SMILEDIRECTCLUB, LLC, Plaintiff–Appellee, versus TANJA D. BATTLE, in her official capacity as Executive Director of the Georgia Board of Dentistry, et al., Defendants–Appellants.
No. 19-12227
United States Court of Appeals, Eleventh Circuit
August 11, 2020
D.C. Docket No. 1:18-cv-02328-WMR
[PUBLISH]
Appeal from the United States District Court for the Northern District of Georgia
(August 11, 2020)
Before JORDAN, TJOFLAT, and ANDERSON, Circuit Judges.
SmileDirectClub, LLC, brought the instant suit against the Georgia Board of Dentistry, including the Board’s members in their individual capacities, alleging inter alia, antitrust, Equal Protection, and Due Process violations. Pursuant to
I. BACKGROUND
For the purposes of our review at this stage, we accept all of the factual allegations in SmileDirect’s complaint as true.
A. SmileDirect and the Georgia Board of Dentistry
SmileDirect is a company that offers orthodontic treatments, like teeth alignment, to its customers at a steep discount. It is able to afford that discount because, unlike most other orthodontists, it does not do in-person treatment. Instead, its patients go to one of its locations—called “SmileShops”—located around the country, which are staffed by SmileDirect technicians. At the “SmileShop,” the technicians take digital scans of the patient’s teeth, which are sent to SmileDirect’s lab to create a model for treatment.
If the SmileDirect patient is in Georgia, the lab sends the model to a Georgia-licensed dentist or orthodontist for review. The doctor “then identifies any periodontal disease, cavities, or any other oral conditions that require[] further investigation or which would prevent the patient from being a candidate for” SmileDirect’s treatment. Dist. Ct. Op. at 2. If there are no such problems, the doctor creates a patient-specific plan, which culminates in a prescription for SmileDirect’s “clear aligners.” The patient receives the aligners through the mail.
Enter the Georgia Board of Dentistry. The Board is organized under Title 43, Chapter 11, of the
On January 24, 2018, the Board voted to amend Rule 150-9-.02, which related to the “Expanded Duties of Dental Assistants.” The proposed amendment added conducting “[d]igital scans for fabrication [of] orthodontic appliances and models” to the list of expanded duties of dental assistants, Ga. Bd. of Dentistry R. 150-9-.02(aa), which requires “direct supervision” by a dentist, see
The Board then sent the proposed amendment to Governor Nathan Deal, who was tasked with approving, modifying, or vetoing it. See
Georgia law grants the Board authority to promulgate rules and regulations related to dental assistant services. As such, the amendment adopted by the Board is within its authority as granted by clearly articulated state policy. Therefore, I hereby approve the amendment to [the dental regulations] for the purposes of active supervision review required by [state law].
Id.
B. The Instant Lawsuit
In response to the amendment to Rule 150-9-.02, SmileDirect filed the instant lawsuit against the Georgia Board of Dentistry and its members, challenging the amended rule. It alleged, inter alia, that the Board’s actions in amending the rule violated antitrust law, the Equal Protection Clause, and the Due Process Clause; it also sought a declaratory judgment that taking digital scans did not constitute the practice of dentistry such that the Board could lawfully regulate it. In response, the Board moved to dismiss the complaint, pursuant to
II. DISCUSSION
A. Jurisdiction
Before proceeding to the merits of this case, we have an “obligation to satisfy ourselves that we have jurisdiction” over this appeal. See Boyd v. Homes of Legend, Inc., 188 F.3d 1294, 1297 (11th Cir. 1999). SmileDirect argues that we do not have jurisdiction to hear the Board’s appeal of the (partial) denial of its motion to dismiss because it does not fit within the collateral-order doctrine.
It is, of course, generally the case that parties can only appeal final decisions of district courts. See
Pursuant to binding precedent in this Circuit, a district court’s denial of a Rule 12(b)(6) motion to dismiss based on state-action immunity is immediately appealable under the collateral order doctrine. Diverse Power, Inc. v. City of LaGrange, 934 F.3d 1270, 1272 & n.1 (11th Cir. 2019); Commuter Transp. v. Hillsborough Cty., 801 F.2d 1286, 1289–90 (11th Cir. 1986). Diverse Power held: “[S]tate-action immunity is a form of immunity from suit, not merely from liability. And denials of immunity from suit—like denials of sovereign and qualified immunities—are immediately appealable under the collateral order doctrine.” 934 F.3d at 1272 n.1 (citations omitted).4 Put another way, state-action
As noted in the text, binding precedent in Diverse Power and Commuter Transportation holds that state-action immunity is immunity from suit—not merely immunity from liability. There is established law detailing the significance of immunity from suit, as distinguished from immunity from liability. As the Supreme Court said in Behrens v. Pelletier:
Harlow and Mitchell make clear that the defense is meant to give government officials a right, not merely to avoid “standing trial,” but also to avoid the burdens of “such pretrial matters as discovery . . . , as ‘inquiries of this kind can be peculiarly disruptive of effective government.’” Mitchell, supra, at 526 (emphasis added) (quoting from Harlow, supra, at 817). Whether or not a later summary judgment motion is granted, denial of a motion to dismiss is conclusive as to this right. . . . [T]his right is important enough to support an immediate appeal.
