Court Opinion

ID: 9479441
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:18:46.674727+00
Date Added: 2024-06-11T17:47:02.816158
License: Public Domain

ALARCON, Circuit Judge:
I. INTRODUCTION
Defendant-Appellee Oregon State Bar (Bar) passed a resolution requiring all active Oregon-based attorneys to purchase primary malpractice insurance from the Bar. Plaintiff-Appellant Fred Hass (Hass), a member in good standing of the Bar, contends that the Bar’s insurance requirement violates both the Sherman Antitrust Act, 15 U.S.C. §§ 1, 2 (1982) and the commerce clause, U.S. Const, art. I, § 8, cl. 3. The following issues are presented: (1) whether the Bar’s insurance requirement is immune from challenge under the Sherman Act by virtue of the state action exemption or by virtue of the exemption for the business of insurance contained in the McCar-ran-Ferguson Act, 15 U.S.C. §§ 1011-1015 (1982); and (2) whether the Bar’s insurance requirement violates the commerce clause.
We find it unnecessary to discuss the McCarran-Ferguson Act because we conclude that the Bar’s insurance requirement falls within the state action exemption to the Sherman Act. We also conclude that the requirement does not violate the commerce clause.
II. PERTINENT FACTS
The Bar is a public corporation and an instrumentality of the judicial department of the government of the State of Oregon. Or.Rev.Stat. § 9.010 (1987). The Bar is governed by a Board of Governors (Board). Id. § 9.025. The legislature has expressly granted the Board “authority to require all active members of the state bar engaged in the private practice of law whose principal offices are in Oregon [hereinafter “Oregon-based attorneys”] to carry professional liability insurance-” Id. § 9.080(2)(a). The legislature has further empowered the Board, “either by itself or in conjunction with other bar organizations, to do whatever is necessary and convenient to implement” its authority to require Oregon-based attorneys to carry professional liability insurance. Id.
The legislature has granted the Board “authority to own, organize and sponsor any insurance organization authorized under the laws of the State of Oregon and to establish a lawyer’s professional liability fund.” Id. The Board is authorized to “assess each [Oregon-based attorney] ... for contributions to such fund....” Id. The Board is further authorized “to establish definitions of coverage to be provided by such fund and to retain or employ legal counsel to represent such fund and defend and control the defense against any covered claim made against” an Oregon-based attorney. Id. The fund is required to pay, on behalf of such attorneys, “all sums as may be provided under such plan which any such [attorney] shall become legally obligated to pay as money damages because of any claim” of malpractice made against such attorney. Id.
In 1977, exercising its delegated authority, the Board passed a resolution, effective July 1, 1978, requiring all Oregon-based attorneys to carry malpractice coverage with aggregate limits of not less than $100,000.1 The resolution also established *1456the fund contemplated in § 9.080(2)(a), which the Board denominated “the Oregon State Bar Professional Liability Fund” [hereinafter “the Fund”]. The resolution further provided that the required malpractice coverage “for all active members in the private practice of law, with the exception of patent attorneys, shall be obtained through” the Fund. (Emphasis added.)
Pursuant to the foregoing resolution, Oregon-based attorneys have been required, since 1978, to participate in the Fund, and the Fund has provided such attorneys with legal malpractice coverage. An Oregon-based attorney’s failure to participate in the Fund results in suspension from membership in the Bar.
On February 25, 1987, Hass instituted the present action. Hass’ complaint alleged that in mandating attorney participation in the Fund, the Bar unlawfully monopolized the market for primary malpractice insurance, in violation of the Sherman Act, and violated the commerce clause of the U.S. Constitution.
The parties stipulated to the facts recited above and tried the case before the district court. The court did not adjudicate the Bar’s liability under the Sherman Act, because the court ruled that the Bar’s insurance requirement was immune from challenge under that Act by reason of the state action exemption. The district court also rejected Hass’ claim that the Bar’s practice violated the commerce clause. Hass now appeals from the final judgment entered in favor of the Bar.
The district court had jurisdiction over the subject matter under 28 U.S.C. § 1331. We have jurisdiction over Hass’ timely appeal from the final judgment under 28 U.S.C. § 1291.
