Court Opinion

ID: 8915624
Source: CourtListenerOpinion
Date Created: 2022-11-27 04:55:18.462182+00
Date Added: 2024-06-11T17:08:57.247582
License: Public Domain

FERGUSON, Circuit Judge,
dissenting:
It is now the law in this circuit that a person who has been judicially determined to be mentally unable to engage in the practice of law in the State of Arizona may still maintain a $1,200,000 damage action under the federal antitrust laws against the Committee on Examinations and Admissions of the Arizona Supreme Court and the Committee’s members1 for failure to give *702him a passing grade on the state bar examination!
Precedents in this circuit and the Supreme Court mandate that when the grading procedures of the board of bar examiners are challenged, such a challenge must be brought against the state supreme court as defendant. Moreover, because the action of the state supreme court is state action within the Parker exception, that action is immune to an antitrust attack. Further, the impact of the actions alleged by plaintiff are insubstantial and thus outside the antitrust laws. Consequently, I dissent from the majority’s conclusion that the antitrust laws apply to this bar examination matter.
I. CHALLENGE TO DENIAL OF BAR ADMISSION.
A. Proper Defendant
A state’s discretion over rules for admission to legal practice is vested in the judiciary, or the legislature. Schware v. Board of Bar Examiners, 353 U.S. 232, 77 S.Ct. 752, 1 L.Ed.2d 796 (1957). In Hackin v. Lockwood, 361 F.2d 499 (9th Cir.), cert. denied, 385 U.S. 960, 87 S.Ct. 396, 17 L.Ed.2d 305 (1966), we held that the power to grant or deny admission to the bar is vested in the Arizona Supreme Court. Hence, the State Committee on Examinations and Admissions was not a proper defendant because it was merely a committee of the Arizona Supreme Court with powers delegated by the court. Id. at 500.
In Hackin, plaintiff, the graduate of an unaccredited law school, could not take the bar because a state bar rule allowed only graduates of accredited law schools to take the bar. Plaintiff sued the justices of the Arizona Supreme Court, the State Bar of Arizona, and the Committee on Examinations and Admissions. In holding that the state bar and the Committee on Examinations and Admissions were improper defendants, the court explained:
The State Bar of Arizona is not an appropriate party to the suit because it cannot promulgate or change the rules governing admission to practice in Arizona. Its Board of Governors can suggest rules to the Arizona Supreme Court, and can enforce them, but only with the approval of the Arizona Supreme Court.. . .
In the original complaint, but not in the amended complaint, appellant names as a defendant the “Committee on Examinations and Admissions,” presumably of the State Bar. This is not a committee of the State Bar, but a committee named by the Supreme Court of Arizona, made up of members of the Arizona State Bar, Rule 28(a). Thus we find the power to grant or deny admission is vested solely in the Arizona Supreme Court. . . .
361 F.2d at 499 (9th Cir. 1966).
Considering a similar admissions procedure, the court reiterated this conclusion in Chaney v. State Bar of California, 386 F.2d 962 (9th Cir. 1967), cert. denied, 390 U.S. 1011, 88 S.Ct. 1262, 20 L.Ed.2d 162 (1968). In that case, we held that the refusal of the State Bar Committee to certify an applicant was not a terminative step in the admissions process. Because final decision is vested in the state supreme court, the committee’s decision not to admit had no “fixative” status until the court approved or rejected the Committee’s recommendation. Id. at 966. Once a decision is final, the supreme court is the proper defendant when a party complains about examination procedures. Thus, the Committee cannot be a party because it is merely an arm of the state supreme court “for the purposes *703of assisting in matters of admission . . . which matters remain ultimately in the court. Id. If the plaintiff is deprived of a right, it is the state supreme court, not the Committee on Examinations and Admissions, that is the source of the deprivation.
These decisions were reaffirmed in Brown v. Board of Bar Examiners, 623 F.2d 605 (9th Cir. 1980). The Bar Examiners of Nevada were found to be an improper party for the reason articulated in Hackin and reemphasized in Chaney,2 id. at 608. See also Whitfield v. Illinois Board of Law Examiners, 504 F.2d 474 (7th Cir. 1974) (reaching similar conclusion).