516 U.S. 299, 308 (1996); see also Brown v. Crawford Cty., Ga., 960 F.2d 1002, 1011 (11th Cir. 1992) (noting the significance of immunity from suit, we held: “[t]o preserve its purpose, ‘entitlement to absolute immunity must be determined as early as possible’ and appropriately on a motion to dismiss or judgment on the pleadings”) (quoting from Marx v. Gumbinner, 855 F.2d 783, 788 (11th Cir. 1988)).
Thus, if the Board members’ legal arguments at this early stage had been sound, they would have been entitled to dismissal now, without having to engage in discovery and further litigation. After a litigant’s immunity defense is denied at an early stage, the caselaw recognizes that the facts may change after further factual development, and at a later stage in the litigation, the party may assert again its immunity defense. See Behrens, 516 U.S. at 309, 116 S. Ct. at 840 (“[R]esolution of the immunity question may require more than one judiciously timed appeal, because the legally relevant factors bearing upon the Harlow question will be different on summary judgment than on an earlier motion to dismiss.”) (internal quotation omitted).
We also disagree with the dissent’s suggestion that our decision is merely a hypothetical, advisory opinion. Although it is true that our decision does not resolve the issue of the Board members’ ultimate entitlement to state-action immunity, our decision does definitively resolve the legal issues the Board members have presented at this stage. Our decision does definitively reject two legal arguments asserted by the Board members: First, their argument that they are entitled to ipso facto immunity merely because the Governor approved the Board’s rule under Georgia’s immunity is “comparable to”
SmileDirect’s argument that private parties—and it asserts that the individual members of the Board members are private parties—are not entitled to immediately appeal under the collateral-order doctrine is at odds with our precedent. See Praxair, Inc. v. Fla. Power & Light, 64 F.3d 609, 611 (11th Cir. 1995). In Praxair, we held that there was “collateral order appellate jurisdiction of the appeals of Florida Power and Florida Power & Light” because the denial of state-action immunity is immediately appealable. See id. Although Praxair also involved an automatic appeal under
statutory framework that vests in the Governor the power, authority, and duty to substantively review, approve, modify, or veto the rule, notwithstanding whether the Governor has actually exercised his powers and discharged his duties; and second, their argument that the “active supervision” prong (of the applicable analysis where the board is dominated by market participants) is satisfied because of the Governor’s approval of the rule in light of that statutory framework, again notwithstanding whether the Governor has actually exercised his statutory powers and discharged his duties.
For the foregoing reasons, we conclude that we do have appellate jurisdiction under
B. State-Action Immunity
We review the district court’s ruling on a motion to dismiss de novo. Paez v. Mulvey, 915 F.3d 1276, 1292 (11th Cir. 2019). A motion to dismiss is properly denied if, taking the allegations in the plaintiff’s complaint as true, the plaintiff makes out a claim “that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007).
The Sherman Antitrust Act of 1890 makes unlawful “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or [interstate] commerce.”
Determining the existence of “state action”—that is, actors claiming that they are acting as the state and thus are immune from suit—requires a context-specific analysis. That a defendant in an antitrust case is technically a state board, agency, or commission is not dispositive of the ultimate question. “The similarities between agencies controlled by active market participants and private trade associations are not eliminated simply because the former are given a formal designation by the State, vested with a measure of government power, and required to follow some procedural rules. Parker immunity does not derive from nomenclature alone.” N.C. State Bd. of Dental Exam’rs v. FTC, 574 U.S. 494, 511 (2014) (hereinafter Dental Examiners). Addressing a case involving the North Carolina State Board of Dental Examiners—a state board charged with regulating the practice of dentistry and composed of a majority of board members who are engaged in the active practice of the profession it regulates, precisely like the Georgia Board of Dentistry in this case—the Supreme Court in Dental Examiners held:
When a State empowers a group of active market participants to decide who can participate in its market, and on what terms, the need for supervision is manifest. The Court holds today that a state board on which a controlling number of decisionmakers are active market participants in the occupation the board regulates must satisfy Midcal’s active supervision requirement in order to invoke state-action antitrust immunity.5
Accordingly, we turn to what is commonly known as the Midcal test—a two-prong analysis synthesized by the Supreme Court in California Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980). In Midcal, the Supreme Court explained that, under Parker v. Brown, there are “two standards for antitrust immunity.” Id. “First, the challenged restraint must be ‘one clearly articulated and affirmatively expressed as state policy’; second, the policy must be ‘actively supervised’ by the State itself.” Id. (quoting City of Lafayette v. La. Power & Light Co., 435 U.S. 389, 410 (1978)). As noted above, the Supreme Court in Dental Examiners recently explained that “a state board on which a controlling number of decisionmakers are active market participants in the occupation the board regulates must satisfy Midcal’s active supervision requirement in order to invoke state-action antitrust immunity.” Dental Examiners, 574 U.S. at 511–12.
