Lexplug logoLexplug

North Carolina State Board of Dental Examiners v. Federal Trade Commission

Supreme Court of the United States
191 L. Ed. 2d 35, 135 S. Ct. 1101 (2015)
ELI5:

Rule of Law:

A state professional regulatory board controlled by active market participants in the profession it regulates must be actively supervised by the state to claim state-action immunity from federal antitrust laws. Without such supervision, the board is considered a non-sovereign actor whose anticompetitive actions are not shielded by the Parker doctrine.


Facts:

  • The North Carolina State Board of Dental Examiners (Board) was a state agency responsible for regulating the practice of dentistry.
  • State law required that six of the Board's eight members be licensed dentists engaged in active practice, elected by other dentists in the state.
  • After non-dentists began offering teeth whitening services at lower prices than dentists, dentists complained to the Board, primarily about the economic competition.
  • The Board investigated the non-dentist providers, with a dentist member leading the inquiry.
  • Beginning in 2006, the Board issued at least 47 cease-and-desist letters to non-dentist teeth whiteners, asserting that their services constituted the illegal practice of dentistry and threatening criminal prosecution.
  • The Board also sent letters to mall operators, advising them to expel teeth-whitening kiosks from their premises.
  • As a direct result of the Board's actions, non-dentists ceased offering teeth whitening services throughout North Carolina.

Procedural Posture:

  • The Federal Trade Commission (FTC) filed an administrative complaint in 2010 against the North Carolina State Board of Dental Examiners (Board), alleging unfair methods of competition.
  • The Board filed a motion to dismiss, claiming state-action immunity, which was denied by an Administrative Law Judge (ALJ).
  • The full FTC affirmed the ALJ's denial of the motion to dismiss.
  • Following a hearing on the merits, the ALJ ruled that the Board had unreasonably restrained trade, and the FTC affirmed this finding.
  • The FTC issued a final cease-and-desist order against the Board.
  • The Board, as petitioner, sought review in the U.S. Court of Appeals for the Fourth Circuit.
  • The Fourth Circuit affirmed the FTC's order in all respects, holding that the Board was not entitled to state-action immunity because it was not actively supervised by the state.
  • The U.S. Supreme Court granted the Board's petition for a writ of certiorari.

Locked

Premium Content

Subscribe to Lexplug to view the complete brief

You're viewing a preview with Rule of Law, Facts, and Procedural Posture

Issue:

Does a state professional licensing board, created by state law but controlled by active market participants, enjoy state-action immunity from federal antitrust law when its anticompetitive conduct is not actively supervised by the state?


Opinions:

Majority - Justice Kennedy

No. A state professional licensing board controlled by active market participants does not enjoy state-action immunity unless its anticompetitive conduct is actively supervised by the state. When a state delegates its regulatory power to a non-sovereign actor composed of self-interested market participants, there is a significant risk that the actor will pursue private interests rather than state policy. To qualify for Parker immunity under these circumstances, the actor must satisfy the two-part test from California Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc.: 1) the challenged restraint must be clearly articulated as state policy, and 2) the policy must be actively supervised by the state. The active supervision requirement is essential to provide 'realistic assurance' that the conduct promotes state policy, not private self-interest. Because the North Carolina Board's actions to exclude non-dentist teeth whiteners from the market were not supervised by any disinterested state official, the Board fails the Midcal test and is not immune from federal antitrust law.


Dissenting - Justice Alito

Yes. The Board is a state agency created by the North Carolina legislature to regulate a profession, which is a traditional exercise of state police power that the Parker doctrine was meant to protect. As a state agency, the Board is an arm of the state's sovereign power and should be immune from antitrust liability without needing to satisfy the Midcal test, which was designed for private actors. The majority errs by treating a state agency as a private entity based on its composition. This inquiry into whether a board has been 'captured' by private interests improperly judges the wisdom of the state's chosen regulatory structure and creates an unworkable standard that undermines principles of federalism.



Analysis:

This decision significantly narrows the scope of state-action antitrust immunity for professional licensing boards. It establishes that a board's formal designation as a 'state agency' is insufficient to confer immunity if its decision-making is controlled by active market participants. The ruling effectively requires states to either restructure hundreds of professional boards to reduce the influence of active practitioners or implement active, substantive oversight by a disinterested state entity. This increases the exposure of such boards to federal antitrust liability and imposes a new compliance burden to ensure their actions are genuinely advancing state policy rather than private economic interests.

🤖 Gunnerbot:
Query North Carolina State Board of Dental Examiners v. Federal Trade Commission (2015) directly. You can ask questions about any aspect of the case. If it's in the case, Gunnerbot will know.
Locked
Subscribe to Lexplug to chat with the Gunnerbot about this case.

Unlock the full brief for North Carolina State Board of Dental Examiners v. Federal Trade Commission