III. DISCUSSION
A. The State Action Exemption
The question presented is whether the Board’s resolution requiring Oregon-based attorneys to purchase primary malpractice insurance2 from the Bar (hereinafter “the mandatory participation provision”) is immune from challenge under the federal antitrust laws by reason of the state action exemption. We review de novo the district court’s ruling that the Bar is protected by the exemption. Kern-Tulare Water Dist. v. City of Bakersfield, 828 F.2d 514, 518 (9th Cir.1987), cert. denied, — U.S. —, 108 S.Ct. 1752, 100 L.Ed.2d 214 (1988).
Recognizing the principle of state sovereignty that underlies our federalist system of government, the Supreme Court has construed the Sherman Act not to apply to anti-competitive acts undertaken by a state in its sovereign capacity. Parker v. Brown, 317 U.S. 341, 350-51, 63 S.Ct. 307, 313-14, 87 L.Ed. 315 (1943); Kern-Tulare, 828 F.2d at 518. A state is deemed to be acting in its sovereign capacity when it acts through its legislature, Parker, 317 U.S. at 350-51, 63 S.Ct. at 313-14, or through its supreme court, acting in a legislative capacity, Bates v. State Bar, 433 U.S. 350, 359-60, 97 S.Ct. 2691, 2696-97, 53 L.Ed.2d 810 (1977).
The mandatory participation provision challenged by Hass was not imposed directly by either the Oregon legislature or the Oregon Supreme Court acting in a legislative capacity. The provision was promulgated by the Bar, which is merely an instrumentality of the state judiciary. Thus, promulgation of the mandatory participation provision was not an act of the state in its sovereign capacity. See Goldfarb v. Virginia State Bar, 421 U.S. 773, 790-92, 95 S.Ct. 2004, 2014-16, 44 L.Ed.2d 572 (1975) (activity of state bar in approving minimum-fee schedule was not activity of state acting as sovereign); cf. Hoover v. Ronwin, 466 U.S. 558, 572-73, 104 S.Ct. 1989, 1997-98, 80 L.Ed.2d 590 (1984) (plurality) (where state supreme court appointed committee to administer bar examination but “retained strict supervisory pow*1457ers and ultimate full authority” over committee, conduct of committee in grading examination was “in reality” that of state supreme court in its sovereign capacity).
Where, as here, the challenged activity “is not directly that of the [state] legislature or supreme court, but is carried out by others pursuant to state authorization,” the court must closely analyze the activity to “ensure that the anticompetitive conduct of the State’s representative was contemplated by the State.” Hoover, 466 U.S. at 568, 104 S.Ct. at 1995 (footnote omitted).
The Supreme Court has formulated a two-part test to determine whether Parker immunity is available to non-sovereign entities engaged in alleged anticompetitive conduct pursuant to state authorization. First, the court must determine whether the challenged conduct has been undertaken “pursuant to a ‘clearly articulated and affirmatively expressed state policy’ to replace competition with regulation.” Hoover, 466 U.S. at 569, 104 S.Ct. at 1995; accord Patrick v. Burget, 486 U.S. 94, 108 S.Ct. 1658, 1663, 100 L.Ed.2d 83 (1988); California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97, 105, 100 S.Ct. 937, 943, 63 L.Ed.2d 233 (1980) (quoting City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 410, 98 S.Ct. 1123, 1135, 55 L.Ed.2d 364 (1978) (plurality)). Second, when the challenged conduct is that of a private party, the court must determine whether the conduct is “ ‘actively supervised’ by the State itself.” Midcal, 445 U.S. at 105, 100 S.Ct. at 943 (quoting City of Lafayette, 435 U.S. at 410, 98 S.Ct. at 1135). Whether the conduct of state agencies must also be “actively supervised” by the state is an open question. These requirements are discussed below.
