Court Opinion

ID: 8915827
Source: CourtListenerOpinion
Date Created: 2022-11-27 04:59:53.157467+00
Date Added: 2024-06-11T17:08:58.461722
License: Public Domain

FEIKENS, District Judge,
dissenting.
In this case the Court holds that the challenged restraint upon Kentucky dentists is clearly articulated in the statutory scheme and the policy is one which is actively supervised by the State. While the Court correctly reads California Retail Liquor Dealers to articulate two requirements for antitrust immunity under Parker v. Brown:
“First, the challenged restraint must be ‘one clearly articulated and affirmatively expressed as state policy’; second, the policy must be ‘actively supervised’ by the State itself.” 445 U.S. at 105, 100 S.Ct. at 943,
the court runs these two requirements together and concludes that if the policy is clearly articulated in a statute that establishes standards of conduct, then it is also actively supervised. I do not read California Retail Liquor Dealers in this way. It does not do justice to the cardinal point that the test includes two parts. Under that interpretation, and keeping some distinction between the parts, having fulfilled the first part by adopting a policy, the State must still fulfill the second part by *622producing standards of conduct. Yet whenever the State fulfills the second, it has also fulfilled the first. The first part is thus redundant. I believe the Supreme Court meant more: the state must not only clearly articulate its policy in legislation specifying standards of conduct, it must also actively supervise the policy by actively enforcing the legislation. Because the record in this case does not reflect that the State has enforced its policy, I cannot agree with the majority.
I would vacate the District Court’s Order of Summary Judgment and remand the case for a hearing in which the State would have to show that it has seriously undertaken the enforcement of its anti-competitive statute. Absent a record, it can as easily be asserted that it is the Kentucky Dental Association and not the statutory Board of Dentistry which carries out this regulatory scheme. If that factual conclusion is made, we would have a situation here to which Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975) would apply. To quote Goldfarb:
It is not enough that private anti-competitive conduct is ‘prompted’ by the state action; rather, anti-competitive activities must be compelled by direction of the State acting as a sovereign. 421 U.S. at 791, 95 S.Ct. at 2015.
As I read the development and the source of the state action doctrine, announced in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1942), a state must not only show that it has adopted particular standards of conduct and that the legislation entrusts enforcement to a state agency, the state must also show that it has seriously undertaken the enforcement of the statute. Anything less and the fundamental federal policy of free competition “is being unnecessarily and inappropriately subordinated to state policy . . . . ” Bates v. State Bar of Arizona, 433 U.S. 350, 362, 97 S.Ct. 2691, 2698, 53 L.Ed.2d 810 (1976).
The state action exemption, like many other doctrines in many areas of our jurisprudence, is the product of a close balancing of competing legitimate interests. In this case, a balance between the federal policy of free competition and our fundamental principles of federalism which leaves to strong independent states the power to deal with peculiar local problems. As the Supreme Court stated in Parker v. Brown, supra, 317 U.S. at 351, 63 S.Ct. at 313, “In a dual system of government in which, under the constitution, the states are sovereign, save only as Congress may constitutionally subtract from their authority, an unexr pressed purpose to nullify a state’s control over its officers and agents is not lightly to be attributed to Congress.” The Court speaks of the intention of Congress, but its finding is based on a presumption that results from the careful balance already described. Bates v. State Bar of Arizona, supra, 433 U.S. at 362, 97 S.Ct. at 2698 (quoted above).
The balance presumes, of course, that a state does more than merely “authoriz[e], approv[e], encourag[e], or participare], in restrictive private conduct.” Cantor v. Detroit Edison Co., 428 U.S. 579, 96 S.Ct. 3110, 49 L.Ed.2d 1141 (1975). The state “as sovereign” must demonstrate the seriousness of its intentions by, first, clearly articulating and affirmatively expressing the restraint as state policy, and, second, actively supervising the implementation of the policy. California Liquor Dealers v. Midcal Aluminum, 445 U.S. 97, 105, 100 S.Ct. 937, 943, 63 L.Ed.2d 233 (1979). Active supervision of the policy in this context must include active enforcement. Without enforcement, the state is throwing into the balance a hollow husk.
The Supreme Court has repeatedly reiterated the necessity of enforcement. In Parker, 317 U.S. at 352, 63 S.Ct. at 314, the Court stressed in upholding the California program that “it is the state, acting through the Commission which adopts the program and which enforces it with penal sanctions, in the execution of a governmental policy.” (Emphasis added). Similarly, in Bates, 433 U.S. at 362, 97 S.Ct. at 2698, the Court concluded, “we deem it significant that the state policy is so clearly and affirmatively expressed and that the State’s *623supervision is so active.” And in California Liquor Dealers, 445 U.S. at 100, fn. 2, 100 S.Ct. at 940 fn. 2, the Court in striking down California’s wine pricing scheme noted that wine dealers who were covered by the regulation “also may be subject to private damage suits for unfair competition.”
The wisdom of requiring a state to enforce its anti-competitive restraints is further evidenced when one considers the possible consequences of failing to enforce. A statute left unenforced by the state is an easy tool for protected groups to use illicitly in further securing hegemony over the market — most likely to the disadvantage of the consumers the legislation was meant to protect. The present case offers a possible illustration. While the prohibition on dealings between dental patients and dental technicians was undoubtedly intended to insure that denture wearers receive proper professional adjustment, it also gives dentists the opportunity to mark up the cost of a denture and to charge for an additional office visit. Dentists have an economic stake in the statute. Unenforced, the private dental association is free to wield the statute discriminatively, perhaps only against those technicians who seek through lobbying or public advertising to change the statute. More elaborate and efficient legislation could thus be thwarted.
The private organization might also enforce the law only against technicians who advertise their services and prices even if they add that they are available only through the patient’s dentist. This sort of advertising is presumably proper and competitive but it could be eliminated.* Unlike the scheme approved in Bates where the State Bar Association enforced the restraints under the close eye of the State Supreme Court, the role of the private Kentucky Dental Association is not “completely defined by the court” nor does it “act as the agent of the court under its continuous supervision.” Bates, supra, 433 U.S. at 361, 97 S.Ct. at 2697. If it leaves enforcement to the private professional organization, the State of Kentucky is doing no more than “casting a gauzy cloak of state involvement over what is essentially a private ... arrangement.” California Liquor Dealers, supra, 445 at 106, 100 S.Ct. at 943. As Parker established and the Court has repeated through the years, “a state does not give immunity to those who violate the Sherman Act by authorizing them to violate it, or by declaring that their action is lawful . . . . ” Id., 371 U.S. at 351, 63 S.Ct. at 313.
A hearing would close the gap created by the Court. If the evidence shows that the State has seriously undertaken enforcement, then the Parker doctrine applies. If not, it does not.

 An excellent recent article by Professors Payton and Powsner explores some of the ways in which professional medical organizations have pursued state regulation for the economic benefit of their members. See Payton and Powsner, Regulation Through the Looking Glass: Hospitals, Blue Cross, and Certificate-of-Need, 79 Mich. L. Rev. 203 (1980).