David Udell points out this fascinating pending Supreme Court case, that had passed me by.
On October 14, 2014, the Supreme Court is scheduled to hear North Carolina Board of Dental Examiners v. Federal Trade Commission, which raises the issue whether a professional association authorized by the state to enforce the law governing the practice and unauthorized practice of, in this case dentistry, enjoys the state actor exemption from anti-trust law when the organization is run by members of the profession, particularly when those are elected by the profession. (In this case the dentists had passed a regulation defining teeth whitening services as the practice of dentistry — sounds vaguely familiar?)
The 4th Circuit agreed withe the FTC that the answer to the exemption question was no, and that therefore the North Carolina Board of Dental examiners was subject to the Sherman Anti-Trust Act, and that indeed, in this case, the issuance of cease and desist orders to non-dentists offering teeth-whitening services was not legal.
While the issue would not apply to bar associations that do not have regulatory authority, at least some are clearly worried and have filed an amicus in support of the dentists, concluding:
The decision will intrude upon the regimes that states have created to enforce laws governing regulated professionals, such as lawyers, doctors, dentists, physical therapists, pharmacists, engineers, and architects. The decision ignores federalism, frustrating the sovereign and commonsense choice of states (i) to entrust regulation of professionals to entities composed primarily of officials who are also “market participants,” (and who thus have the requisite expertise), and (ii) not to seek somehow to “actively supervise” those expert bodies with another level of bureaucracy. By disrupting state regulatory regimes and by facilitating antitrust claims by persons subject to regulation, the decision below will impair the ability of the State Bar and other professional regulatory entities to protect the public.
As the 4th Circuit clarified, however:
At the end of the day, this case is about a state board run by private actors in the marketplace taking action outside of the procedures mandated by state law to expel a competitor from the market. Despite these actions, if the [**13] Board was actively supervised by the State, it would be entitled to the Parker exemption. Today’s opinion simply reinforces the Court’s admonition that federalism “serves to assign political responsibility, not to obscure it.” Ticor, 504 U.S. at 636, 112 S.Ct. 2169. As the FTC summarized: allowing the antitrust laws to apply to the unsupervised decisions of self-interested regulators acts as a check to prevent conduct that is not in the public interest; absent antitrust to police their actions, unsupervised self-interested boards would be subject to neither political nor market discipline to serve consumers’ best interests. Interlocutory Order, 151 F.T.C. at 622-23.
While there are a number of ways that states might be able to avoid the consequences of an affirmance of the 4th Circuit’s decision, such as by having much tighter supervision by the state supreme court of the state bar, or by moving the enforcement process directly into the Court or another “non-market” entity, and while the Supreme Court’s grant of cert might in any event signal a likely reversal, none the less, any decision is likely to put into stark relief the arguably monopolistic consequences of the regulatory system, in a time of great technological and market change.