Opinion ID: 407849
Heading Depth: 2
Heading Rank: 2

Heading: Subject Matter Jurisdiction-Interstate Commerce

Text: 27 The Sherman Act's requirement of interstate commerce, 15 U.S.C. § 1, is jurisdictional. See Western Waste Service Systems v. Universal Waste Control, 616 F.2d 1094, 1097 (9th Cir.), cert. denied, 449 U.S. 869, 101 S.Ct. 205, 66 L.Ed.2d 88 (1980); see generally McLain v. Real Estate Board, 444 U.S. 232, 100 S.Ct. 502, 62 L.Ed.2d 441 (1980). The district court evidently found that the alleged restraint did not affect interstate commerce so as to invoke jurisdiction under the Sherman Act. Defendants contend that the jurisdictional requirement of the Sherman Act was not satisfied by Ronwin's complaint because bar admission is a purely local matter. Ronwin responds that the services of Arizona lawyers are required by people living outside Arizona. The price paid by these out-of-state clients for legal services performed by Arizona lawyers is, according to Ronwin, higher than it would be if the number of Arizona lawyers had not been artificially restricted. 28 In order to establish jurisdiction under the antitrust laws, a plaintiff must establish that the defendant's activity either (1) is itself in commerce or (2) has an effect on some other appreciable activity demonstrably in interstate commerce. McLain, 444 U.S. at 242, 100 S.Ct. at 509 (emphasis added). Because of the past confusion surrounding these tests, we will consider Ronwin's allegations of interstate commerce under both the in commerce and the effect on commerce tests. See Bain v. Henderson, 621 F.2d 959, 960 n.1 (9th Cir. 1980). 29 (1) The in commerce test : The most applicable Supreme Court decision applying the in commerce test is Goldfarb v. Virginia State Bar, 421 U.S. at 783-86, 95 S.Ct. at 2011-12. In Goldfarb, plaintiffs alleged that the Virginia State Bar was fixing the prices charged by lawyers handling real estate transactions. In upholding jurisdiction, the Court noted that the real estate transactions that require legal services are frequently interstate transactions. 421 U.S. at 783-84, 95 S.Ct. at 2011-12. The Court reasoned that any restraint on those services therefore had a substantial effect on interstate commerce. Id. at 785, 95 S.Ct. at 2012. 30 Ronwin did not specifically plead which interstate transactions require legal services. See Bain, 621 F.2d at 961. Nor did he indicate how substantial an effect on interstate commerce results from restricting the number of lawyers practicing in Arizona. It is not inconceivable, however, that he could establish that legal services constitute an indispensable and inseparable component of certain interstate transactions. Therefore, the district court erred in dismissing the complaint for that reason at this stage of the proceedings. See McLain, 444 U.S. at 246, 100 S.Ct. at 511 (a complaint should not be dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts that would entitle him to relief). 31 (2) The effect on commerce test : In McLain, plaintiffs charged that various New Orleans-based real estate brokers were engaged in a price-fixing conspiracy. The Court held that plaintiffs had alleged facts sufficient to show that defendants' conduct affected interstate commerce. 7 McLain, 444 U.S. at 245, 100 S.Ct. at 510. Specifically, the Court noted indications in the record that: (1) an appreciable amount of commerce (was) involved in the financing of residential property in the Greater New Orleans area and the commerce involved various interstate institutions, id. at 245, 100 S.Ct. at 510; and (2) the activities of the real estate brokers, by affecting the terms and frequency of local real estate transactions, could have a not insubstantial effect on interstate commerce. Id. at 246, 100 S.Ct. at 511. 32 Ronwin did not allege either that there are an appreciable number of interstate transactions taking place in Arizona that require legal services or that limiting the number of lawyers has a not insubstantial effect on the number or size of these transactions. However, as is also true under the in commerce test, it is not inconceivable that Ronwin could establish jurisdiction under the effect on commerce test. See, e.g., McLain, 444 U.S. at 245-47, 100 S.Ct. at 510-11; Western Waste Service, 616 F.2d at 1097-99. Therefore, on remand, the district court should give Ronwin the opportunity to prove that his complaint meets the jurisdictional requirements under either of these tests.