When is the Filed Rate Doctrine a Defense to an Antitrust Lawsuit?


Author: Jarod Bona

The doctrine of federal antitrust law includes several immunities and exemptions—entire areas that are off limits to certain antitrust actions. This can be confusing, especially because these “exceptions” arise, grow, and shrink over time, at the seeming whim of federal courts.

As a matter of interpretation, the Supreme Court demands that courts view such exemptions and immunities narrowly, but they are still an important part of the antitrust landscape. This includes, prominently, the Filed Rate Doctrine, which is the topic of this article.

Here at The Antitrust Attorney Blog, we write about these antitrust exceptions periodically. In particular, we spend a lot of time on state-action immunity, but have also published articles on, for example, the baseball antitrust exemption, the farm cooperative exemption, and the business of insurance exception (which, unlike many others, arose from statute: The McCarran-Ferguson Act).

What is the Filed Rate Doctrine?

The filed rate doctrine is simply a judicially created exception to a civil antitrust action for damages in which plaintiffs challenge the validity of rates or tariff terms that have been filed with and approved by a federal regulatory agency.

But what does that mean?

In some industries, notably insurance, energy, and shipping (or other common carriers), the participants must file the rates that they offer to all or most customers with a government agency. This regulatory agency must then, in some manner, approve those rates. This approach is an exception to a typical market and was more common in certain industries pre-deregulation.

The idea of filing these rates is that the benevolent and all-knowing government agency, rather than the market, will best look after customers. It arises from the same seed as socialism and was particularly popular in the early to mid-20th century when the view that educated people could perform better than markets was in vogue.

Anyway, these “filed rates” are still with us and are a defense, through the filed rate doctrine, to certain antitrust actions.

The filed rate doctrine itself arose in a 1922 US Supreme Court case called Keogh v. Chicago & Northwest Railway Co., 260 U.S. 156 (1922). In that case, the plaintiffs sought antitrust damages by arguing that defendants violated the Sherman Act and the rates charged by certain common-carrier shippers were higher than they would have been in a competitive market.

The defendants, however, had filed these rates with the Interstate Commerce Commission (ICC), a federal agency that had approved them. The Supreme Court responded by precluding plaintiffs’ antitrust lawsuit on that basis, as the rates, once filed, “cannot be varied or enlarged by either contract or tort of the carrier.” It is the legal rate.

The Supreme Court has since reaffirmed this holding, most prominently in a case called Square D Co. v. Niagara Frontier Tariff Bureau, Inc., 476 U.S. 409 in 1986, which you can read at the link if you want to dig deeper.

When Does the Filed Rate Doctrine Preclude Antitrust Liability?

The filed rate doctrine is a defense to an antitrust lawsuit, premised on damages, so long as the claim requires the Court to examine or second guess the rates filed with a federal agency.

So if you are a plaintiff that wants to bring an antitrust action against a defendant that filed rates, you could (1) seek certain types of injunctive relief; and (2) develop your action in a way that doesn’t require the Court to determine liability or calculate damages by comparing current filed rates to a hypothetical rate in a but-for world. This can get complicated, so if you are not an antitrust attorney, you might want to find one.

If you are or represent a defendant that has been sued under the antitrust laws and the defendant company files rates with some agency, you should also seek antitrust-specific guidance. You might have a strong defense.

Here are some other controversial filed-rate-doctrine issues:

State or Federal? We’ve been describing the filed rate doctrine as applying to instances where defendants file rates with federal government agencies. But some federal appellate circuits apply the doctrine to rates filed with state government agencies too. Since the states tend to regulate insurance, you see this issue come up in antitrust actions against insurance companies, including Title Insurance companies.

Customer or Competitor. Another issue that has split courts is whether the filed rate doctrine applies to actions by competitors or just customers. Some courts won’t apply the filed rate doctrine to competitor antitrust claims, with the common rationale that the purpose of filing rates with an agency is to protect consumers not competitors. The agency reviewing the rates is not examining them to protect any competitors, just customers.

How Thorough Was the Agency Review? An important issue that is not entirely resolved is whether the agency needs to expressly approve each rate that is filed, or generally approve them, or whether the ability of the agency to disapprove the rate is enough. Must any agency review of the rates be meaningful? Did the agency actually abdicate its authority in reviewing the rates?

This issue came up in the United States Court of Appeals for the Ninth Circuit (April 14, 2017) when it affirmed a district court that rejected the filed rate doctrine at summary judgment because there were, for example, genuine issues of material fact in dispute about whether the federal agency—in this case, the Department of Transportation—effectively abdicated its authority to review certain unfiled air fares. The case is called Wortman v. All Nippon Airways if you want to read more about it.

A similar issue that is increasingly arising is whether the filed rate doctrine applies when the filed rates are effectively market-based rates with discretionary review instead of the traditional fixed rates. This is an interesting area that I’d like to see the Supreme Court address, particularly if and when it overlaps with state-action immunity (which usually requires active state supervision).

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