1. The Requirement of a Clearly Articulated and Affirmatively Expressed State Policy
To determine whether the Bar has acted pursuant to a clearly articulated and affirmatively expressed state policy to replace competition with regulation in the field of primary legal malpractice coverage, we must examine the pertinent enabling legislation. If the statutory provisions plainly show that the legislature contemplated the sort of activity that is challenged, the “clear articulation” requirement has been satisfied. Town of Hallie v. City of Eau Claire, 471 U.S. 34, 44, 105 S.Ct. 1713, 1719, 85 L.Ed.2d 24 (1985); see also Southern Motor Carriers Rate Conf., Inc. v. United States, 471 U.S. 48, 64, 105 S.Ct. 1721, 1730, 85 L.Ed.2d 36 (1985) (“[a]s long as the State as sovereign clearly intends to displace competition in a particular field with a regulatory structure,” the “clear articulation” requirement is satisfied). The legislature will be deemed to have contemplated the challenged activity if the statutes confer “express authority to take action that foreseeably will result in anticompetitive effects.” Town of Hallie, 471 U.S. at 43, 105 S.Ct. at 1718 (emphasis added); accord Kern-Tulare, 828 F.2d at 518-19 (“So long as the restraint is a ‘foreseeable result’ which results logically from a broad grant of regulatory authority ..., the ‘clear articulation’ requirement is satisfied.”).
The legislature need not detail or compel the specific anti-competitive actions at issue, nor need it explicitly state that it expects the regulated party “to engage in conduct that would have anticompetitive effects.” Town of Hallie, 471 U.S. at 42, 105 S.Ct. at 1718. Likewise, the legislature need not expressly permit the challenged conduct. Southern Motor Carriers, 471 U.S. at 63-65, 105 S.Ct. at 1730-31.
On the other hand, “the requirement of ‘clear articulation and affirmative expression’ is not satisfied when the State’s position is one of mere neutrality respecting the ... actions challenged as anticompeti-tive.” Community Communications Co. v. City of Boulder, 455 U.S. 40, 55, 102 S.Ct. 835, 842, 70 L.Ed.2d 810 (1982). In Community Communications, a state constitutional provision granted cities “the full right of self-government in both local and municipal matters.” Id. at 43, 102 S.Ct. at 836. The Court held that this provision did not reflect a clearly articulated and affirmatively expressed state policy of replacing competition with regulation in the field of cable television, since the provision did not even address the subject *1458of cable television. Id. at 55, 102 S.Ct. at 842 (“[T]he term, ‘granted,’ necessarily implies an affirmative addressing of the subject by the State.”). The Court explained: “A State that allows its municipalities to do as they please can hardly be said to have ‘contemplated’ the specific anticompetitive actions for which municipal liability is sought.” Id.
A state agency is not free to “do as it pleases” simply because the state has left to the agency the task of selecting the course of action best suited to accomplishing the legislative policy. See Central Iowa Refuse Systems v. Des Moines Metro. Solid Waste Agency, 715 F.2d 419, 427 (8th Cir.1983) (fact that state left municipality with “a range of options concerning how best to provide for sanitary disposal facilities” did not mean that state’s position was one of “mere neutrality” concerning the challenged municipal conduct), cert. denied, 471 U.S. 1003, 105 S.Ct. 1864, 85 L.Ed.2d 158 (1985). As the Sixth Circuit has observed:
An agency vested with broad discretionary powers will rarely find that only one course of action is available to accomplish its mission_ Our task, therefore, is to determine whether the restraints in question are a reasonable and foreseeable exercise of delegated powers within the scope of an agency’s authority.
Hybud Equipment Corp. v. City of Akron, 742 F.2d 949, 960 (6th Cir.1984), cert. denied, 471 U.S. 1004, 105 S.Ct. 1866, 85 L.Ed.2d 160 (1985) (footnote omitted).