However, the Midcal test is not applied in all instances in which state-action immunity is invoked. The actions of a “state sovereign” are, ipso facto, “exempt from the operation of the antitrust laws.” Hoover v. Ronwin, 466 U.S. 558, 568 (1984). In such a case, the Midcal test is not conducted and state-action immunity applies automatically. See id. The Supreme Court has applied ipso facto state-action immunity in only limited cases—to the actions of a “state legislature adopt[ing] legislation” or “a decision of a state supreme court, acting legislatively rather than judicially[,]” id., and only where the conduct challenged “was in reality that of” the sovereign itself, see id. at 573.
We first address whether, on the basis of the facts we assume in this Rule 12(b)(6) posture, the Board members have satisfied the Midcal test. Because we conclude below that the Board members have failed to satisfy the “active supervision” prong, and because satisfaction of both prongs is necessary, we conclude that the Board members have failed to satisfy the Midcal test, and we need not address the clear articulation prong. We then proceed to consider, and ultimately reject, the Board’s argument that it is entitled to ipso facto immunity.
1. The Midcal Test
As explained previously, the Midcal test synthesized the Supreme Court’s past state-action immunity caselaw into two discrete requirements. For state-action immunity to apply (aside from ipso facto immunity where the sovereign itself has acted), the challenged market restraint must be (1) “clearly articulated and affirmatively expressed as state policy,” and (2) “actively supervised by the State itself.” 445 U.S. at 105 (citations and quotations omitted).
a. Clear Articulation
Most litigation with respect to the satisfaction of the Midcal test concerns the second prong—the presence of “active supervision.” The absence of “active supervision” is dispositive, and courts need not consider the “clear articulation” prong where “active supervision” is absent. Patrick v. Burget, 486 U.S. 94, 100 (1988). Because we conclude below that the Board members have failed to satisfy the “active supervision” prong, we decline to address the clear articulation prong.
b. Active Supervision
We turn to the second prong of the Midcal analysis, which asks whether the amendment to Rule 150-9-.02 was “actively supervised by the State.” Midcal, 445 U.S. at 105. The “active supervision” prong
mandates that the State exercise ultimate control over the challenged anticompetitive conduct. The mere presence of some state involvement or monitoring does not suffice. The active supervision prong of the Midcal test requires that state officials have and exercise power to review particular anticompetitive acts of private parties and disapprove those that fail to accord with state policy. Absent
such a program of supervision, there is no realistic assurance that a private party’s anticompetitive conduct promotes state policy, rather than merely the party’s individual interests.
Patrick, 486 U.S. at 101 (citations omitted). “[T]he purpose of the active supervision is not to determine whether the State has met some normative standard, such as efficiency, in its regulatory practices. Its purpose is to determine whether the State has exercised sufficient independent judgment and control so that the details of the rates or prices have been established as a product of deliberate state intervention, not simply by agreement among private parties. . . . [T]he analysis asks whether the State has played a substantial role in determining the specifics of the economic policy. The question is not how well the regulation works, but whether the anticompetitive scheme is the State’s own.” FTC v. Ticor Title Ins. Co., 504 U.S. 621, 634–35 (1992).
This is not an inquiry conducted in the abstract. The “Court has identified only a few constant requirements of active supervision”:
The supervisor must review the substance of the anticompetitive decision, not merely the procedures followed to produce it, see Patrick, 486 U.S., at 102–03; the supervisor must have the power to veto or modify particular decisions to ensure they accord with state policy, see ibid.; and the “mere potential for state supervision is not an adequate substitute for a decision by the State,” Ticor, [504 U.S.] at 638. Further, the state supervisor may not itself be an active market participant. In general, however, the adequacy of supervision otherwise will depend on all the circumstances of a case.
Dental Examiners, 574 U.S. at 515.
The Supreme Court’s opinion in Ticor helps illustrate the application of these principles. Ticor concerned the permissibility, under antitrust law, of the defendant insurance companies’ setting of rates for title search and examination services, which applied in multiple states. The Third Circuit concluded that the State of Wisconsin’s Insurance Department had actively supervised the insurance companies’ setting of these rates. Ticor Title Ins. Co. v. FTC, 922 F.2d 1122, 1139–40 (3d Cir. 1991). Specifically, the court determined that “Wisconsin had the power to regulate Ticor’s collective filing of rates for title search and examination services” and that it had exercised that power. Id. It based its conclusion that Wisconsin had exercised its power on the fact that “Wisconsin’s program of supervision was in place during the relevant time and that it was staffed and funded,” and that the Department “demonstrated some basic level of activity directed towards seeing that Ticor carried out the state’s policy and not simply its own policy.” Id. at 1140.
