GOLDFARB V. VIRGINIA STATE BAR
Decision Date | 16 June 1975 |
Citation | 421 U. S. 773 |
Court | U.S. Supreme Court |
CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
Petitioners, husband and wife, contracted to buy a home in Fairfax County, Va. and the lender who financed the purchase required them to obtain title insurance, which necessitated a title examination that could be performed legally only by a member of respondent Virginia State Bar. Petitioners unsuccessfully tried to find a lawyer who would examine the title for less than the fee prescribed in a minimum fee schedule published by respondent Fairfax County Bar Association and enforced by respondent Virginia State Bar. Petitioners then brought this class action against respondents, seeking injunctive relief and damages, and alleging that the minimum fee schedule and its enforcement mechanism, as applied to fees for legal services relating to residential real estate transactions, constitute price-fixing in violation of § 1 of the Sherman Act. Although holding that the State Bar was exempt from the Sherman Act, the District Court granted judgment against the County Bar Association and enjoined the publication of the fee schedule. The Court of Appeals reversed, holding not only that the State Bar's actions were immune from liability as "state action," Parke v. Bown, 317 U. S. 341, but also that the County Bar Association was immune because the practice of law, as a "learned profession," is not "trade or commerce" under the Sherman Act; and that, in any event, respondents' activities did not have sufficient effect on interstate commerce to support Sherman Act jurisdiction.
Held: The minimum fee schedule, as published by the County Bar Association and enforced by the State Bar, violates § 1 of the Sherman Act. P P. 780-793.
(a) The schedule and its enforcement mechanism constitute price-fixing, since the record shows that the schedule, rather than being purely advisory, operated as a fixed, rigid price floor. The fee schedule was enforced through the prospect of professional discipline by the State Bar, by reason of attorneys' desire to comply with announced professional norms, and by the assurance that other lawyers would not compete by underbidding. P P. 781-783.
(b) Since a significant amount of funds furnished for financing the purchase of homes in Fairfax County comes from outside the State, and since a title examination is an integral part of such interstate transactions, interstate commerce is sufficiently affected for Sherman Act purposes notwithstanding that there is no showing that prospective purchasers were discouraged from buying homes in Fairfax County by the challenged activities, and no showing that the fee schedule resulted in raising fees. P P. 783-785.
(c) Congress did not intend any sweeping "learned profession" exclusion from the Sherman Act; a title examination is a service, and the exchange of such a service for money is "commerce" in the common usage of that term. P P. 785-788.
(d) Respondents' activities are not exempt from the Sherman Act as "state action" within the meaning of Parker v. Brown, supra. Neither the Virginia Supreme Court nor any Virginia statute required such activities, and, although the State Bar has the power to issue ethical opinions, it does not appear that the Supreme Court approves them. It is not enough that the anticompetitive conduct is "prompted" by state action; to be exempt, such conduct must be compelled by direction of the State acting as a sovereign. Here the State Bar, by providing that deviation from the minimum fees may lead to disciplinary action, has voluntarily joined in what is essentially a private anticompetitive activity, and hence cannot claim it is beyond the Sherman Act's reach. P P. 788-792.
497 F.2d 1, reversed and remanded.
BURGER, C.J., delivered the opinion of the Court, in which all other Members joined except POWELL, J., who took no part in the consideration or decision of the case.
We granted certiorari to decide whether a minimum fee schedule for lawyers published by the Fairfax County Bar Association and enforced by the Virginia State Bar violates § 1 of the Sherman Act, 26 Stat. 209, as amended, 15 U.S.C. § 1. The Court of Appeals held that, although the fee schedule and enforcement mechanism substantially restrained competition among lawyers, publication of the schedule by the County Bar was outside the scope of the Act because the practice of law is not "trade or commerce," and enforcement of the schedule by the State Bar was exempt from the Sherman Act as state action as defined in Parker v. Brown, 317 U. S. 341 (1943).
In 1971 petitioners, husband and wife, contracted to buy a home in Fairfax County, Va. The financing agency required them to secure title insurance; this required a title examination, and only a member of the Virginia State Bar could legally perform that service. [Footnote 1]
Petitioners therefore contacted a lawyer who quoted them the precise fee suggested in a minimum fee schedule published by respondent Fairfax County Bar Association; the lawyer told them that it was his policy to keep his charges in line with the minimum fee schedule, which provided for a fee of 1% of the value of the property involved. Petitioners then tried to find a lawyer who would examine the title for less than the fee fixed by the schedule. They sent letters to 36 other Fairfax County lawyers requesting their fees. Nineteen replied, and none indicated that he would charge less than the rate fixed by the schedule; several stated that they knew of no attorney who would do so.
Because petitioners could not find a lawyer willing to charge a fee lower than the schedule dictated, they had their title examined by the lawyer they had first contacted. They then brought this class action against the State Bar and the County Bar [Footnote 7] alleging that the operation of the minimum fee schedule, as applied to fees for legal services relating to residential real estate transactions, constitutes price-fixing in violation of § 1 of the Sherman Act. Petitioners sought both injunctive relief and damages.
After a trial solely on the issue of liability, the District Court held that the minimum fee schedule violated the Sherman Act. [Footnote 8] 355 F.Supp. 491 (ED Va.1973). The
court viewed the fee-schedule system as a significant reason for petitioners' failure to obtain legal services for less than the minimum fee, and it rejected the County Bar's contention that, as a "learned profession," the practice of law is exempt from the Sherman Act.
The County Bar, on the other hand, is a private organization, and was under no compulsion to adopt the fee schedule recommended by the State Bar. Since the County Bar chose its own course of conduct, the District Court held that the antitrust laws "remain in full force and effect as to it." The court enjoined the fee schedule, 15 U.S.C. § 26, and set the case down for trial to ascertain damages. 15 U.S.C. § 15.
The accord reached by that court was to hold the practice of law exempt from the antitrust laws.
Alternatively, the Court of Appeals held that respond...
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