Under the foregoing principles, we have found the “clear articulation” requirement satisfied by a variety of legislative schemes comparable to the scheme involved in the present case. See, e.g., Kern-Tulare, 828 F.2d at 519-20 (city’s refusal to consent to water district’s proposed sale of water that district had acquired from city was contemplated by legislature, where statutes empowered municipal corporations to contract for water, to purchase and operate public works to supply water to cities and their inhabitants, and to sell, lease, exchange, or otherwise transfer surplus water); Grason Elec. Co. v. Sacramento Municipal Util. Dist., 770 F.2d 833, 837-38 (9th Cir.1985) (public utility’s alleged monopolization of markets for electrical distribution systems on private property and for street and outdoor lighting systems was pursuant to “clearly articulated” state policy, where statutes authorized utility to acquire, construct, own and operate works for supplying power, to fix its rates below cost, and to “do all things necessary or convenient to the full exercise of the powers” granted by statute), cert. denied, 474 U.S. 1103, 106 S.Ct. 886, 88 L.Ed.2d 921 (1986); Springs Ambulance Serv., Inc. v. City of Rancho Mirage, 745 F.2d 1270, 1273 (9th Cir.1984) (cities’ provision of free municipal ambulance service, which effectively excluded all private ambulance companies from market, was pursuant to “clearly articulated” state policy, where statute provided that “[t]he legislative body of a city may contract for ambulance service to serve the residents of the city as convenience requires”) (exclusion of private ambulance companies “was surely within the contemplation of the legislature” when it authorized cities to contract for such services).
Turning to the statutory scheme involved in the present case, the Oregon legislature has authorized the Bar to compel all Oregon-based attorneys to carry malpractice insurance. Or.Rev.Stat. § 9.080(2)(a) (1987). Toward that end, the Bar is authorized “to own, organize and sponsor any insurance organization” and “to establish a lawyer’s professional liability fund.” Id. The legislature has further authorized the Bar to assess each Oregon-based attorney for contributions to the Fund and has stipulated that the Fund “shall pay” all covered sums for which an Oregon-based attorney becomes legally liable as a result of a malpractice claim. Id. The legislature provided that the Bar could act “by itself or in conjunction with other bar organizations.” Id. (emphasis added). Moreover, the legislature granted the Bar wide-ranging authority “to do whatever is necessary and convenient to implement this provision [for mandatory malpractice coverage].” Id.
This statutory scheme clearly evinces a legislative policy to supplant free market competition with regulation in the field of primary legal malpractice coverage, and to *1459leave the effectuation of that policy to the Bar. Under these circumstances, the Bar’s promulgation of its mandatory participation provision was a foreseeable consequence of the legislative grant of authority. See Grason, 770 F.2d at 837-38 (anti-competitive conduct was a foreseeable consequence of legislative grant of authority to own and operate works for supplying power and to “do all things necessary or convenient to the full exercise of the powers” granted by statute).
Hass argues that the statute does not clearly articulate and affirmatively express a state policy because the statute neither “refers to the requirement that attorneys purchase minimum legal malpractice insurance from Defendant” nor does it “direct Defendant to make such a requirement.” As stated above, however, a statute need not expressly mention the challenged anti-competitive activity to satisfy the requirement of clear articulation, Town of Hallie, 471 U.S. at 42, 105 S.Ct. at 1718, nor must the statute direct or compel the state agency to engage in the challenged activity, Southern Motor Carriers, 471 U.S. at 61, 105 S.Ct. at 1729.
For the foregoing reasons, we find that the mandatory participation provision satisfies the first part of the two-part test for protection under the state action exemption. The provision was promulgated pursuant to a clearly articulated and affirmatively expressed state policy to replace competition with regulation in the field of primary legal malpractice insurance.
2. The Requirement of Active State Supervision
The “active supervision” requirement of the state action exemption “stems from the recognition that ‘[wjhere a private party is engaging in the anticompetitive activity, there is a real danger that he is acting to further his own interests, rather than the governmental interests of the State.’ ” Patrick, 108 S.Ct. at 1663 (quoting Town of Hallie, 471 U.S. at 47, 105 S.Ct. at 1720). The requirement ensures “that the state action doctrine will shelter only the particular anticompetitive acts of private parties that, in the judgment of the State, actually further state regulatory policies.” Id.
When there is no danger that the party engaging in alleged anticompetitive activity is pursuing interests other than those of the state, there is no reason to require the party to satisfy the “active supervision” requirement. The state action exemption should be available to such a party whenever the first part of the two-part test is satisfied. Thus, for example, municipalities acting pursuant to clearly articulated and affirmatively expressed state policies are protected by the state action exemption, and no active supervision by the state need be shown. Town of Hallie, 471 U.S. at 47, 105 S.Ct. at 1720.