The harm suffered by the plaintiff, if any, is that resulting from the Arizona Supreme Court’s refusal to admit him to the bar. Accordingly, Ronwin cannot sue the Committee on Examinations and Admissions of the Arizona Supreme Court.
B. Limitations on Challenges
Court review of state procedures for admission and testing is guided by the rational basis standard. Chaney v. State Bar, supra, at 964; Tyler v. Vickery, 517 F.2d 1089, 1099 (5th Cir. 1975), cert. denied, 426 U.S. 940, 96 S.Ct. 2660, 49 L.Ed.2d 393 (1976).3 While the discretion granted to states and bar examiners is broad, the opportunity to practice law is protected by the due process and equal protection clauses of the fourteenth amendment. Willner v. Committee on Character & Fitness, 373 U.S. 96, 102, 83 S.Ct. 1175, 1179, 10 L.Ed.2d 224 (1963). Brown v. Board of Bar Examiners, supra, established a definite procedure for challenging admission practices. Noting that admission procedures are purely a matter of local concern, Brown stated, “The only constraints on the states’ exclusive jurisdiction are constitutional in nature. .. . ” 623 F.2d at 609.
Brown outlined the alternatives available to an unsuccessful applicant:
Since federal courts are granted jurisdiction under 28 U.S.C. § 1343 to vindicate constitutional rights, an issue arises as to the extent of a federal court’s authority to participate in what is' primarily a state concern. A dichotomy has developed between two kinds of constitutional attack which might be pursued by an unsuccessful bar applicant: “The first is a constitutional challenge to the state’s general rules and regulations governing admission; the second is a claim, based on constitutional or other grounds, that the *704state has unlawfully denied a particular applicant admission.” Doe v. Pringle, 550 F.2d 596, 597 (10th Cir. 1976), cert. denied, 431 U.S. 916, 97 S.Ct. 2197, 53 L.Ed.2d 227 (1977).
In the first type of attack, federal district courts may assert jurisdiction under § 1343 to ensure that generally applicable rules of procedures do not impinge on constitutionally protected rights. Federal courts have frequently entertained challenges to rules controlling admission to the bar, and have almost without exception sustained the validity of such rules. [Citations omitted].
On the other hand, a state court’s decision on an individual application may not be disturbed in an original suit in federal district court. “[0]rders of a state court relating to the admission, discipline, and disbarment of members of its bar may be reviewed only by the Supreme Court of the United States on certiorari to the state court . . . . ” Mackay v. Nesbett, 412 F.2d 846 (9th Cir.), cert. denied, 396 U.S. 960, 90 S.Ct. 435, 24 L.Ed.2d 425 (1969). In exercising its judgment on an individual petition, a state supreme court performs a judicial act, In re Summers, 325 U.S. 561, 65 S.Ct. 1307, 89 L.Ed. 1795 (1945), reviewable in the Supreme Court. See Schware v. Board of Bar Examiners, supra, 353 U.S. at 238, 77 S.Ct. at 755; Konigsberg v. State Bar of California, 353 U.S. 252, 258, 77 S.Ct. 722, 725, 1 L.Ed.2d 810 (1957). A federal district court, in contrast, does not sit as an appellate court and therefore lacks jurisdiction to review state court actions denying admission to the bar, even though the denial allegedly involves deprivation of constitutional rights.
Brown, supra, at 609-10 (citations omitted). The plaintiff in Brown attempted the only viable challenge to state bar admission procedures — a constitutional challenge. Brown denied jurisdiction because the plaintiff presented a claim of individual constitutional deprivation and the prayer for relief sought individual redress including monetary damages. Hence, the court found that the claim was not cognizable in district court. Brown, supra, at 611.
