On Feb. 25, 2015, the U.S. Supreme Court held, in a 6-3 decision, that a state board with a controlling number of decision-makers, who are active market participants in the occupation the board regulates, does not enjoy state action immunity from federal antitrust laws unless "the State has articulated a clear policy to allow the anticompetitive conduct, and, the State provides active supervision of [the] anticompetitive conduct." N.C. State Bd. of Dental Exam'rs v. F.T.C., 135 S. Ct. 1101, 1112 (2015). (Click here for a copy of the opinion.)
In Parker v. Brown, 317 U.S. 341, 350-51 (1943), the Supreme Court held that state agencies acting in their sovereign capacity are immunized from liability under federal antitrust laws. Since Parker, state action immunity (also known as Parker immunity) has been extended to non-state entities in two circumstances. First, private actors seeking immunity must 1) act pursuant to a "clearly articulated and affirmatively expressed" state policy, and 2) be subject to active state supervision when advancing that policy. See, e.g., California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97, 104-05 (1980). Second, municipalities and more vaguely defined "substate governmental entities" need only satisfy the clearly articulated state policy requirement to gain immunity. See, e.g.,F.T.C. v. Phoebe Putney Health Sys., Inc., 133 S. Ct. 1003, 1010-11 (2013) (applying rule for substate entities);Town of Hallie v. City of Eau Claire, 471 U.S. 34, 46-47 (1985) (applying rule for municipalities); see also N.C. State Bd., 135 S. Ct. at 1112-13.
The Supreme Court used this framework in Dental Examiners to evaluate whether the North Carolina State Board of Dental Examiners ("Board") enjoyed immunity from antitrust claims when it issued anticompetitive cease and desist letters, where it was a state agency but a majority of its members were licensed dentists regulating their own trade without active state supervision.
Background
Under the North Carolina Dental Practice Act ("Act"), North Carolina created the Board as an "agency of the State," and entrusted to it the oversight and regulation of the practice of dentistry. See N. C. Gen. Stat. Ann. § 90-22, § 90-48 (2013) ("[The Board] shall be and is hereby vested, as an agency of the State, with full power and authority to enact rules and regulations governing the practice of dentistry within the State...."). The Board is funded by fees paid by in-state...