Whether a state agency, such as the Bar, must satisfy the “active supervision” requirement is an open question. The Supreme Court has suggested, in dictum, that state agencies need not satisfy the requirement to qualify for the state action exemption. See id. at 46 n. 10, 105 S.Ct. at 1720 n. 10 (“In cases in which the actor is a state agency, it is likely that active state supervision would ... not be required, although we do not here decide that issue.”). We are aware of one circuit court opinion in which the question has been addressed. See Hancock Industries v. Schaeffer, 811 F.2d 225, 232 n. 4 (3d Cir.1987). There, the court, albeit without extended discussion, excused both a political subdivision and an agency of the state from having to satisfy the “active supervision” requirement. Id. at 232 n. 4, 235-36. Our circuit has not addressed the question whether state agencies should be treated like political subdivisions for purposes of the state action exemption.
In the following passage, the Supreme Court explained why municipalities need not satisfy the “active supervision” requirement:
[T]he requirement of active state supervision serves essentially an evidentiary function: it is one way of ensuring that the actor is engaging in the challenged conduct pursuant to state policy. In Midcal, we stated that the active state supervision requirement was necessary *1460to prevent a State from circumventing the Sherman Act’s proscriptions “by casting ... a gauzy cloak of state involvement over what is essentially a private price-fixing arrangement.” Where a private party is engaging in the anti-competitive activity, there is a real danger that he is acting to further his own interests, rather than the governmental interests of the State. Where the actor is a municipality, there is little or no danger that it is involved in a private price-fixing arrangement. The only real danger is that it will seek to further purely parochial public interests at the expense of more overriding state goals. This danger is minimal, however, because of the requirement that the municipality act pursuant to a clearly articulated state policy. Once it is clear that state authorization exists, there is no need to require the State to supervise actively the municipality’s execution of what is a properly delegated function.
Town of Hallie, 471 U.S. at 46-47, 105 S.Ct. at 1720-21 (citation omitted).
The foregoing rationale applies with equal force to the Bar. The Bar is a public corporation and an instrumentality of the judicial department of the State of Oregon. The Bar “at all times direct[s] its power to the advancement of the science of jurisprudence and the improvement of the administration of justice.” Or.Rev.Stat. § 9.080(1) (1987). The Bar is an agency of the state of Oregon organized to regulate the practice of law for the benefit of the public. See Bates, 433 U.S. at 361, 97 S.Ct. at 2697 (“[T]he regulation of the activities of the bar is at the core of the State’s power to protect the public.”). Toward this end, three of the fifteen members of the Board must be nonlawyer members of the public. Or.Rev.Stat. § 9.025(1) (1987).
The records of the Bar, like those of other state agencies and municipalities, are open for public inspection. Id. §§ 9.010(1), 192.410-192.505. The Bar’s accounts and financial affairs, like those of all state agencies, are subject to periodic audits by the State Auditor. Id. §§ 9.010(1), 297.-210-297.230. The Board, like the governing body of other state agencies and municipalities, is required to give public notice of its meetings, and such meetings are open to the public. Id. §§ 9.010(1), 192.610-192.-690. Members of the Board are public officials who must comply with the Code of Ethics enacted by the state legislature to guide the conduct of all public officials. Id. §§ 9.010(1), 244.010-244.040. These requirements leave no doubt that the Bar is a public body, akin to a municipality for the purposes of the state action exemption. See Town of Hallie, 471 U.S. at 45, 105 S.Ct. at 1719 (a municipality, unlike a private party, “is an arm of the State” and may be presumed to be acting in the public interest absent a contrary showing); id. at 45 n. 9, 105 S.Ct. at 1719 n. 9 (“municipal conduct is invariably more likely to be exposed to public scrutiny than is private conduct,” in part because of mandatory disclosure regulations.).3
When the actor is a state agency subject to requirements such as those set forth above, just as when the actor is a municipality, “there is little or no danger that it is involved in a private ... arrangement.” Town of Hallie, 471 U.S. at 47, 105 S.Ct. at 1720. This is particularly true where, as here, the actions are undertaken pursuant to a clearly articulated and affirmatively expressed state policy. See Part 111(A)(1) *1461supra. “Once it is clear that state authorization exists, there is no need to require the State to supervise actively the ... execution of what is a properly delegated function.” Town of Hallie, 471 U.S. at 47, 105 S.Ct. at 1720.
