Federal Trade Commission v. v. Federal Trade Commission

• Decision Date: 22 January 1990
• Docket Number: 88-1393,Nos. 88-1198,s. 88-1198
• Parties: FEDERAL TRADE COMMISSION, Petitioner, v. ., Petitioners, v. FEDERAL TRADE COMMISSION
• Court: U.S. Supreme Court

493 U.S. 411

110 S.Ct. 768

107 L.Ed.2d 851

FEDERAL TRADE COMMISSION, Petitioner,

v SUPERIOR COURT TRIAL LAWYERS ASSOCIATION.

SUPERIOR COURT TRIAL LAWYERS ASSOCIATION, et

al., Petitioners,

v. FEDERAL TRADE COMMISSION.

Nos. 88-1198, 88-1393.

Argued Oct. 30, 1989.

Decided Jan. 22, 1990.

Syllabus

A group of lawyers in private practice who regularly acted as court-appointed counsel for indigent defendants in District of Columbia criminal cases agreed at a meeting of the Superior Court Trial Lawyers Association (SCTLA) to stop providing such representation until the District increased group members' compensation. The boycott had a severe impact on the District's criminal justice system, and the District government capitulated to the lawyers' demands. After the lawyers returned to work, petitioner Federal Trade Commission (FTC) filed a complaint against SCTLA and four of its officers (respondents), alleging that they had entered into a conspiracy to fix prices and to conduct a boycott that constituted unfair methods of competition in violation of § 5 of the FTC Act. Declining to accept the conclusion of the Administrative Law Judge (ALJ) that the complaint should be dismissed, the FTC ruled that the boycott was illegal per se and entered an order prohibiting respondents from initiating future such boycotts. The Court of Appeals, although acknowledging that the boycott was a "classic restraint of trade" in violation of § 1 of the Sherman Act, vacated the FTC order. Noting that the boycott was meant to convey a political message to the public, the court concluded that it contained an element of expression warranting First Amendment protection and that, under United States v. O'Brien, 391 U.S. 367, 88 S.Ct. 1673, 20 L.Ed.2d 672, an incidental restriction on such expression could not be justified unless it was no greater than was essential to an important governmental interest. Reasoning that this test could not be satisfied by the application of an otherwise appropriate per se rule, but instead requires the enforcement agency to prove rather than presume that the evil against which the antitrust laws are directed looms in the conduct it condemns, the court remanded for a determination whether respondents possessed "significant market power."

Held:

1. Respondents' boycott constituted a horizontal arrangement among competitors that was unquestionably a naked restraint of price and output in violation of the antitrust laws. Respondents' proffered social justifications for the restraint of trade do not make the restraint any less unlawful. Nor is respondents' agreement outside the coverage of the antitrust laws under Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464, simply because its objective was the enactment of favorable legislation. The Noerr doctrine does not extend to horizontal boycotts designed to exact higher prices from the government simply because they are genuinely intended to influence the government to agree to the conspirators' terms. Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 503, 108 S.Ct. 1931, 1939, 100 L.Ed.2d 497. Pp. 421-425.

2. Respondents' boycott is not immunized from antitrust regulation by NAACP v. Claiborne Hardware Co., 458 U.S. 886, 102 S.Ct. 3409, 73 L.Ed.2d 1215, which held that the First Amendment prevented a State from prohibiting a politically motivated civil rights boycott. Unlike the boycott upheld in Claiborne Hardware, the undenied objective of this boycott was to gain an economic advantage for those who agreed to participate. Id., at 914-915, 102 S.Ct., at 3426-3427. Pp. 425-428.

3. The Court of Appeals erred in creating a new exception, based on O'Brien, supra, to the antitrust per se liability rules for boycotts having an expressive component. The court's analysis is critically flawed in at least two respects. First, it exaggerates the significance of the "expressive component" in respondents' boycott, since every concerted refusal to do business with a potential customer or supplier has such a component. Thus, a rule requiring courts to apply the antitrust laws "prudently and with sensitivity," in the Court of Appeals' words, whenever an economic boycott has an "expressive component" would create a gaping hole in the fabric of those laws. Second, the Court of Appeals' analysis denigrates the importance of the rule of law that respondents violated. The court's implicit assumption that the antitrust laws permit, but do not require, the condemnation of price fixing and boycotts without proof of market power is in error, since, although the per se rules are the product of judicial interpretation of the Sherman Act, they nevertheless have the same force and effect as any other statutory commands. The court also erred in assuming that the categorical antitrust prohibitions are "only" rules of "administrative convenience" that do not serve any substantial governmental interest unless the price-fixing competitors actually possess market power. The per se rules reflect a longstanding judgment that every horizontal price-fixing arrangement among competitors poses some threat to the free market even if the par- ticipants do not themselves have the power to control market prices. Pp. 428-436.

