Because we conclude in the present case that Boulder's
moratorium ordinance does not satisfy the 'clear articulation and affirmative
expression' criterion, we do not reach the question whether that ordinance must
or could satisfy the 'active state supervision' test focused upon in Midcal.")
This circuit has answered this question in the negative in the context of
municipal conduct. Gold Cross Ambulance & Trans. v. City of Kansas City,
705 F.2d 1005, 1014 (8th Cir.1983) ("[T]he state supervision requirement is
intended to control the potential for abuse created by authorizing private
persons to make anticompetitive decisions and to insure that those decisions are
consistent with the clearly articulated and affirmatively expressed state policy at
stake."). The court's reasoning in Gold Cross was fourfold: municipal officials
are generally politically accountable to their citizens, which keeps those
officials in check; requiring state authorization for local government conduct is
analogous to requiring active supervision of private conduct; it would make
little sense to require the state to supervise and enforce municipal ordinances;
and state supervision could lead to duplicative, wasteful regulation as well as
the erosion of local autonomy. Id., 705 F.2d at 1014-15. But see Ronwin v.
State Bar of Arizona, 686 F.2d 692, 696 (9th Cir.1981), cert. granted, --- U.S. ---, 103 S.Ct. 2084, 77 L.Ed.2d 296 (1983) (The court held in the context of
challenged action by the state supreme court-appointed committee which grades
the Arizona bar examination that the acts of this governmental body had to be
"actively supervised by the state itself" in order to be immune from Sherman
Act scrutiny.).

14

The Court indicated that the conduct of a particular distiller under the statute
would not necessarily be insulated from scrutiny under the Sherman Act, even
though there was no basis "for condemning the statute itself by force of the
Sherman Act." Rice v. Norman Williams Co., --- U.S. ----, 102 S.Ct. 3294,
3301, 73 L.Ed.2d 1042, 1052 (1983)

15

See also 1 Am.Jur.2d Abstracts of Title 4 at 230 (1962) ("The inherent police
power of the states permits reasonable regulation of businesses or professions
when such regulation appears necessary for the general welfare of the people,
and in the exercise of this power, a state may impose reasonable regulations
upon those who seek to engage in the business of abstracting titles to real
estate.")

16

It is thus unnecessary to consider the district court's alternative holding that the
countersignature statute is exempt from antitrust scrutiny under the McCarranFerguson Act, 15 U.S.C. 1011-15, because the statute constitutes state
regulation of the "business of insurance." See Union Labor Life Ins. Co. v.
Pireno, --- U.S. ----, 102 S.Ct. 3002, 73 L.Ed.2d 647 (1982)
Additionally, we reject First American's contention that the district court failed
to consider its claims under 2 of the Sherman Act. 15 U.S.C. 2. If the
alleged private price-fixing conspiracy was supposed to be evidence of
monopolization, the claim failed for lack of proof. If the lobbying and litigation
activity which has been held immune from antitrust scrutiny under NoerrPennington is alleged to be evidence of an attempt or a conspiracy to
monopolize, then Noerr-Pennington applies to immunize defendants from these
claims as well.