C. The Majority Opinion
The opinion disregards the tradition of deference to state discretion in admission procedures. Because such deference has never existed toward the state’s ability to regulate fees, the majority’s reliance on Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975), is misplaced. Further, the opinion creates an antitrust cause of action where the only challenge that might be appropriate is a constitutional one. Brown, 623 F.2d at 609. Finally, Brown held that a federal district court does not have jurisdiction over a claim against bar examiners because the state court is the real party in interest in admission cases. In addition, jurisdiction is allowed only where the suit alleges arbitrary and capricious procedures violative of due process. 623 F.2d at 610. However, the qualifications for admission in Arizona are “nearly identical” to those unsuccessfully challenged in Brown. Id. at 610, n.9. Because Ronwin has sued the wrong defendant and because his suit raises no constitutional challenge to admission procedures, binding precedent requires that the district court’s dismissal be affirmed.
II. THE ANTITRUST EXEMPTION.
The Parker antitrust exemption is grounded in our federal system:
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 unexpressed purpose to nullify a state’s control over its officers and agents is not lightly to be attributed to Congress.
Parker v. Brown, 317 U.S. 341, 351, 63 S.Ct. 307, 313, 87 L.Ed. 315 (1943). The unfortunate effect of the majority opinion is to attribute to the Sherman Act a congressional intent to limit a state’s control over bar admissions.
The proposition for which National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976), stands, *705namely, that federal interference should not extend to essential state functions, is applicable to antitrust cases, in which Congress exercises its powers under the commerce clause. See Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 423, 98 S.Ct. 1123, 1142, 55 L.Ed.2d 364 (1977) (Burger, C. J., concurring in Part I of the Court’s opinion and in the judgment); id. at 430, 98 S.Ct. at 1145 (Stewart, J., dissenting). I would think that regulation of bar admissions is an “integral operation in the area of traditional government functions.” See id. at 424, 98 S.Ct. at 1142 (Burger, C. J.). For that very reason, the Arizona Supreme Court oversees bar admissions and delegates authority to its agent. The state must have regulatory authority to examine the fitness and competence of bar applicants. If the state’s agents abuse their authority, the proper remedy is a constitutional attack, not an antitrust attack that will undermine the authority that states qua states have to regulate bar admissions.
The majority applies erroneous standards to determine whether an agency of the state, that is, the Committee on Examinations and Admissions of the Arizona Supreme Court, is exempt from antitrust laws. The majority incorrectly applies a test of compulsion by asking whether the action of the Committee was required by the state supreme court. The majority answers: “Like the defendants in Goldfarb, the defendants here have no statute or Supreme Court Rule to point to as directly requiring the challenged grading procedure.” Maj. op., ante, at 696 (emphasis added).
However, the test of compulsion in Goldfarb, supra, applied only to private conduct of the county bar association and to the State Bar’s joinder in that private conduct. In Goldfarb, the private county bar association adopted a fee schedule and the State Bar, “by providing that deviation from County Bar minimum fees may lead to disciplinary action ... voluntarily joined in what is essentially a private anticompetitive activity.” Goldfarb, supra, at 791-92, 95 S.Ct. at 2015-16.
In analyzing the application of the compulsion test to the antitrust immunity of public and private defendants, Professor Areeda has wisely remarked:
The Supreme Court and lower courts have not applied the compulsion language literally. In Midcal, 445 U.S. 97 [100 S.Ct. 937, 63 L.Ed.2d 233] (1980), the Court defined the criteria for immunity not in terms of compulsion but in terms of supervision and articulated state policy; the emphasis on supervision implies public scrutiny, deliberation and review, but not command. Id. at 105-06 [100 S.Ct. at 943-44]. And in Parker, 317 U.S. at 346-47 [63 S.Ct. at 311-12], the anti-competitive output limitations ultimately enforced by public officials originated in proposals from the beneficiaries.
Lower courts employ the rhetoric of compulsion found in Goldfarb and Cantor, but immunize private action that is essential to a state regulatory scheme.... ******
Compulsion is not necessary in cases of public defendants. Immunity for decisions of subordinate agencies or officials cannot depend on an explicit command from the legislature; delegation of governmental powers necessarily includes the discretion to make decisions not compelled by the legislature.
Areeda, Antitrust Immunity for “State Action” After Lafayette, 95 Harv.L.Rev. 435, 438 n.19, 445 n.49 (1981).