But the Supreme Court concluded that this was insufficient and reversed the Third Circuit’s decision. “Where prices or rates are set as an initial matter by private parties, subject only to a veto if the State chooses to exercise it, the party claiming the immunity must show that state officials have undertaken the necessary steps to determine the specifics of the price-fixing or ratesetting scheme. The mere potential for state supervision is not an adequate substitute for a decision by the State.” Ticor, 504 U.S. at 638 (emphasis added). The administrative law judge in the case found that, in Wisconsin, “at most the rate filings were checked for mathematical accuracy,” and some “were unchecked altogether.” Id. Despite the state law requirement that the State Insurance Commissioner “examine the rating bureau at regular intervals” and its “authoriz[ation]
We believe that similar dynamics are at play here. Though the Governor of Georgia had the “authority and duty to actively supervise” and was clearly empowered to “approve, remand, modify or reverse” proposed rules (or amendments),
Accordingly, accepting the reasonable inferences from the allegations of SmileDirect’s complaint, and the Governor’s certification to which it refers, we conclude that the Board has not satisfied the active supervision requirement for entitlement to state-action immunity.6
2. Ipso Facto Immunity
In addition to its argument that it complied with the Midcal test, the Board members argue that they are exempt from that test altogether. They argue that they are entitled to ipso facto immunity because the Board of Dentistry’s amendment to Rule 150-9-.02 can be attributed to the Governor of Georgia. Specifically, they argue that Georgia’s statutory framework for rulemaking grants the Governor both the authority and power to substantively review any rule promulgated by a
professional board, like the Board of Dentistry, and indeed imposes upon him the duty to do so.
The Board members argue that, in this case, then-Governor Nathan Deal, who issued
We will assume, arguendo, but expressly do not decide, that the executive action of a governor could qualify for ipso facto state-action immunity.7 We also assume, arguendo, that the Georgia General Assembly actually granted the
Governor the kind of power, authority, and duty to substantively review proposed rules such that they are attributable to him.8 Nonetheless, even making these assumptions, the Board members’ argument is ultimately without merit.
In evaluating ipso facto immunity, we review the Supreme Court’s limited jurisprudence on the subject. The cases in which the Supreme Court has employed ipso facto state-action immunity involve situations as in Hoover v. Ronwin, supra. There, Ronwin was an unsuccessful candidate for admission to the Bar of Arizona. The Arizona Constitution vested authority in the Arizona Supreme Court to determine admissions to the Bar. Arizona Supreme Court rules delegated to a committee the tasks of designing a grading or scoring system, submitting same to the Court before the examination, grading the exams and submitting to the Court its recommendations with respect to admission to the Bar. Only the Court had authority to admit or deny, and any applicant was entitled to individualized review by filing a petition directly with the Court. Ronwin did petition the Court challenging, inter alia, the grading or scoring formula. The Court denied his petition. Ronwin later sued the members of the Committee in federal district court, challenging that same grading or scoring formula, which he claimed is an
anticompetitive action to reduce the number of competing attorneys. The Ninth Circuit construed the district court as having dismissed Ronwin’s complaint pursuant to
The Supreme Court granted certiorari. In its opinion, the Court noted that “[c]loser analysis is required when the activity at issue is not directly that of the legislature or supreme court, but is carried out by others pursuant to state authorization.” Ronwin, 466 U.S. at 568. The Court also noted the Midcal line of cases, and noted that its two-step analysis
The Court’s decision in Bates v. State Bar of Arizona, 433 U.S. 350 (1977), also applied ipso facto state-action immunity on facts virtually indistinguishable from those in Ronwin. There, Bates challenged as anticompetitive his suspension from the practice of law imposed because of his violation of a disciplinary rule of the Supreme Court of Arizona restricting advertising by lawyers. Although the disciplinary complaint was initially heard by the Bar committee, Bates sought review in the Arizona Supreme Court, challenging the rule as a violation of the Sherman Act. The Arizona Supreme Court heard his challenge and rejected it. Id. at 356. Bates appealed to the United States Supreme Court. Again emphasizing that the Arizona Supreme Court adopted the challenged rule and was the “ultimate trier of fact and law in the enforcement process,” id. at 361, the Court held that state-action immunity was available.
The Ronwin Court’s holding—“the conduct that Ronwin challenges was in reality that of the Arizona Supreme Court”—was expressly based on the Bates decision. Ronwin, 466 U.S. at 573. The Bates opinion illustrates that ipso facto state-action immunity is available only if the anticompetitive conduct challenged is “in reality” the action of the sovereign itself. In distinguishing its previous decision in Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975), the Court in Bates held:
This Court concluded that the action was not protected, emphasizing that “we need not inquire further into the state-action question because it cannot fairly be said that the State of Virginia through its Supreme Court Rules required the anticompetitive activities of either respondent.” In the instant case, by contrast, the challenged restraint is the affirmative command of the Arizona Supreme Court.