Hass emphasizes that the Bar is an instrumentality of the state judiciary, rather than the state legislature. We do not believe this fact is relevant to the question whether the Bar is a state agency. The Bar’s status as a state agency depends on whether it is an instrumentality of the government of the state, not on whether it is supervised by one department of government rather than another.
A state bar operating as an instrumentality of the state supreme court is a state agency. See Goldfarb, 421 U.S. at 776 n. 2, 790, 95 S.Ct. at 2007 n. 2, 2014. In Goldfarb, the Court refused to apply the state action exemption to the Virginia State Bar’s enforcement of a minimum-fee schedule published by a county bar association. The Court acknowledged that the state bar was “a state agency by law,” id. at 789-90, 95 S.Ct. at 2014-15, but held that the bar had not been acting pursuant to any state mandate. In a later discussion of the ease, the Supreme Court read Goldfarb as establishing that “for purposes of the Parker doctrine, not every act of a state agency is that of the State as sovereign.” City of Lafayette, 435 U.S. at 410, 98 S.Ct. at 1135 (emphasis added).
In Bates, the Court upheld application of the state action exemption to the Arizona State Bar’s enforcement of a ban on advertising by attorneys. 433 U.S. at 363, 97 S.Ct. at 2698. The Arizona State Bar, like the Oregon State Bar, was an instrumentality of the state supreme court. Id. at 353 n. 3, 361, 97 S.Ct. at 2693 n. 3, 2697. The Court later observed that Bates, too, “involved the actions of a state agency.” City of Lafayette, 435 U.S. at 410, 98 S.Ct. at 1135.
In the present case, the Oregon legislature has expressly designated the Bar as the instrumentality through which the legislature will implement its policies concerning primary legal malpractice insurance. The legislature has authorized the Bar to operate a legal malpractice insurance fund, to assess all Oregon-based attorneys for contributions to that fund, and to do whatever is “necessary and convenient” to ensure that all such attorneys carry the prescribed level of insurance. Under these circumstances, the Bar is clearly an agent of the legislature for the purposes of administering the malpractice insurance program, notwithstanding that it functions as an agent of the state supreme court for other purposes, such as bar admissions. Because we hold that state agencies need not demonstrate that their activities are “actively supervised” by the state, we find it unnecessary to determine whether, or to what extent, the Bar’s administration of the insurance program is overseen by either the state legislature or the state supreme court.
For the foregoing reasons, we hold that the Bar, as an agency of the State of Oregon, need not satisfy the “active supervision” requirement to qualify for protection under the state action exemption. As long as the Bar acts pursuant to a clearly articulated and affirmatively expressed state policy, it is protected. Because, as discussed above, the Bar has acted pursuant to such a policy in this case, the Bar’s conduct is immune from challenge under the federal antitrust laws.4
B. The Commerce Clause
The district court held that the mandatory participation provision of the Bar’s resolution did not exceed the scope of permissible state regulation under the commerce clause. The court’s ruling was a matter of law, which we review de novo. United States v. McConney, 728 F.2d 1195, *14621201 (9th Cir.) (en banc), cert. denied, 469 U.S. 824, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984).
The commerce clause provides: “The Congress shall have Power ... To regulate Commerce ... among the several States.” U.S. Const, art. I, § 8, cl. 3. The clause has been interpreted “not only as an authorization for congressional action, but also, even in the absence of a conflicting federal statute, as a restriction on permissible state regulation.” Hughes v. Oklahoma, 441 U.S. 322, 326, 99 S.Ct. 1727, 1731, 60 L.Ed.2d 250 (1979) (footnote omitted). A state statute triggers scrutiny under the commerce clause in either of two situations: (1) when the statute “affirmatively discriminates,” either on its face or in practical effect, against transactions in interstate commerce, or (2) when the statute regulates evenhandedly but incidentally burdens interstate transactions. Maine v. Taylor, 477 U.S. 131, 138, 106 S.Ct. 2440, 2447, 91 L.Ed.2d 110 (1986). Statutes of the first type are subject to demanding scrutiny and will be upheld only if the state demonstrates “both that the statute ‘serves a legitimate local purpose,’ and that this purpose could not be served as well by available nondiscriminatory means.” Id. (quoting Hughes, 441 U.S. at 336, 99 S.Ct. at 1736). Statutes of the second type, on the other hand, will be upheld unless “the burdens they impose on interstate trade are ‘clearly excessive in relation to the putative local benefits,’.... ” Id. (quoting Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 847, 25 L.Ed.2d 174 (1970)).