In the instant case, the defendants are the committee and its members, a state agency and officials acting within their general ambit of authority granted by the Arizona Supreme Court. Since the activity of public defendants is involved, the proper test for antitrust immunity is the one found in City of Lafayette, supra. The plurality in Lafayette concluded that “the Parker doctrine exempts only anticompetitive conduct engaged in as an act of government by the State as sovereign, or, by its subdivisions, pursuant to state policy to displace competition with regulation.” Id. at 413, 98 S.Ct. at 1137. An adequate mandate for state anticompetitive activity exists when it is found, from the authority given a gov*706ernmental entity to operate in a particular area, that “the kind of action complained of” was contemplated. Id. at 415, 98 S.Ct. at 1138.
Thus, the proper test to apply to the action of the Committee is one of state authorization, not one of compulsion. In deciding whether the action of the Committee was authorized, it is necessary to consider whether the Committee acted “pursuant to state policy to displace competition with regulation,” City of Lafayette, supra, at 413, 98 S.Ct. at 1137, and whether that policy was “clearly articulated and affirmatively expressed.” Community Communications Co., Inc. v. City of Boulder, 455 U.S. 40, 51, 102 S.Ct. 835, 840, 70 L.Ed.2d 810 (1982).4
There can be no doubt that it was the policy of the Arizona Supreme Court — and, of course, the policy of the state’s highest court is that of the state, see Bates v. State of Arizona, 433 U.S. 350, 360, 97 S.Ct. 2691, 2697, 53 L.Ed.2d 810 (1977) — to displace competition with regulation. Indeed, any effort to limit admission to the bar will limit the open competition of the market place. As part of the regulatory scheme, the supreme court adopted a rule directing its Committee to “examine applicants and recommend to this court for admission to practice applicants who are found by the committee to have the necessary qualifications.” Rule 28(a) (1970). Surely this authorization by the Arizona Supreme Court “contemplates” that its Committee would engage in the “kind of action complained of” by plaintiff, namely, the establishment of bar admission standards and grading procedures.
The majority relies on Goldfarb, rather than Bates, supra, as analogous to the in*707stant ease. Though neither Goldfarb nor Bates is an exact replica of the case at hand, Bates is more directly on point. Goldfarb would be more relevant if, in the instant case, the Arizona Supreme Court had rejected the Committee’s procedures; the state supreme court in Goldfarb had warned the state bar against enforcing the challenged fee schedules. Goldfarb, supra, at 789, 95 S.Ct. at 2014. In contrast, the Arizona Supreme Court approved the procedures challenged here by accepting recommendations for admission based on those procedures.5 This implied validation of the board’s grading system renders Bates the more direct and proper analogy.
In Bates, the activity of the state bar was to enforce a prohibition against advertising. There, the state bar was immune because the supreme court had promulgated the rule. The alleged anticompetitive result was to monopolize. In the instant case, the challenged activity is the grading of examinations on a curve. The state supreme court has entrusted the grading of examinations to the state bar. The alleged anti-competitive result is artificially to limit the number of attorneys and thereby to monopolize. The opinion erroneously subjects the state bar to antitrust laws by focusing on the alleged result and ignoring the immunity issue decided in Bates.
The majority has relied on two eases in which no antitrust immunity was found for cities charged with antitrust violations. City of Lafayette, supra; City of Boulder, supra. Those cases are inapposite, as they involve actions by cities. Such action deserves close scrutiny, as there is justifiable concern that a city may advance local, parochial interests, rather than the interests of the people of a state. The federalist compromise, of course, only provides antitrust immunity where the state’s interests are concerned. In the instant case, however, an arm of the state supreme court, not a city, is doing the regulating. Moreover, the regulation concerns a matter of statewide interest — the qualifications of admittees to the bar — not a matter of local concern. The regulation of admission to the bar is at the core of the state’s power to protect the public.
City of Boulder, supra, actually lends support to the position that antitrust immunity should apply in the case at hand. In explaining why antitrust immunity should not be conferred on a city exercising home rule powers granted by the legislature, the Court in City of Boulder stated:
[Pjlainly the requirement of “clear articulation and affirmative expression” is not satisfied when the State’s position is one of mere neutrality respecting the municipal actions challenged as anticompetitive. A State that allows its municipalities to do as they please can hardly be said to have “contemplated” the specific anti-competitive actions for which municipal liability is sought. Nor can those actions be truly described as “comprehended within the powers granted,” since the term, “granted,” necessarily implies an affirmative addressing of the subject by the State.
