Memorandum of Respondent Louisiana Real Estate Appraisers Board in Opposition to Complaint Counsel’S Motion for Partial Summary Decision
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PUBLIC UNITED STATES OF AMERICA 12 18 2017 BEFORE THE FEDERAL TRADE COMMISSION 589091 COMMISSIONERS: Maureen K. Ohlhausen, Acting Chairman Terrell McSweeny _______________________________________ 'INAL In the Matter of Louisiana Real Estate Appraisers Board, Docket No. 9374 Respondent _______________________________________ MEMORANDUM OF RESPONDENT LOUISIANA REAL ESTATE APPRAISERS BOARD IN OPPOSITION TO COMPLAINT COUNSEL’S MOTION FOR PARTIAL SUMMARY DECISION W. Stephen Cannon Seth D. Greenstein Richard O. Levine James J. Kovacs Kristen Ward Broz Constantine Cannon LLP 1001 Pennsylvania Ave. NW, Ste. 1300N Washington, DC 20004 Phone: 202-204-3500 [email protected] Counsel for Respondent, Louisiana Real Estate Appraisers Board December 12, 2017 PUBLIC TABLE OF CONTENTS TABLE OF CONTENTS ................................................................................................................. i TABLE OF AUTHORITIES ......................................................................................................... iii TABLE OF AFFIDAVITS .......................................................................................................... viii INTRODUCTION .......................................................................................................................... 1 SUMMARY OF MATERIAL FACTS ........................................................................................... 4 A. LREAB ......................................................................................................................... 4 B. Federal and State Regulation over AMC Payments of Customary and Reasonable Residential Appraisal Fees ............................................................................................ 5 1. Federal Law provides for State regulation of residential appraisal fees paid by Appraisal Management Companies. .................................................................... 5 2. Louisiana’s AMC Act, and State supervision over promulgation of Rule 31101 6 3. LREAB Enforcement of Rule 31101 ................................................................... 9 c. Pleadings ..................................................................................................................... 11 STANDARD FOR SUMMARY DECISION ............................................................................... 12 ARGUMENT ................................................................................................................................ 12 I. The Motion for Partial Summary Decision Should Be Denied as Moot. ............................ 12 II. The State of Louisiana Actively Supervised LREAB’s Promulgation and Enforcement of Prior Rule 31101. ................................................................................................................. 17 A. Standards for Active Supervision ............................................................................... 18 B. Louisiana’s System of Legislative and Executive Oversight Over Promulgation of Prior Rule 31101 Met Federal Standards for Active Supervision. ............................. 19 C. Louisiana’s System of Enforcement of Prior Rule 31101 Met Federal Standards for Active Supervision. ..................................................................................................... 21 III. The LREAB Boards that Promulgated and Enforced Prior Rule 31101 Were Not Controlled by Active Market Participants, Therefore Summary Decision Should be Denied. ............. 24 A. The Louisiana Legislature Established the Composition of the Board to Preclude Control by Any Single Interest Group, and Determined General Appraisers and Residential Appraisers to Have Distinct Interests. ..................................................... 25 B. Under Dodd-Frank and the AMC Act, the Only Relevant Market is the Market for Covered Residential Real Estate Transactions. .......................................................... 27 C. Only Residential Appraisers Could be “Active” Participants in the Relevant Market. ..................................................................................................................................... 28 i PUBLIC D. Disputed Facts Regarding Whether the Board Was Controlled by Active Market Participants Preclude Summary Decision. .................................................................. 28 1. Market Definition is a Fact-Dependent Question that Should Not be Resolved on Summary Judgment. .................................................................................... 29 2. Disputed Issues of Material Fact Preclude Summary Decision Whether LREAB Members Pursued Private Rather than Public Interests. .................................. 