N.C. State Bd. of Dental Examiners v. Fed. Trade Comm'n
135 S. Ct. 1101
| SCOTUS | 2015Background
- North Carolina’s Dental Practice Act designates the State Board of Dental Examiners (Board) as the state agency to regulate dentistry; six of eight board members must be licensed, practicing dentists.
- Dentists began offering teeth-whitening services; nondentist providers entered the market charging lower prices, prompting complaints to the Board.
- The Board (dominated by practicing dentists) sent at least 47 official cease-and-desist letters to nondentist teeth-whitening providers and related businesses, warning of criminal liability; nondentists exited the market.
- The FTC brought an administrative enforcement action under §5 of the FTC Act alleging the Board’s conduct unlawfully restrained trade; an ALJ and the FTC found liability and ordered cessation of the letters and corrective notices.
- The Fourth Circuit affirmed; the Supreme Court granted certiorari to decide whether the Board is entitled to state-action antitrust immunity without active state supervision.
Issues
| Issue | Plaintiff's Argument (FTC) | Defendant's Argument (Board) | Held |
|---|---|---|---|
| Whether a state board dominated by active market participants may invoke Parker state-action immunity without active state supervision | The Board is a hybrid public/private actor dominated by active market participants and thus cannot claim immunity absent active state supervision | The Board is an agent of the State exercising sovereign power under the Dental Practice Act and therefore entitled to Parker immunity | A board with a controlling number of active market participants must show active state supervision to invoke Parker immunity; Board failed to show such supervision |
| Whether the Board’s enforcement actions (cease-and-desist letters) fall within a clearly articulated state policy displacing competition | Even if a clear articulation exists, that alone is insufficient to confer immunity for a hybrid actor | The delegation of regulatory power to the Board is a clear expression of state policy covering dental practice | Court assumed clear-articulation satisfied but held clear articulation alone insufficient for immunity where active supervision is lacking |
| What constitutes “active state supervision” for purposes of immunity | Supervision must provide realistic assurance that actions further state policy, including review of substance and veto/modification power, and supervisor cannot be an active market participant | States often designate agencies and procedural safeguards; formal agency status suffices | Active supervision requires substance review, veto/modification power, and cannot rest on mere potential oversight; North Carolina provided no such supervision here |
| Whether formal state-agency designation exempts a board from Midcal active-supervision requirement | Immunity attaches whenever the entity is formally a state agency exercising delegated sovereign authority | Formal designation and procedural trappings suffice to show state accountability | Formal designation alone does not exempt a board dominated by active market participants from Midcal’s active-supervision requirement |
Key Cases Cited
- Parker v. Brown, 317 U.S. 341 (1943) (establishes state-action antitrust immunity for sovereign state actions)
- California Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445 U.S. 97 (1980) (two-part test: clear articulation and active state supervision for nonsovereign actors claiming immunity)
- FTC v. Ticor Title Ins. Co., 504 U.S. 621 (1992) (actual state involvement, not deference, is precondition for immunity)
- FTC v. Phoebe Putney Health Sys., Inc., 568 U.S. 216 (2013) (reaffirmed Midcal framework; active supervision necessary when actors have incentives to pursue self-interest)
- Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365 (1991) (no conspiracy exception to Parker; immunity not lost by ad hoc inquiry into motives)
- Hallie v. Eau Claire, 471 U.S. 34 (1985) (municipalities need satisfy only clear-articulation prong because of electoral accountability and general governmental powers)
- Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975) (denied immunity to state agency dominated by market participants absent supervision)
- Patrick v. Burget, 486 U.S. 94 (1988) (active supervision must provide realistic assurance that private conduct advances state policy)
- Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492 (1988) (recognizes risk of anticompetitive harm from private associations and related entities)