Southern Motor Carriers Rate Conference, Inc. v. United States

PETITIONER: Southern Motor Carriers Rate Conference, Inc.
RESPONDENT: United States
LOCATION: House where alleged robbery took place

DOCKET NO.: 82-1922
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 471 US 48 (1985)
ARGUED: Nov 26, 1984
DECIDED: Mar 27, 1985

ADVOCATES:
Allen I. Hirsch - on behalf of the petitioners
Lawrence G. Wallace - on behalf of the respondent

Facts of the case

Question

Media for Southern Motor Carriers Rate Conference, Inc. v. United States

Audio Transcription for Oral Argument - November 26, 1984 in Southern Motor Carriers Rate Conference, Inc. v. United States

Warren E. Burger:

We will hear arguments next in Southern Motor Carriers Rate Conference, Inc., and others, against the United States.

Mr. Hirsch, I think you may proceed when you are ready.

Allen I. Hirsch:

Mr. Chief Justice, and may it please the Court, while there are many directions one can take when answering the question posed by this case in a manner which would be favorable to the petitioners, the question itself, we believe, is rather simply put: Does a state's clearly articulated and affirmatively expressed policy to displace competition with a mandatory and pervasive regulatory system which it actively supervises shield from antitrust liability the private regulated parties acting in a manner contemplated and authorized but not literally compelled by the state system?

In order to answer this question, it is useful not only to examine the state action doctrine as it commenced with Parker v. Brown and as it has been discussed by this Court in subsequent opinions, but to look closely at the underlying concept of federalism upon which Parker v. Brown was based.

To begin this examination, we should look briefly at the state regulatory systems as well as the pertinent federal statutes in this area.

Each state in this case has legislatively mandated regulation of motor carriers with pervasive regulatory schemes setting forth what the motor carrier operators must do in order to comply with the state schemes and in order to be motor carriers within the state bounds.

Each state has established a public service commission to administer that regulation in order to achieve these legislatively articulated purposes and goals for the benefit of the public and the citizens of those states.

On the federal level, at the same time, the Congress of the United States first in 1935 specifically reserved to the states the right to regulate motor carriers within their state boundaries, and subsequently in 1948 the Congress of the United States specifically exempted activity which if not identical is very, very similar when engaged in by interstate motor carriers subject to the regulation of the Interstate Commerce Commission.

The unique aspect of this case is that under the federal scheme, in order to avail oneself of the exemption from the federal antitrust laws, carriers had to petition the Interstate Commerce Commission for a collective agreement, and in order to receive the exemption by use of this agreement, they had to reserve the right to independent action by each of the carriers who were parties to the agreement.

What the government proposes in this situation is that contrary to the federal scheme which required the reservation of the right to independent action in order to obtain relief from the antitrust laws, that the states, because they do not remove that right, because they do not compel collective activity, but only allow and authorize collective activity while still allowing this independent action, have lost the right to exemption from the antitrust laws.

We submit that in the context of this case, pervasive regulatory schemes coupled with this federal background of an explicit reservation to the states of the right to regulate in this area, and Congressional action in the same arena attempting to accomplish the same goals, and not to allow the states to do the same, is to stand the doctrine of federalism on its head.

Now, under the doctrine of federalism as addressed in Parker v. Brown, this Court has stated in the oft quoted phrase that when we are dealing in a system of dual sovereignty, where the federal government is a sovereign and the state is a sovereign, it is not easily to be implied that the federal government has intended to remove the state right to act and to subject it to federal law.

In this case when we couple this proposition of the Parker case with the specific reservation of the right to the states to regulate in this area, we believe that this substantiates the position that the federal Congress does not intend to apply the Sherman Act in this area.

In Parker you had no statement of a reservation of rights to the states to regulate their agricultural crops.

They went ahead and regulated.

In fact, in Parker there was federal legislation which was comparable to the regulation that was being engaged in by the state itself.

In this case, we don't deal with just the silence of the Congress of the United States in the Sherman Act with respect to its applicability to the states.

We deal with the subsequent explicit statement of the intent of the Congress of the United States not to apply the federal laws to the states when it comes to the regulation of motor carriers.

In this arena, we then turn to the state action doctrine, and see if the doctrine as evolved by this Court does apply in fact to the regulatory schemes of the states we have before you.

The issue has evolved over the term compulsion, that the activity in question when engaged in by a private party must be compelled by the state.

We believe this is a narrow and wooden approach to the state action doctrine.

We believe that the state action doctrine means exactly what it says.

Does the state as a sovereign intend to occupy a particular field and regulate that field to the extent of displacing competition?

And is that intention clearly stated, clearly articulated?

And when dealing with private parties who are necessary to the realization of the regulatory goals set forth by the regulatory scheme, whether the state merely says, go do as you will, or whether the state remains actively involved--

John Paul Stevens:

Mr. Hirsch--

Allen I. Hirsch:

--Yes, sir.

John Paul Stevens:

--hasn't the state said to every single independent motor carrier, go do as you will?

Allen I. Hirsch:

No, sir, they have not.

John Paul Stevens:

Don't they all have an independent right of action?