The mandatory participation provision of the Bar’s resolution clearly falls within the second category described above. The resolution provides “[t]hat such professional liability coverage [as is required by the resolution] for all active members in the private practice of law, ... shall be obtained through the Oregon State Bar Professional Liability Fund.” The resolution does not affirmatively discriminate against interstate insurance transactions on its face; nor does it have such an effect. In-state and out-of-state insurance companies are burdened in exactly the same way — all are effectively prevented from competing with the Bar to provide primary malpractice coverage. See CTS Corp. v. Dynamics Corp. of America, U.S., 481 U.S. 69, 107 S.Ct. 1637,1648-49, 95 L.Ed.2d 67 (1987) (state statute regulating takeovers did not discriminate against interstate commerce; it “has the same effects on tender offers whether or not the offeror is a domiciliary or resident” of the state); Commonwealth Edison Co. v. Montana, 453 U.S. 609, 619, 101 S.Ct. 2946, 2954, 69 L.Ed.2d 884 (1981) (no discrimination where severance tax on mineral production in the state was imposed without “any distinction between in-state and out-of-state consumers”). This is not a case in which the challenged regulation operates to place out-of-state providers at a competitive disadvantage. Cf. Hunt v. Washington State Apple Advertising Comm ’n, 432 U.S. 333, 350-51, 97 S.Ct. 2434, 2445-46, 53 L.Ed.2d 383 (1977) (statute, although evenhanded on its face, had effect of raising costs of out-of-state sellers while leaving those of local sellers unaffected). Here, all providers — whether local or out-of-state — are equally disadvantaged vis a vis the Bar.
The challenged provision in this case, thus, regulates evenhandedly. If it burdens interstate commerce at all, it does so only incidentally. The provision must be upheld, therefore, unless the burden it imposes on such commerce is “clearly excessive in relation to the putative local benefits.” Pike, 397 U.S. at 142, 90 S.Ct. at 847. Whether the burden is “clearly excessive” depends on “the nature of the local interest involved, and on whether it could be promoted as well with a lesser impact on interstate activities.” Id.
Assuming arguendo that the mandatory participation provision burdens interstate commerce, which Hass has not demonstrated, that burden is not excessive in light of the substantial state interest in ensuring that Oregon-based attorneys are able to satisfy meritorious malpractice claims. Hass concedes, as he must, that “[t]he public should be protected from attorney malpractice.” He maintains, however, that the Bar’s resolution does not clearly further this important goal.
*1463Oregon’s legislative scheme addresses a patent failure in the unregulated market for legal malpractice insurance. The parties have stipulated to the fact that immediately prior to the commencement of the Bar’s mandatory malpractice program, approximately 35% of the attorneys in private practice in Oregon were without any legal malpractice insurance coverage. To correct this hazard to the public, the legislature authorized the Bar to do “whatever is necessary or convenient” to ensure that Oregon-based attorneys are covered by malpractice insurance. Included within the legislative grant of authority was the power to own and operate a fund to be used in satisfying the malpractice liability of Oregon-based attorneys.
The mandatory participation provision furthers the state’s interest in ensuring universal malpractice coverage in at least two ways. First, it provides a convenient means of monitoring attorney compliance with the requirement that primary malpractice coverage be obtained. Since the Bar itself collects the assessments and provides the coverage, there is little chance that an attorney will be able to evade the requirement.