City of Boulder, supra, 455 U.S. at 55, 102 S.Ct. at 843 (emphasis in original). By no stretch of the imagination has the Arizona Supreme Court taken a position of “neutrality” allowing the Committee to do as it pleases. To the contrary, the Arizona Supreme Court has affirmatively addressed the subject matter of this suit by granting to the Committee the power to examine applicants and to recommend for admission to the bar those who are found to have the necessary qualifications.6
*708I am concerned that the majority, by holding that the anticompetitive action in this case was not authorized by the state and is not shielded by the state antitrust immunity, has opened wide the door to antitrust scrutiny of virtually all acts by agents and officials of the state who carry out policies of statewide concern. The foreseeable consequence of multiplication of antitrust actions accompanied by the threat of treble damages will be timorous decision-making by state officials entrusted with the public interest. The day when every act of an agent or official of the state who has been delegated power pursuant to state policy becomes subject to scrutiny for violation of the antitrust laws will be the day that our federalism has become gravely weakened.
III. ALLEGED IMPACT ON COMMERCE.
In order to prevail in an antitrust suit, a party must demonstrate an effect on commerce which is “more than trivial” in the relevant market. Gough v. Rossmore Corp., 585 F.2d 381, 389 (9th Cir. 1978), cert. denied, 440 U.S. 936, 99 S.Ct. 1280, 59 L.Ed.2d 494 (1979). Plaintiff’s complaint neither identifies a relevant market nor alleges a substantial impact on such a market. A court should give a party the opportunity to demonstrate the elements of his case if his claim presents the possibility that he may prove substantial impact. However, on the facts of this case, plaintiff could not demonstrate more than the trivial impact of a curved grading system. The ability of applicants to reapply permits them to remain within the potential commerce stream.
In addition, the opinion relies on McLain v. Real Estate Board, 444 U.S. 232,100 S.Ct. 502, 62 L.Ed.2d 441 (1980), for the proposition that Ronwin could “conceivably” demonstrate impact on the relevant market. The relevant market in this case, however, while not defined before the district court, is a broad and diffuse market that is not analogous to the well-defined property market in New Orleans with a specific percentage of out-of-state contractors. Without more, the conclusion of a conceivable impact in Ronwin does not flow from the facts of McLain.
CONCLUSION
For the foregoing reasons, I dissent.

. The majority has dismissed spouses of the committee members for the perplexing reason that no specific allegations of wrongdoing have been made against the spouses. Maj. op., note 1, ante. However, in Arizona plaintiffs join spouses as defendants to reach their community property, not because the spouses are wrongdoers. A.R.S. § 25-215 requires that a cause of action based upon a community obligation be brought against both husband and wife. Eng v. Stein, 123 Ariz. 343, 599 P.2d 796 (1979). A community obligation is incurred when, for example, a husband’s tort is committed in furtherance of the community’s interest. Howe v. Haught, 11 Ariz.App. 98, 462 P.2d 395 (1969). In fact, plaintiff pleaded, “The male Defendants all acted on their own behalves and on behalf of their respective marital communi*702ties.” Whether defendants actually acted on behalf of their marital communities is a question that the district court did not address and that the majority does not address. Since the case is remanded, resolution of this material issue should have been left to the district court. That plaintiff did not specifically allege that defendants’ spouses are wrongdoers is wholly immaterial.
The majority’s expansive interpretation of antitrust law contrasts nicely with its restrictive view of plaintiff’s remedies. The effect of dismissing defendants’ spouses from the action is that now plaintiff may recover only from the separate property of defendants. See Eng v. Stein, supra, 123 Ariz. at 346, 599 P.2d at 799.