Bates, 433 U.S. at 359–60 (emphasis added).
The argument of the Board members—that the power, authority and duty vested in the Governor to adopt and make his own the challenged anticompetitive action of the Board is sufficient for ipso facto state-action immunity, without regard to whether or not the Governor actually exercises that authority—is inconsistent with Ronwin, Bates and Goldfarb. Even assuming arguendo such power and duty vested in the Governor, we cannot conclude that one could fairly say that the anticompetitive
Whatever the Governor’s power and duty with respect to the amended rule, if he does not exercise same and does not actually make the amended rule his own “affirmative command,” his actions fall short of the actions of the Arizona Supreme Court in Ronwin and Bates where the challenged anticompetitive conduct was actually the conduct of the sovereign actor—i.e., approving and enforcing the challenged grading formula (in Ronwin), or promulgating the challenged rule and enforcing the violation thereof (in Bates), in both cases after an individualized hearing on the challenge by the Arizona Supreme Court. See Dental Examiners, 574 U.S. at 504 (suggesting that ipso facto state-action immunity is available only when the challenged conduct is “an undoubted exercise of state sovereign authority”).
The argument of the Board members is also inconsistent with the Court’s decisions in Dental Examiners and Ticor. Even in the context of describing the kind of sovereign action necessary to satisfy the “active supervision” prong of Midcal, both Dental Examiners and Ticor held that the “mere potential for state supervision is not an adequate substitute for a decision by the State.” Dental Examiners, 574 U.S. at 515 (quoting Ticor, 504 U.S. at 638); see also Patrick, 486 U.S. at 101 (“The active supervision prong of the Midcal test requires that state officials have and exercise power to review particular anticompetitive acts of private parties and disapprove those that fail to accord with state policy.”) (emphasis added). It would make no sense to suppose, as the Board members do, that the mere power and duty on the part of the Governor would suffice for ipso facto immunity, when clearly established Supreme Court case law makes it clear that mere potential supervision is not even sufficient to satisfy the “active supervision” prong of Midcal. In other words, given that ipso facto immunity serves to entirely immunize an actor from antitrust litigation without the rigorous, fact-sensitive scrutiny articulated in the Midcal test, it would make no sense to apply a lower standard with respect to ipso facto immunity than is required to satisfy the Midcal test.
For the foregoing reasons, we reject the Board members’ argument that ipso facto state-action immunity is available merely because of the Governor’s power and duty, and without regard to his actual exercise thereof. We held above—in our discussion of the “active supervision” prong—that, on the basis of the facts we must assume in this
III. CONCLUSION
For the foregoing reasons, we conclude that the district court properly denied the Board members’ motion to dismiss with respect to SmileDirect’s antitrust claims.9
AFFIRMED.
Our cases hold that the denial of state-action antitrust immunity is immediately appealable under the collateral order doctrine, not only by the state but by private parties as well. See, e.g., Commuter Transportation Systems, Inc. v. Hillsborough County Aviation Authority, 801 F.2d 1286 (11th Cir. 1986); Praxair, Inc. v. Florida Power & Light Co., 64 F.3d 609, 611 (11th Cir. 1995). In my view, our precedent on this issue is mistaken and should be re-examined in an appropriate case by the full court.
The Supreme Court first recognized what is frequently referred to as state-action immunity in Parker v. Brown, 317 U.S. 341, 350–52 (1943), holding that the Sherman Act does not reach anticompetitive conduct by the state or its officers or agents. Over time, the Supreme Court extended Parker protection, in appropriate circumstances, to municipalities and private parties. See Town of Hallie v. City of Eau Claire, 471 U.S. 34, 38–39 (1985) (municipalities); Cal. Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97, 104–06 (1980) (private parties).