Second, by maximizing the number of participants in the liability Fund, the Bar is able to provide coverage to attorneys who cannot afford to purchase coverage on the open market, or who are able to obtain coverage only from companies that are financially unstable. See Feinstein v. Nettleship Co., 714 F.2d 928, 932 (9th Cir.1983) (medical association’s designation of single insurance broker for all its members “assure[d] coverage for certain high-risk specialties” by “spreading] risk across a wide area”), cert. denied, 466 U.S. 972, 104 S.Ct. 2346, 80 L.Ed.2d 820 (1984). “If competition is permitted in risk selection the socially undesirable consequences may be either that those most at risk cannot obtain insurance at all, or that the solvency of companies which wind up insuring them will be impaired.” Owens v. Aetna Life & Cas. Co., 654 F.2d 218, 223 (3d Cir.), cert. denied, 454 U.S. 1092, 102 S.Ct. 657, 70 L.Ed.2d 631 (1981). By mandating participation in its Fund, the Bar maximizes the pool of insureds, spreading risk across a wide area. This risk spreading promotes the financial viability of the Fund. Were private carriers permitted to write coverage for selected practitioners, the Fund would be left to insure attorneys who were denied coverage by the private carriers, or who could not afford to buy coverage from such carriers. The Fund would be forced to underwrite an adverse selection of lawyers unacceptable to private carriers. The result would likely be assessments so high that many of these lawyers would not be able to afford the assessments and would be forced to discontinue the practice of law. The Bar is able to offer coverage at affordable rates to all attorneys by mandating that all attorneys participate in the Fund. The mandatory participation provision, therefore, furthers the state’s interest in protecting the public from the malpractice of every attorney.
In summary, the Bar’s mandatory participation provision does not affirmatively discriminate against interstate commerce, either on its face or in its practical effect. To the extent it incidentally burdens such commerce (and Hass has not demonstrated such a burden), that impact is not excessive, in light of the fact that the provision directly and substantially furthers the state’s important interest in ensuring that all Oregon-based attorneys have insurance against liability for malpractice.
IV. CONCLUSION
We AFFIRM the district court’s judgment for the Bar on Hass’ antitrust claims. The activity at issue is immune from challenge under the Sherman Act by reason of the state action exemption because the activity was undertaken pursuant to a clearly articulated and affirmatively expressed state policy. We hold that the Bar, like a municipality, need not show that the activity was actively supervised by the state.
We also AFFIRM the district court’s judgment for the Bar on Hass’ commerce clause claim. The challenged provision regulates a local matter in which the state has a strong interest, and the provision does not impose an excessive burden, if any, on interstate commerce.

. The Board later raised the required aggregate limits to $300,000. For purposes of the present *1456case, the amount of malpractice coverage mandated by the Board is not significant. Hass does not challenge the Board’s requirement that he carry coverage of specified limits; he challenges only the requirement that such coverage be purchased from the Bar.

. The Board's resolution does not prevent an attorney from purchasing excess malpractice coverage from the company of his or her choice. Hass challenges the Board's resolution that the primary layer of coverage must be purchased from the Bar.

. The dissent states that the Oregon State Bar does not possess the attributes that are characteristic of a municipality because the bar’s operation of the fund is not subject to public scrutiny. In particular, the dissent states that, "the actions of the Bar's Board of Governors cannot be checked by the electoral process, as no Board positions are filled by public election.” Dissent at 10332. The dissent ignores the fact that only members of the Oregon State Bar are subject to the mandatory malpractice insurance requirement. Members of the Oregon State Bar have the right and responsibility to elect the members of the Board. ORS § 9.030. Moreover, although members of the bar who are unhappy with the mandatory malpractice insurance assessment do not have the power to "direct, modify or rescind” any assessment, ORS § 9.130(5), such members can petition for a recall of the members of the Board. ORS § 9.050. Thus, those members of the public who are interested parties, the members of the Oregon State Bar, do have the ability to “check” the actions of the Board by the electoral process.

. Our holding is based on the characteristics of the Oregon State Bar and the particular statutory scheme at issue in the present case. We do not hold that all state bars are protected under the state action exemption to the federal antitrust laws. The dissent’s fear that our holding will clothe other state bars in state action immunity is unfounded. See Dissent at 1467. Our finding that the Oregon Bar is a state agency does not automatically clothe the bar with state action immunity. As discussed, the clear articulation requirement must be met first.