272 U.S.App.D.C. 272, 856 F.2d 226 (CADC 1988), reversed in part and remanded.

STEVENS, J., delivered the opinion for a unanimous Court with respect to Parts I, II, III, and IV, and the opinion of the Court with respect to Parts V and VI in which REHNQUIST, C.J., and WHITE, O'CONNOR, SCALIA, and KENNEDY, JJ., joined. BRENNAN, J., filed an opinion concurring in part and dissenting in part, in which MARSHALL, J., joined, post, p. 436. BLACKMUN, J., filed an opinion concurring in part and dissenting in part, post, p. 453.

Ernest J. Isenstadt, Washington, D.C., for F.T.C.

Willard K. Tom, Washington, D.C., for Superior Court Trial Lawyers Ass'n, et al.

Justice STEVENS delivered the opinion of the Court.

Pursuant to a well-publicized plan, a group of lawyers agreed not to represent indigent criminal defendants in the District of Columbia Superior Court until the District of Columbia government increased the lawyers' compensation. The questions presented are whether the lawyers' concerted conduct violated § 5 of the Federal Trade Commission Act and, if so, whether it was nevertheless protected by the First Amendment to the Constitution.¹

I

The burden of providing competent counsel to indigent defendants in the District of Columbia is substantial. During 1982, court-appointed counsel represented the defendant in approximately 25,000 cases. In the most serious felony cases, representation was generally provided by full-time employees of the District's Public Defender System (PDS). Less serious felony and misdemeanor cases constituted about 85 percent of the total caseload. In these cases, lawyers in private practice were appointed and compensated pursuant to the District of Columbia Criminal Justice Act (CJA).²

Although over 1,200 lawyers have registered for CJA appointments, relatively few actually apply for such work on a regular basis. In 1982, most appointments went to approximately 100 lawyers who are described as "CJA regulars." These lawyers derive almost all of their income from representing indigents.³ In 1982, the total fees paid to CJA lawyers amounted to $4,579,572.

In 1974, the District created a Joint Committee on Judicial Administration with authority to establish rates of compensation for CJA lawyers not exceeding the rates established by the federal Criminal Justice Act of 1964. After 1970, the federal Act provided for fees of $30 per hour for court time and $20 per hour for out-of-court time. See 84 Stat. 916, codified at 18 U.S.C. § 3006A (1970 ed.). These rates accordingly capped the rates payable to the District's CJA lawyers, and could not be exceeded absent amendment to either the federal statute or the District Code.

Bar organizations began as early as 1975 to express concern about the low fees paid to CJA lawyers. Beginning in 1982, respondents, the Superior Court Trial Lawyers Association (SCTLA) and its officers, and other bar groups sought to persuade the District to increase CJA rates to at least $35 per hour. Despite what appeared to be uniform support for the bill, it did not pass. It is also true, however, that noth- ing in the record indicates that the low fees caused any actual shortage of CJA lawyers or denied effective representation to defendants.

In early August 1983, in a meeting with officers of SCTLA, the Mayor expressed his sympathy but firmly indicated that no money was available to fund an increase. The events giving rise to this litigation then ensued.

At an SCTLA meeting, the CJA lawyers voted to form a "strike committee." The eight members of that committee promptly met and informally agreed "that the only viable way of getting an increase in fees was to stop signing up to take new CJA appointments, and that the boycott should aim for a $45 out-of-court and $55 in-court rate schedule." In re Superior Court Trial Lawyers Assn., 107 F.T.C. 510, 538 (1986).

On August 11, 1983, about 100 CJA lawyers met and resolved not to accept any new cases after September 6 if legislation providing for an increase in their fees had not passed by that date. Immediately following the meeting, they prepared (and most of them signed) a petition stating:

"We, the undersigned private criminal lawyers practicing in the Superior Court of the District of Columbia, agree that unless we are granted a substantial increase in our hourly rate we will cease accepting new appointments under the Criminal Justice Act." 272 U.S.App.D.C. 272, 276, 856 F.2d 226, 230 (1988).

On September 6, 1983, about 90 percent ⁴ of the CJA regulars refused to accept any new assignments. Thereafter, SCTLA arranged a series of events to attract the attention of the news media and to obtain additional support....