Parker held only that the Sherman Act does not reach state action, not that it cannot do so. See Parker, 317 U.S. at 350–51 (“We find nothing in the language of the Sherman Act or in its history which suggests that its purpose was to restrain a state or its officers or agents from activities directed by its legislature. In a dual system of government in which, under the Constitution, the states are sovereign, save only as Congress may constitutionally subtract from their authority, an unexpressed purpose to nullify a state’s control over its officers and agents is not lightly to be attributed to Congress.”). State-action antitrust “immunity” therefore arose from an interpretation of the Sherman Act’s scope, not from a constitutional (or common-law) right to avoid trial, and not out of concern about special harms that might result from litigation. See S.C. St. Bd. of Dentistry v. FTC, 455 F.3d 436, 444–45 (4th Cir. 2006). As a number of our sister circuits have explained, Parker “immunity” is more like a defense to a cause of action than an entitlement to avoid suit completely. See id.; Acoustic Sys., Inc. v. Wenger Corp., 207 F.3d 287, 292 n.3, 294 (5th Cir. 2000). The denial of state-action immunity, therefore, is not “effectively unreviewable” on appeal, and a party made to postpone its arguments until final judgment may still invoke the protections of Parker. See, e.g., SolarCity Corp. v. Salt River Project Agricultural & Power District, 859 F.3d 720, 726–27 (9th Cir. 2017); S.C. St. Bd. of Dentistry, 455 F.3d at 444–45; Huron Valley Hosp. v. City of Pontiac, 792 F.2d 563, 567 (6th Cir. 1986). Contra Martin v. Memorial Hospital at Gulfport, 86 F.3d 1391, 1394 (5th Cir. 1996); 1A Phillip Areeda & Herbert Hovenkamp, Antitrust Law ¶ 222b (4th ed. 2013).
Even if we assume that a state is able to immediately appeal the denial of Parker immunity, an interlocutory appeal should not be available to private parties like the members of the Georgia Board of Dentistry, whose status does not implicate sovereignty concerns. See Auraria Student Hous. v. Campus Village, 703 F.3d 1147, 1151 (10th Cir. 2013); Acoustic Sys., 207 F.3d at 293–94; Jason Kornmehl, State Action on Appeal: Parker Immunity and the Collateral Order Doctrine in Antitrust Litigation, 39 Seattle U. L. Rev. 1, 32 (2015). As the Fifth Circuit concluded in Acoustic Systems, the concerns that might animate the need for an immediate appeal by a state—for example, sparing the state the burdens and uncertainties of litigation—are “not raised by a suit against a private party.” 207 F.3d at 294. Indeed,
Our decision in Praxair, Inc., 64 F.3d at 611, which allowed a private party to take an immediate appeal from the denial of Parker immunity, contains no analysis whatsoever. It is therefore not surprising that we stand alone among the circuits in holding that a private party may take an interlocutory appeal of the denial of Parker immunity. See Auraria Student Hous., 703 F.3d at 1151 (describing the lopsided circuit split).
There is, moreover, another reason why private parties should not be able to immediately appeal the denial of Parker immunity. The collateral order doctrine “is a practical construction” of the general rule that parties may only appeal final decisions of a district court. See Dig. Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863, 867 (1994) (quoting Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1940)). To come within the “small class” of interlocutory orders that are immediately appealable under Cohen, an order must (1) conclusively determine the disputed question, (2) be effectively unreviewable on appeal after trial, and (3) resolve an important issue completely separate from the merits of the action. See Cohen, 337 U.S. at 545–46. The Supreme Court has repeatedly stressed that very few interlocutory orders will meet these three stringent conditions. See Will v. Hallock, 546 U.S. 345, 349 (2006) (“[W]e have not mentioned applying the collateral order doctrine recently without emphasizing its modest scope.”).
Where, as here, private parties are concerned, the matter of Parker immunity is not completely separate from the merits. That is because the Supreme Court requires private parties to satisfy the “clear articulation” and “active supervision” requirements, as set out in Midcal, 445 U.S. at 105, and its progeny. See Christopher J. Reid, Appealability of State Action Immunity: Navigating Federal Courts Past the Crossroads Where Parker Immunity Meets the Collateral Order Doctrine, 52 Suffolk L. Rev. 157, 180–82, 184–85 (2019). Given these requirements, it is difficult, if not impossible, to separate the Parker immunity of a private party from the merits.
With these thoughts, I join the majority opinion in full.
TJOFLAT, Circuit Judge, dissenting:
The majority concludes that we have jurisdiction to hear this interlocutory appeal of the District Court’s order, which denied the Georgia Board of Dentistry members’
I.
The Courts of Appeals generally have jurisdiction to hear appeals only of a district court’s final decision.
This appeal fails the first prong of Cohen’s collateral-order doctrine because the District Court never conclusively determined that the Board members could not avail themselves of Parker state-action immunity. To understand why, it is necessary to lay out the District Court’s entire analysis of the Parker immunity issue. The District Court first held that SmileDirect’s complaint sufficiently alleged that the Board members engaged in concerted action to unreasonably restrain trade, and thus that the complaint adequately stated a federal antitrust claim under the Sherman Act so as to survive a motion to dismiss under
[T]he Complaint reveals a well-pleaded factual dispute that is not resolved by the Certification of Active Supervision. Only discovery will determine whether the Board provided all relevant information to the Governor, whether the proposed amendment was subjected to any meaningful review by the Governor, or whether the Certification of Active Supervision was merely “rubberstamped” as a matter of course. See Patrick v. Burget, 486 U.S. 94, 101 (1988) (“[t]he mere presence of some state involvement or monitoring does not suffice” to meet the active supervision requirement).
