Bd. of Dental Exam'rs of Ala. v. Fed. Trade Comm'n

• Decision Date: 02 February 2021
• Docket Number: Case No.: 2:20-cv-1310-RDP
• Citation: 519 F.Supp.3d 1033
• Court: U.S. District Court — Northern District of Alabama
• Parties: BOARD OF DENTAL EXAMINERS OF ALABAMA, Plaintiff, v. FEDERAL TRADE COMMISSION, Defendant.

519 F.Supp.3d 1033

BOARD OF DENTAL EXAMINERS OF ALABAMA, Plaintiff,

v.FEDERAL TRADE COMMISSION, Defendant.

Case No.: 2:20-cv-1310-RDP

United States District Court, N.D. Alabama, Southern Division.

Signed February 2, 2021

Filed February 3, 2021

Robert Ashby Pate, Logan Taylor Matthews, Jackson R. Sharman, III, Lightfoot Franklin & White LLC, Birmingham, AL, for Plaintiff.

Mariel Goetz, Federal Trade Commission, Washington, DC, Don B. Long, III, United States Attorney's Office, Birmingham, AL, for Defendant.

MEMORANDUM OPINION

R. DAVID PROCTOR, UNITED STATES DISTRICT JUDGE

This matter is before the court on Defendant Federal Trade Commission ("FTC")’s Motion to Dismiss. (Doc. # 8). In that Motion, the FTC moves to dismiss the complaint filed against it by the Board of Dental Examiners of Alabama ("Board") under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the reasons stated below, the FTC's Motion is due to be granted.

I. Factual and Procedural Background

In 2017, the Board promulgated a new rule, amending the Alabama Code to prohibit the making of "digital images" or "digital impressions" of a patient's mouth without the "direct supervision" of a dentist who is on-site and physically present. Ala. Admin Code r. 270-x-3-.06, 270-x-3-.10. Pursuant to that new rule, the Board sent SmileDirectClub, LLC ("SmileDirectClub") a cease-and-desist letter, directing it to stop offering teledentistry services to Alabama customers because its "SmileShop" did not have a dentist who was physically present and on-site while its intra-oral digital imaging procedures were taking place. (Doc. # 1 ¶ 34). Several months later, Dr. Leeds and SmileDirectClub filed a complaint in this court, asserting various claims for constitutional and Sherman Act violations. See D. Blaine Leeds, DDS v. Board of Dental Examiners of Alabama , No. 18-cv-01679 (N.D. Ala.) (Doc. # 1). The Board filed a Motion to Dismiss, id. (Doc. # 32), which was granted in substantial part but denied as to SmileDirectClub's dormant Commerce Clause and Sherman Act claims. See id. (Docs. # 57-58). Relevant to this Motion, the court rejected the Board's argument that the Sherman Act claims against the Board should be dismissed because the Board is entitled to state-action immunity from Sherman Act claims under Parker v. Brown , 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943) and its progeny.¹ D. Blaine Leeds, DDS , No. 18-cv-1679 (Doc. # 57 at 19). The Board subsequently appealed the denial of its Motion to Dismiss SmileDirectClub's Sherman Act claim to the Eleventh Circuit, and SmileDirectClub filed a cross-appeal. See id. (Docs. # 64, 74, 75). That appeal has been briefed, argued, and is currently pending interlocutory review.

While that appeal was pending, the FTC issued a Civil Investigative Demand ("CID") to the Board, requesting information relating to the passage and enforcement of the Board's rule prohibiting the making of "digital images" or "digital impressions" of a patient's mouth without the "direct supervision" of a dentist who is on-site and physically present. (Doc. # 1 ¶ 2). Although the Board at first assured the FTC that it intended to cooperate with the FTC's investigation, several months after the FTC issued the CID, the Board filed this suit seeking declaratory and injunctive relief. (Doc. # 8 ¶ 7-8). Specifically, the Board has requested the court to enjoin the FTC's CID and civil investigation and to declare that the Board is under no obligation to respond to the FTC's CID.² The Board claims that it is immune from FTC scrutiny under the doctrine of Parker immunity. (Doc. # 1). In response to the Board's Complaint, the FTC filed a Motion to Dismiss for lack of subject-matter jurisdiction and failure to state a claim. (Doc. # 8 at 1) (citing Fed. R. Civ. P. 12(b)(1), 12(b)(6) ). In that Motion to Dismiss, the FTC asserted: (1) the Administrative Procedure Act ("APA") does not permit entities to challenge preliminary, nonfinal actions like the FTC's CID and civil investigation; (2) the Board has not exhausted its administrative remedies and therefore cannot seek judicial relief; and (3) even if the court were to conclude it had jurisdiction, it should decline to exercise that jurisdiction based upon its inherent discretion to not hear this case as it involves a declaratory action. (Doc. # 8 at 1-2). The Motion to Dismiss has been fully briefed by the parties. (Docs. # 8, 19, 23). While the Motion to Dismiss was pending, the court consolidated this matter with D. Blaine Leeds, DDS , No. 18-cv-1679 (N.D. Ala.) (Doc. # 20).

