31 F.4th 1110
9th Cir.
2022
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Background

  • SmileDirectClub developed a direct-to-consumer tele-dentistry model selling clear teeth aligners; Dr. Jeffrey Sulitzer (and his professional corporation) is a SmileDirect-affiliated dentist who practices in California via SMILESHOP stores, a mobile "SmileBus," and mail-order impression kits.
  • The California Dental Board (15 members; majority practicing dentists) regulates dentistry in California; several Board members maintain traditional orthodontia practices and allegedly view SmileDirect as competitive.
  • Plaintiffs allege certain individual Board members and employees ("Board Actors") conspired to harass SmileDirect and Sulitzer through coordinated investigations, aggressive raids, public intimidation, and a retaliatory licensing action to drive them from the market.
  • The district court dismissed federal claims (Sherman Act §1, Dormant Commerce Clause, Equal Protection), and plaintiffs appealed. The district court had rejected state-action immunity but dismissed under Rule 12(b)(6) largely because alleged conduct was "consistent with" the Board’s regulatory purpose.
  • The Ninth Circuit held plaintiffs had standing, concluded the complaint plausibly alleged an anticompetitive conspiracy by certain Board members and employees (reversing dismissal of the Sherman Act claim as to some defendants), but affirmed dismissal as to defendants not plausibly tied to the conspiracy.
  • The Ninth Circuit affirmed dismissal of the Dormant Commerce Clause and the class-of-one Equal Protection claims (plaintiffs could not show they were "similarly situated" to other dentists in all material respects).

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Article III standing Board Actors' campaign injured business, reputation, and operations Plaintiffs lack traceable, redressable injury Standing adequately alleged (injury, traceability, redressability)
§1 Sherman Act — concerted action Board members and staff used the Board to coordinate harassment to restrain trade Actions were official regulatory investigations; district court treated conduct as consistent with Board purpose Complaint plausibly alleges concerted action by many (but not all) named defendants; dismissal reversed as to those plausibly implicated
§1 Sherman Act — unreasonable restraint / state-action immunity Conduct was a targeted campaign whose anticompetitive effects outweigh regulatory justifications Because acts were within regulatory authority, they cannot be unreasonable; state-action immunity/consistency doctrine shields conduct Agreements can be unlawful even if exercised via regulatory power; district court erred by requiring allegations inconsistent with regulatory purpose; plausible §1 claim survives for certain defendants
Dormant Commerce Clause Board’s actions discriminated against interstate commerce and out-of-state providers Regulations are facially neutral and investigation targeted in-state activity Dismissed — plaintiffs did not plead facial discrimination or clearly excessive incidental burdens
Equal Protection (class-of-one) Plaintiffs were singled out irrationally compared to other California dentists Plaintiffs are not similarly situated because their model and pricing are different Dismissed — class-of-one requires similarity in all material respects; SmileDirect’s unique business model defeats the claim

Key Cases Cited

  • Spokeo, Inc. v. Robins, 578 U.S. 330 (U.S. 2016) (Article III standing requires injury in fact, traceability, and redressability)
  • Parker v. Brown, 317 U.S. 341 (U.S. 1943) (state-action antitrust immunity principle)
  • N.C. State Bd. of Dental Exam'rs v. FTC, 574 U.S. 494 (U.S. 2015) (regulatory boards dominated by active market participants are not categorically immune from antitrust scrutiny)
  • N.C. State Bd. of Dental Exam'rs v. FTC, 717 F.3d 359 (4th Cir. 2013) (FTC finding that coordinated board actions can constitute an unreasonable restraint of trade)
  • Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752 (U.S. 1984) (at summary judgment, plaintiffs must present evidence tending to exclude lawful independent conduct)
  • Ohio v. American Express Co., 138 S. Ct. 2274 (U.S. 2018) (§1 prohibits only unreasonable restraints; courts apply per se or rule-of-reason analysis)
  • Village of Willowbrook v. Olech, 528 U.S. 562 (U.S. 2000) (class-of-one Equal Protection requires intentional differential treatment without a rational basis)
  • Engquist v. Oregon Dep't of Agriculture, 553 U.S. 591 (U.S. 2008) (limits on class-of-one theory in certain public-employment contexts)
  • In re Musical Instruments & Equip. Antitrust Litig., 798 F.3d 1186 (9th Cir. 2015) (standard of review on Rule 12(b)(6) in antitrust pleadings)
  • Name.Space, Inc. v. Internet Corp. for Assigned Names & Numbers, 795 F.3d 1124 (9th Cir. 2015) (elements required to plead a §1 Sherman Act claim)
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