Antitrust Law Daily Justice Department asserts that state bars are not automatically entitled to state-action doctrine protections
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Wednesday, March 14, 2018

Justice Department asserts that state bars are not automatically entitled to state-action doctrine protections

By Gregory Kane, J.D., M.B.A.

The Department of Justice has filed a statement in support of the plaintiff in an antitrust suit against the Florida State Bar in the federal district court in Miami. The pleading argues that the Bar is not entitled to automatic protection under the state-action doctrine but rather, in light of the Supreme Court’s most recent state-action decision, the Bar, if controlled by active market participants, must satisfy the doctrine’s clear articulation and active supervision requirements in order to gain state-action protection (TIKD Services LLC v. The Florida Bar, March 12, 2018).

Background. TIKD Services LLC uses a mobile phone app to match Florida drivers dealing with traffic tickets with a Florida-licensed lawyer, although it is owned and operated by a non-lawyer. TIKD argued that it is in competition with The Ticket Clinic and other traditional traffic ticket defense firms. TIKD alleged that the Florida Bar, several Bar officers and The Ticket Clinic conspired to drive TIKD out of the market by spreading misinformation designed to discourage Florida lawyers from working with the company, namely that working with TIKD would violate Florida ethics rules and that the Bar had determined that TIKD was engaged in the unlicensed practice of law (UPL). TIKD alleged that this conduct violated Sections 1 and 2 of the Sherman Act. The Bar moved to dismiss on several grounds including that it is exempt from antitrust laws under the state-action doctrine as an arm of the Florida Supreme Court without having to meet the clear articulation or active supervision requirements imposed by Supreme Court precedent. The Justice Department disagreed.

State-Action Doctrine. The Supreme Court’s most recent state-action decision, N. Carolina State Bd of Dental Examiners v. FTC, requires that a state agency regulating a learned profession controlled by those in the market—specifically using state bars as an example—must satisfy the clear articulation and active supervision requirements in order to gain state-action protections, according to the Justice Department. That is, that the alleged anticompetitive conduct was taken pursuant to a clearly articulate and affirmatively expressed state policy to displace competition and that the conduct was actively supervised by the state itself. Without these requirements, a state agency that is controlled by those also competing in the market is at risk to pursue the interests of the competing individuals rather than the state’s policy goals.

The Florida Bar argued that it is exempt from these requirements which is contrary, according the Justice Department, with the ruling in Dental Examiners. The Florida Bar was also one of four state bars to submit an amicus curiae brief in Dental Examiners arguing that state bars were functionally the same as dental examination boards and that a ruling against the board would force state bars to defend antitrust actions. The Supreme Court ruled against the dental examination board and therefore against the Florida Bar’s legal position.

Active Market Participants. The critical test is not whether the state designates an agency as an arm of the state but whether that agency is controlled by active market participants, thereby requiring clear articulation and active supervision. To the extent it is unclear whether the Bar is controlled by active market participants or not, then a genuine issue of material fact is in dispute which should not be decided at the motion to dismiss stage, the Justice Department contended.

The case is No. 1:17-cv-24103-Cooke/Goodman.

Companies: TIKD Services LLC

MainStory: TopStory Antitrust FloridaNews

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