Accordingly, the Court finds that a definitive ruling on Parker immunity would be premature at this stage, that SmileDirect’s Sherman Act antitrust
claim, as pleaded, is sufficient to survive a Rule 12(b)(6) motion to dismiss on Parker immunity grounds, and that further factual development is required to determine whether the Board members are entitled to Parker immunity. The Board members may therefore raise the Parker immunity defense at a later stage in this litigation, such as in a motion for summary judgment, if appropriate.
Id. at 13 (footnote omitted) (emphases added).
The majority’s cursory reference to the District Court’s opinion treats the District Court as having denied the Board members’
This is not to say that this Court could never have collateral-order jurisdiction to review a district court’s denial of state-action immunity at the motion-to-dismiss stage when the district court in fact makes such a conclusive determination. Indeed, we held in Diverse Power, Inc. v. City of LaGrange that this Court does have jurisdiction under the collateral-order doctrine to review a district court’s denial of a
In Diverse Power, the plaintiff corporation brought federal antitrust claims against the City of LaGrange, Georgia, alleging that a City ordinance created an unlawful tying arrangement by conditioning the sale of the City’s water utility services on the installation of natural gas appliances in all new construction (the plaintiff corporation was in the business of providing electrical services that competed with the City’s natural gas utility service). See id. at 1271–72. The City moved to dismiss the federal antitrust claims against it on state-action immunity grounds, arguing that certain Georgia statutes evinced a “clearly articulated and affirmatively expressed” state policy to displace competition. Id. at 1272–73. Specifically,
The District Court thus identified the question at the motion-to-dismiss stage as “whether, as a matter of law, the conditioning of water utility service on natural gas installation is a foreseeable result of the anticompetitive conduct authorized by the State of Georgia.” Diverse Power, Inc. v. City of LaGrange, Georgia, No. 3:17-CV-3-TCB, 2018 WL 9651475, at *4 (N.D. Ga. Feb. 21, 2018), aff’d, 934 F.3d 1270 (11th Cir. 2019). If so, then the City acted pursuant to a “clearly articulated and affirmatively expressed” state policy to displace competition and was entitled to Parker state-action immunity. The only question before the District Court, then, was whether the Georgia statute contemplated the type of anticompetitive conduct raised in the complaint—a purely legal question of statutory interpretation. The District Court needed no additional facts to interpret the statute at the motion-to-dismiss stage, and so the Court proceeded to decide the issue. It found that the City’s alleged coercion in the natural gas market, a completely different market, “is not, as a matter of law, the sort of activity contemplated by the legislature in authorizing the operation of water and sewage systems” in
On the City’s interlocutory appeal, we determined that we had collateral-order jurisdiction under Cohen to review that conclusive determination by the District Court. 934 F.3d at 1272 & n.1. Specifically, we said that “state-action immunity is a form of immunity from suit, not merely from liability. And denials of immunity
The same cannot be said of this appeal. Unlike Diverse Power, this is not a case in which the entitlement to immunity rests on a purely legal question, or some other question that is resolvable solely on the allegations in the complaint. Rather, it depends here on additional facts that are not in the complaint (and are not required to be included in the complaint). The District Court, recognizing this, deferred a definitive ruling on the state-action-immunity issue until those relevant additional facts could be discovered. At least at this juncture, it left the immunity question open, and we lack jurisdiction to review an issue that the District Court did not actually resolve below. See Royalty Network, Inc. v. Harris, 756 F.3d 1351, 1355 (11th Cir. 2014) (finding that the district court’s order satisfied the first Cohen prong where “[t]he court’s order finally settled the question and did not leave anything open, unfinished, or inconclusive”).
II.
What’s more, by entertaining and deciding this appeal despite the lack of a final decision below, the majority renders an advisory opinion that defies one of our most fundamental constitutional principles. “[T]he oldest and most consistent thread in the federal law of justiciability is that the federal courts will not give advisory opinions.” Flast v. Cohen, 392 U.S. 83, 96, 88 S. Ct. 1942, 1950 (1968) (quotation marks and citation omitted). This ironclad rule derives from
To illustrate why the majority’s decision on appeal is merely hypothetical, consider what follows today’s decision. After this Court affirms the District Court’s “denial” (scare quotes intended) of the Board members’ motion to dismiss on state-action immunity grounds, the case then returns to the District Court and the Board members must file their answer. In that answer, the Board members will assert a variety of defenses, including that they are entitled to state-action immunity. And they will include in their pleading the additional facts—not included in the complaint—supporting their entitlement to immunity that were not before the District Court (or this Court) at the motion-to-dismiss stage.5
Discovery ensues on the claims and defenses. At the close of discovery, the Board members move for summary judgment on the same theory presented here, but this time armed with the additional favorable facts not previously available for consideration by the District Court. The District Court, presented with virtually the same arguments it was presented with at the motion-to-dismiss stage, must decide whether the Board members are now entitled to state-action immunity under Parker. It must decide whether, in light of these new facts, the Board members have now met their burden to show that the defense applies.6 As the majority admits,
Finally, when the losing party inevitably appeals the District Court’s decision on summary judgment to this Court, we would again have to consider on appeal (1) whether, if the District Court denied the motion for summary judgment based on state-action immunity, we have collateral-order jurisdiction to review the denial of immunity; and (2) whether, if the District Court granted the motion or if we determine that we do have collateral-order jurisdiction to review the denial of immunity, the Board members are entitled to state-action immunity. In other words, we would have to reconsider the same questions that the majority proceeds to decide today, this time based on the new facts found in discovery. Again, nothing the majority says here would prevent a future panel from reaching a different conclusion on state-action immunity at this later stage of the litigation.