II. Standard of Review

Before considering whether the Board's suit for declaratory and injunctive relief should be dismissed on Rule 12(b)(6) grounds, the court should first consider whether it has jurisdiction to hear the Board's claims against the FTC. See Jones v. State of Ga. , 725 F.2d 622, 623 (11th Cir. 1984) ("When a district court has pending before it both a 12(b)(1) motion and a 12(b)(6) motion, the generally preferable approach, if the 12(b)(1) motion essentially challenges the existence of a federal cause of action, is for the court to find jurisdiction and then decide the 12(b)(6) motion."); Randall D. Wolcott, M.D., P.A. v. Sebelius , 635 F.3d 757, 762 (5th Cir. 2011) ("When a Rule 12(b)(1) motion is filed in conjunction with other Rule 12 motions, the court should consider the Rule 12(b)(1) jurisdictional attack before addressing any attack on the merits.") (quoting Ramming v. United States , 281 F.3d 158, 161 (5th Cir. 2001) ).

Federal courts are courts of limited jurisdiction " ‘empowered to hear only those cases within the judicial power of the United States as defined by Article III of the Constitution,’ and which have been entrusted to them by a jurisdictional grant authorized by Congress." See Univ. of S. Ala. v. Am. Tobacco Co. , 168 F.3d 405, 409 (11th Cir. 1999) (quoting Taylor v. Appleton , 30 F.3d 1365, 1367 (11th Cir. 1994) ).

The jurisdiction of the federal court may be attacked facially or factually. Morrison v. Amway Corp. , 323 F.3d 920, 924 n.5 (11th Cir. 2003). In a facial challenge, a court assumes the allegations in the complaint are true and determines whether the complaint sufficiently alleges a basis for subject-matter jurisdiction. Lawrence v. Dunbar , 919 F.2d 1525, 1529 (11th Cir. 1990). Factual attacks, on the other hand, "challenge the ‘existence of subject matter jurisdiction in fact, irrespective of the pleadings, and matters outside the pleadings, such as testimony and affidavits, are considered.’ " Id. (citation omitted). In considering a factual attack on subject-matter jurisdiction, the court is free to weigh the facts and is not constrained to view them in the light most favorable to the plaintiff.

Carmichael v. Kellogg, Brown & Root Servs., Inc. , 572 F.3d 1271, 1279 (11th Cir. 2009), cert. denied, 561 U.S. 1025, 130 S.Ct. 3499, 177 L.Ed.2d 1089 (2010). Regardless of whether a challenge is facial or factual, "[t]he burden for establishing federal subject matter jurisdiction rests with the party bringing the claim." Williams v. Poarch Band of Creek Indians , 839 F.3d 1312, 1314 (11th Cir. 2016) (quoting Sweet Pea Marine, Ltd. v. APJ Marine, Inc. , 411 F.3d 1242, 1247 (11th Cir. 2005) ). After careful review, and for the reasons explained below, the court concludes that this action should be dismissed for lack of jurisdiction.

III. Discussion

A. The Final Agency Action Requirement

Although "actions taken by federal administrative agencies are [generally] subject to judicial review ... federal jurisdiction is lacking when the administrative action in question is not ‘final’ within the meaning of 5 U.S.C. § 704." Nat'l Parks Conservation Ass'n v. Norton , 324 F.3d 1229, 1236 (11th Cir. 2003) (citations omitted); see Independent Petroleum Ass'n of Am. v. Babbitt , 235 F.3d 588, 594 (D.C. Cir. 2001) ("[T]he requirement of a final agency action has been considered jurisdictional. If the agency action is not final, the court therefore cannot reach the merits of the dispute." (quoting DRG Funding Corp. v. Sec. of Hous. & Urban Dev. , 76 F.3d 1212, 1214 (D.C. Cir. 1996) )). Relevant to this suit, § 704 of the APA provides in pertinent part that "[a]gency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review. A preliminary, procedural, or intermediate agency action or ruling not directly reviewable is subject to review on the review of the final agency action." 5 U.S.C. § 704. In other words, the APA permits judicial review of preliminary, procedural, or intermediate agency action only upon review of an associated final agency action unless otherwise permitted by statute.

In Bennett v. Spear , the Supreme Court clarified the "final agency" requirement in § 704 :

As a general matter, two conditions must be satisfied for agency action to be ‘final’: First, the action must mark the ‘consummation’ of the agency's decisionmaking process,—it must not be of a merely tentative or interlocutory nature. And second, the action must be one by which ‘rights or obligations have been determined,’ or from which ‘legal consequences will flow.’

520 U.S. 154, 177-78, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997) (internal citations omitted) (quoting Chicago & S. Air Lines, Inc. v. Waterman S.S. Corp. , 333 U.S. 103, 113, 68 S.Ct. 431, 92 L.Ed. 568 (1948) and Port of Boston Marine Terminal Ass'n v. Rederiaktiebolaget Transatlantic , 400 U.S. 62, 71, 91 S.Ct. 203, 27 L.Ed.2d 203 (1970) ); see Darby v. Cisneros , 509 U.S. 137, 144, 113 S.Ct. 2539, 125 L.Ed.2d 113 (1993) ("[T]he finality requirement is concerned with whether the initial decisionmaker has arrived at a definitive position on the issue that inflicts an actual, concrete injury ...." (quoting Williamson County Reg'l Planning Comm'n v. Hamilton Bank of Johnson City , 473 U.S. 172, 193, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985) )); Franklin v. Massachusetts , 505 U.S....