Antitrust Law Daily District court orders denying Parker protection may not be immediately appealed
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Friday, July 30, 2021

District court orders denying Parker protection may not be immediately appealed

By Steven D. Cole, J.D.

The Eleventh Circuit lacked jurisdiction to consider the Alabama Board of Dental Examiners’ appeal of the district court’s rejection of its asserted Parker defense.

The Eleventh Circuit lacked jurisdiction to consider whether a district court properly concluded that Alabama Board of Dental Examiners rules restricting competition from web-based teledentristy were not protected by the state-action doctrine. Global orthodontics provider SmileDirectClub, LLC asserted Sherman Act claims, as well as federal and state constitutional claims, against the Board of Dental Examiners of Alabama and its seven members, pertaining to the Board’s enforcement of Alabama law charging SmileDirect with engaging in the unlawful practice of dentistry. The district court rejected the Board’s argument that the Parker doctrine shielded it from Sherman Act liability. The Board appealed this ruling to the Eleventh Circuit; however, the decision was not immediately appealable. It was not an appealable collateral order (Leeds v. Board of Dental Examiners of Alabama, July 29, 2020, per curiam).

SmileDirect is an orthodontics provider that seeks to reduce treatment costs by using technology to obviate the need for customers to meet in person with dentists and orthodontists. A prospective patient considering SmileDirect’s clear aligner therapy first visits one of SmileDirect’s physical locations where employees use an "iTero device" (described as "essentially a wand with a camera") to rapidly take thousands of digital photographs of the patient’s teeth and gums. The iTero images are then sent to a dental lab, which creates a three-dimensional model of the prospective patient’s teeth, bite, gums, and palate. A state-licensed dentist reviews the three-dimensional model—along with standard digital photographs, the patient’s health and dental histories, and other pertinent information—to decide whether clear aligner therapy may be appropriate. If the dentist makes this determination and the patient agrees, the dentist writes a prescription to a lab to have the clear aligners fabricated and shipped. The patient then receives a series of custom-made, removable plastic retainers that are placed on the patient’s teeth to move them in small increments until the desired positioning is achieved.

On September 20, 2018, the Board sent SmileDirect a cease-and-desist letter stating that SmileDirect was engaged in the unauthorized practice of dentistry, in violation of the Alabama Dental Practice Act and certain regulations promulgated by the Board. Specifically, the Board reasoned that SmileDirect employees’ use of the iTero device to make digital images constituted "the practice of dentistry," which must be done "under the supervision of a licensed dentist or physician." The regulations permit dental hygienists, dental assistants, and dental laboratory technicians to create digital dental images only under the direct supervision of a licensed dentist who is "physically present in the dental facility and available during performance of the procedure."

Sherman Act claim. In response to the letter, SmileDirect filed suit, alleging that the Board’s attempt to regulate its practice was "a contract, combination, or conspiracy in restraint of trade that lacked procompetitive justifications and had the purpose and effect of unreasonably restraining trade in Alabama’s dental services market." The Board moved to dismiss the complaint, arguing, as relevant here, that the Parker doctrine (which holds that the Sherman Act does not reach state action) shielded them from liability. The district court denied the motion, holding that the Board failed to establish that its regulatory conduct was actively supervised by the state. The Board filed an interlocutory appeal of this ruling with the Eleventh Circuit. The district court stayed the proceedings pending resolution of the appeal.

Appellate jurisdiction. In response to SmileDirect’s motion to dismiss the appeal for lack of jurisdiction, the Board argued that the collateral order doctrine formed the basis for appellate jurisdiction. This doctrine applies where the appealed order conclusively determines the disputed question, resolves an important issue completely separate from the merits of the action, and is effectively unreviewable on appeal from a final judgment. The Board’s case for appellate jurisdiction was founded upon Eleventh Circuit precedent holding that a Parker denial at any stage of the litigation is immediately appealable. However, after the Board filed its response to SmileDirect’s motion, the Eleventh Circuit considered this very question (in a similar case involving SmileDirect and the Georgia Board of Dentistry) and issued an en banc decision abrogating Commuter Transportation Systems, finding that the court in 1986 had incorrectly characterized Parker as creating an immunity from suit, rather than a defense to liability.

Therefore, bound by its precedent squarely holding that district court orders denying Parker protection are not immediately appealable collateral orders, the Eleventh Circuit granted SmileDirect’s motion to dismiss the appeal.

The case is No. 19-11502.

Attorneys: Matthew Howard Lembke (Bradley Arant Boult Cummings, LLP) for D. Blaine Leeds and SmileDirectClub, LLC. Samuel H. Franklin (Lightfoot Franklin & White, LLC) for Adolphus M. Jackson.

Companies: SmileDirectClub, LLC

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