30 CONCLUSION ............................................................................................................................. 33 ii PUBLIC TABLE OF AUTHORITIES ----Cases 324 Liquor Corp. v. Duffy, 479 U.S. 336 (1987) ...........................................................................20 Already LLC v. Nike, Inc., 568 U.S. 85 (2013) ..............................................................................16 Am. Cargo Transp., Inc. v. United States, 625 F.3d 1176 (9th Cir. 2010) ....................................16 Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ..................................................................12 Ayyoubi v. Holder, 712 F.3d 387 (8th Cir. 2013) ..........................................................................15 Bahnmiller v. Derwinski, 923 F.2d 1085 (4th Cir. 1991) ..............................................................16 Bench Billboard Co. v. City of Cincinnati, 675 F.3d 974 (6th Cir. 2012) .....................................16 Brown v. Buhman, 822 F.3d 1151 (10th Cir. 2016) .......................................................................16 Brown Shoe Co. v. United States, 370 U.S. 294 (1962) ................................................................26 Burlington N. R.R. Co. v. Crow Tribal Council, 940 F.2d 1239 (9th Cir. 1991)...........................13 Cal. Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97 (1980) .............15, 18, 24 Campbell v. Greisberger, 80 F.3d 703 (2d Cir. 1996) ...................................................................14 Century Aluminum of S.C. v. S.C. Pub. Serv. Auth., 2017 WL 4443456 (D.S.C. Oct. 4, 2017) ...............................................................................................................29, 32 Citizens for Responsible Gov't State PAC v. Davidson, 236 F.3d 1174 (10th Cir. 2000) .............15 Cty. of L.A. v. Davis, 440 U.S. 625 (1979) ....................................................................................13 Dent v. West Virginia, 129 U.S. 114 (1889) ..................................................................................26 Destec Energy, Inc. v. Southern California Gas Co., 5 F. Supp. 2d 433 (S.D. Tex. 1997)...........18 FTC v. Ticor Title Ins. Co., 504 U.S. 621 (1992) ..............................................................20, 21, 22 In re Blue Cross Blue Shield Antitrust Litig., 2017 U.S. Dist. LEXIS 99705 (N.D. Ala. June 28, 2017) ..............................................................................................................26 In the Matter of Kentucky Household Goods Carriers Ass’n, Inc., 139 F.T.C. 404 (2005) ....20, 21 iii PUBLIC In the Matter of Mass. Bd. Of Registration in Optometry, 110 F.T.C. 549 (1988) .......................17 In the Matter of N.C. State Bd. of Dental Exam'rs, 2011 F.T.C. LEXIS 290 (2011) ....................20 In the Matter of S. C. State Board of Dentistry, 138 F.T.C. 229 (2004) ........................................17 Jews for Jesus v. Hillsborough Cty. Aviation Auth., 162 F.3d 627 (11th Cir. 1998) ....................16 Lewis v. Cont'l Bank Corp., 494 U.S. 472 (1990) .........................................................................17 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) ....................................12 Mills v. Green, 159 U.S. 651 (1895) ..............................................................................................13 Mosley v. Hairston, 920 F.2d 409 (6th Cir. 1990) ...................................................................14, 16 Murphy v. Hunt, 455 U.S. 478 (1982) ..........................................................................................17 N.C. State Bd. of Dental Exam'rs v. FTC, 135 S. Ct. 1101 (2015) ........................................ passim Native Vill. of Noatak v. Blatchford, 38 F.3d 1505 (9th Cir. 1994) ...............................................15 Parker v. Brown, 317 U.S. 341 (1943) ..............................................................................11, 13, 24 Patrick v. Burget, 486 U.S. 94 (1988) .....................................................................................18, 22 Princeton Univ. v. Schmid, 455 U.S. 100 (1982) ...........................................................................15 Rio Grande Silvery Minnow v. Bureau of Reclamation, 601 F.3d 1096 (10th Cir. 2010) .............16 Rivera-Nazario v. Corporacion del Fondo del Seguro del Estado, 2015 WL 9484490 (D.P.R. Dec. 29, 2015) .................................................................................................27, 29, 31, 32 Turner v. Virginia Dep't of Med. Assistance Servs., 230 F. Supp. 3d 498 (W.D. Va. 2017) ..29, 32 Twin City Sportservice, Inc. v. Charles O. Finley & Co.,