So, what exactly does today’s decision do? It informs the parties and the District Court of the legal standards that will govern the Board members’ defense of state-action immunity. It tells the Board members that the Certification of Active Supervision will not be enough, alone, to satisfy that standard. And it advises the Board members of the types of facts they must allege in their answer and offer as evidence at the summary-judgment stage to establish their entitlement to state-action immunity.
* * *
Cohen is clear: we may review an otherwise nonappealable interlocutory order only if the district court has, among other things, conclusively determined the disputed question. Freyre, 910 F.3d at 1371. “So long as the matter remains open, unfinished or inconclusive, there may be no intrusion by appeal.” Cohen, 337 U.S. at 546, 69 S. Ct. at 1225. Here, the District Court explicitly did not decide whether the Board members were entitled to state-action immunity, instead finding that a definitive ruling on that issue would be “premature” and leaving the question open for resolution at the summary-judgment stage of the litigation. Because there has been no conclusive determination regarding the Board members’ entitlement to
Moreover, that lack of finality means that today’s decision amounts to nothing more than an advisory opinion explaining to the Board members the relevant facts they must unearth in discovery in order to be entitled to summary judgment based on state-action immunity. Nothing about this decision “affects the rights of the litigants before us”—they will get another chance in the District Court to litigate whether the Board members are entitled to immunity. To make matters worse, the majority’s opinion—despite having no tangible effect on the instant litigation—creates binding precedent for future litigants seeking the benefit of state-action immunity.
Because this appeal amounts to nothing more than a dry run of the Board members’ argument that they are entitled to state-action immunity under Parker, I would dismiss the appeal for lack of jurisdiction, and wait to reach the merits of the immunity issue when this case inevitably comes before us again after discovery of the relevant Parker-immunity facts.7 I therefore respectfully dissent.
Notes
Theoretically, the District Court could have gone through this exercise at the motion-to-dismiss stage. It could have construed all of the facts alleged at this stage in the light most favorable to the plaintiff, SmileDirect, and decided whether, accepting the facts as alleged by SmileDirect, the Board members are nonetheless entitled to state-action immunity. Only then, after having eliminated any fact issue, could the District Court have rendered a final legal determination on state-action immunity that would be reviewable on appeal under Cohen. Of course, the District Court here did not do this. Rather, it noted that the fact issues were not resolvable at the motion-to-dismiss stage, and so it deferred any final determination of the immunity issue for resolution at the summary-judgment stage. (Truthfully, the Board members should be thankful that the District Court did not definitively rule on the state-action-immunity defense based only on the facts in the complaint. If it did, and conclusively determined that the Board members were not entitled to state-action immunity, that would be the end of the matter. The Board members could not re-raise the issue at the summary judgment stage.)
Of course, even at the summary-judgment stage, we will not necessarily have collateral-order jurisdiction to review the District Court’s decision. For example, if the District Court does not eliminate the fact issues by leaning the facts one way or the other, and instead finds that genuine factual issues preclude granting summary judgment to the Board members, we would not have collateral-order jurisdiction on appeal. Cf. Johnson v. Jones, 515 U.S. 304, 313, 115 S. Ct. 2151, 2156 (1995) (holding that the District Court’s determination that the summary judgment record raised a genuine issue of fact—i.e., of “evidence sufficiency”—concerning the defendants’ entitlement to qualified immunity was not a “final decision” that was immediately appealable); cf. also Plumhoff v. Rickard, 572 U.S. 765, 773, 134 S. Ct. 2012, 2019 (2014) (distinguishing Johnson on the ground that the defendant-petitioners in Plumhoff “raise[d] legal issues; these issues are quite different from any purely factual issues that the trial court might confront if the case were tried”).
In my view, the best way to conceptualize this awkward exercise is to treat the defendant’s motion as if it were an answer under Rule 8, which asserts the affirmative defense of state-action immunity and includes the relevant facts from the plaintiff’s complaint (and no more). The motion to dismiss would then be treated as a motion for judgment on the pleadings under