. A variety of discretionary practices have been sanctioned by the courts. Statutes permitting admission without examination are valid. Shenfield v. Prather, 387 F.Supp. 676 (N.D.Miss.1974). A state may validly require an applicant to pass an examination in essay form. Chaney v. State Bar, supra. A state may allow state graduates to waive examination without denying equal protection to oiher applicants. Huffman v. Montana Supreme Court, 372 F.Supp. 1175 (D.C.Mont.), aff’d, 419 U.S. 955, 95 S.Ct. 216, 42 L.Ed.2d 172 (1974). A board of bar examiners may validly meet to review borderline failure after all scores are tabulated. Hooban v. Board of Governors of Washington State Bar Ass’n, 85 Wash.2d 774, 539 P.2d 686, app. dism’d, 424 U.S. 902, 96 S.Ct. 1092, 47 L.Ed.2d 306 (1976). Subjective grading by examiner is allowed. Tyier v. Vickery, supra.

. I recognize that the majority believes an additional element of the immunity test is whether the state policy is “actively supervised by the state itself.” Maj. op., ante, at 696. Professor Areeda, however, observes that the Supreme Court has not yet required that governmental acts be supervised by the state. Areeda, Antitrust Immunity for "State Action” After Lafayette, 95 Harv.L.Rev. 435, 445 & 445 n.50.
The cases cited by the majority do not apply the supervision test to public defendants — and, of course, the Committee and its members are such defendants. City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 410, 98 S.Ct. 1123, 1135, 55 L.Ed.2d 364 (1978), quotes the “active supervision” language of Bates, without applying any such test. New Motor Vehicle Board of California v. Orrin W. Fox Co., 439 U.S. 96, 109, 99 S.Ct. 403, 411, 58 L.Ed.2d 361 (1978), makes no mention of an “active supervision” test. California Retail Liquor Dealers Assoc, v. Midcal Aluminum, Inc., 445 U.S. 97, 105, 100 S.Ct. 937, 943, 63 L.Ed.2d 233 (1980), applies the test to a private defendant. Finally, Community Communications Co. v. City of Boulder, - U.S. - n.14, 102 S.Ct. 841 n.14 (1982), expressly refused to reach the issue of whether active state supervision was required.
Were the Midcal test of “active supervision” to be extended to include public defendants, I have no doubt that the test would be satisfied in the instant case by the Arizona Supreme Court’s review. Ariz.Sup.Ct. Rule 28(a) (1970); Ariz.Sup.Ct. Rule 28(c)VII(B) (1974).
The majority declares that a triable issue remains as to whether the submission made by the Committee to the supreme court pursuant to Rule 28(c) was adequate to enable the supreme court to engage in the kind of active supervision which the majority concludes is required before the state action exemption will be available.
Supreme Court Rule 28(c), as in effect at the relevant time, required the Committee to file its grading formula with the supreme court 30 days before the bar examination. As the majority notes, it apparently did not come to the attention of the district court, nor to this court until quite recently, that this rule was in effect at the time the conduct complained of by Ron-win occurred. However, this supreme court rule has the force of law, and the court can— indeed must — consider it in deciding whether the Committee’s conduct was actively supervised by the court.
In addition to considering the effect of Rule 28(c), however, the majority has also given weight to evidence not presented to the district court, and indeed not presented to this court until long after oral argument, purporting to bear on the actual nature of the submission made pursuant to Rule 28(c). The record made by the parties in the district court contains no evidence whatsoever that would suggest any failure by the Committee to adequately inform the supreme court of its grading policies and procedures. I find it irregular for the court of appeals to go outside the record to decide an appeal from a dismissal by the district court. As a matter of due process, the parties have a right to have their appeal heard on the basis of the factual record assembled in the court below.

. In further contrast, the defendant in the instant case is a public defendant carrying out a state policy, whereas the defendants in Goldfarb were the private county bar and the state bar joining in essentially private activity. See dissent 702 supra.

. Arizona Supreme Court Rule 28(a) (1970), which assigns to the Committee the duty of screening applicants, provides in pertinent part:
The committee shall examine applicants and recommend to this Court for admission to practice applicants who are found by the committee to have the necessary quálifications and to fulfill the requirements prescribed by the rules of the board of governors as approved by this Court respecting exami*708nations and admissions.... The Court will then consider the recommendations and either grant or deny admission.