Supreme Court issues decision in antitrust case against state professional-licensing board

March 11, 2015

Bona Law PC is pleased to announce that the U.S. Supreme Court has issued its decision in North Carolina Board of Dental Examiners v. FTC, holding that state professional-licensing boards dominated by a coalition of market participants are not entitled to the state-action immunity from the antitrust laws unless they show “active supervision” by a disinterested state official.

The board had argued that because it was a state agency, principles of federalism required that the courts respect the state’s designation of the board as a state agency rather than treat it as a group of private market participants. But this rule would allow states to negate the policies embodied in the antitrust laws without any political accountability for doing so.

Bona Law attorneys Jarod Bona and Aaron Gott filed an amicus curiae brief with the Court on behalf of We All Help Patients, Inc., arguing, that the Court’s “independent centers of decisionmaking” test in American Needle, Inc. v. Nat’l Football League—not state law—should control the analysis. The Court did not address this argument, but reached the same result by holding that “a state board on which a controlling number of decisionmakers are active market participants in the occupation the board regulates” must make a showing of active supervision.

The brief also argued that deferential judicial review by the state courts cannot constitute active supervision. Though the Court did not have occasion to address judicial review in this case—which involved extrajudicial threats by the board rather than reviewable disciplinary actions—it did set forth four requirements that are necessary but not sufficient for active supervision: (1) review must be substantive, not merely procedural; (2) the supervisor must have the power to veto or modify the anticompetitive decision; (3) the mere potential for supervision is not enough, the decision must actually be reviewed; and (4) the supervisor must be a disinterested state official.

The Court’s decision is important in that it reaffirms a commitment to the national policy in favor of competition by ensuring that states cannot so easily and haphazardly negate the congressional judgment by handing over the keys of regulation to self-interested private parties. But states are still free to allow this conduct to occur so long as they institute controls that show the state itself approves of the anticompetitive conduct.