Goldfarb v. Virginia State Bar 8212 70, No. 74

CourtUnited States Supreme Court
Writing for the CourtBURGER
Citation95 S.Ct. 2004,44 L.Ed.2d 572,421 U.S. 773
Decision Date16 June 1975
Docket NumberNo. 74
PartiesLewis H. GOLDFARB et al., Petitioners, v. VIRGINIA STATE BAR et al. —70

44 L.Ed.2d 572
95 S.Ct. 2004
421 U.S. 773
Lewis H. GOLDFARB et al., Petitioners,

v.

VIRGINIA STATE BAR et al.

No. 74—70.
Argued March 25, 1975.
Decided June 16, 1975.
Rehearing Denied Oct. 6, 1975.

See 423 U.S. 886, 96 S.Ct. 162.

Syllabus

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,' Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 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. Pp. 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. Pp. 781-783.

Page 774

(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 scheduled resulted in raising fees. Pp. 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. Pp. 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. Pp. 788-792.

497 F.2d 1, reversed and remanded.

Alan B. Morrison, Washington, D.C., for petitioners.

Page 775

Sol. Gen. Robert H. Bork, for the U.S., as amicus curiae, by special leave of Court.

Lewis T. Booker, Richmond, Va., for respondent Fairfax County Bar Ass'n.

Andrew P. Miller, Richmond, Va., for respondent Va. State Bar.

Mr. Chief Justice BURGER delivered the opinion of the Court.

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, 63 S.Ct. 307, 87 L.Ed. 315 (1943).

I

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.1

Page 776

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.

The fee schedule the lawyers referred to is a list of recommended minimum prices for common legal services. Respondent Fairfax County Bar Association published the fee schedule although, as a purely voluntary association of attorneys, the County Bar has no formal power to enforce it. Enforcement has been provided by respondent Virginia State Bar which is the administrative agency2 through which the Virginia Supreme Court regulates the practice of law in that State; membership in the State Bar is required in order to practice in Virginia.3 Although the State Bar has never taken formal disciplinary action to compel adherence to any fee sched-

Page 777

ule, it has published reports4 condoning fee schedules, and has issued two ethical opinions5 indicating that fee schedules cannot be ignored. The most recent opinion states that 'evidence that an attorney habitually charges

Page 778

less than the suggested minimum fee schedule adopted by his local bar Association, raises a presumption that such lawyer is guilty of misconduct . . ..'6

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 Bar7 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.8 355 F.Supp. 491 (ED Va. (1973). The

Page 779

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.

Both respondents argued that their actions were also exempt from the Sherman Act as state action. Parker v. Brown, supra. The District Court agreed that the Virginia State Bar was exempt under that doctrine because it is an administrative agency of the Virginia Supreme Court, and more important, because its 'minor role in this matter . . . derived from the judicial and 'legislative command of the State and was not intended to operate or become effective without that command." 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 Court of Appeals reversed as to liability. 497 F.2d 1 (CA4 1974). Despite its conclusion that it 'is abundantly clear from the record before us that the fee schedule and the enforcement mechanism supporting it act as a substantial restraint upon competition among attorneys practicing in Fairfax County,' id., at 13, the Court of Appeals held the State Bar immune under Parker v. Brown, supra, and held the County Bar immune because the practice of law is not 'trade or commerce' under the Sherman Act. There has long been judicial recognition of a limited exclusion of 'learned professions' from the scope of the antitrust laws, the court said; that exclusion is based upon the special form

Page 780

of regulation imposed upon the professions by the States, and the incompatibility of certain competitive practices with such prefessional regulation. It concluded that the promulgation of a minimum-fee schedule is one of 'those matters with respect to which an accord must be reached between the necessities of professional regulation and the dictates of the antitrust laws.' The accord reached by that court...

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799 practice notes
  • Chamber of Commerce of the United States v. City of Seattle, No. 17-35640
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • May 11, 2018
    ...bounds of state authorization in its application of the clear-articulation test. We must follow suit. In Goldfarb v. Virginia State Bar , 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975), the Supreme Court "rejected a state-action defense to price-fixing claims where a state bar adopted a......
  • Pontius v. Children's Hosp., Civ. A. No. 78-987.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • December 30, 1982
    ..."learned professions," including medicine. This "exemption" was drastically curtailed in Goldfarb 552 F. Supp. 1364 v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 Goldfarb was a class action in which the plaintiffs sought to attack, on antitrust grounds, the application ......
  • Nat'l Ass'n for the Advancement of Multijurisdiction Practice v. Castille, No. 15–1481.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • August 26, 2015
    ...for licensing practitioners and regulating the practice of professions.” King, 767 F.3d at 229 (quoting Goldfarb v. Va. State Bar, 421 U.S. 773, 792, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975) ) (internal quotation marks omitted). Because it regulates only the requirements for obtaining a license......
  • US v. Greater Syracuse Bd. of Realtors, Inc., No. 77-CR-57.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Northern District of New York
    • April 19, 1978
    ...B. A number of courts have considered the applicability of the Sherman Act to real estate transactions. In Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975), the Supreme Court considered the Act's interstate commerce requirement as it applies to a minimum fe......
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786 cases
  • Chamber of Commerce of the United States v. City of Seattle, No. 17-35640
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • May 11, 2018
    ...bounds of state authorization in its application of the clear-articulation test. We must follow suit. In Goldfarb v. Virginia State Bar , 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975), the Supreme Court "rejected a state-action defense to price-fixing claims where a state bar adopted a......
  • Pontius v. Children's Hosp., Civ. A. No. 78-987.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • December 30, 1982
    ..."learned professions," including medicine. This "exemption" was drastically curtailed in Goldfarb 552 F. Supp. 1364 v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 Goldfarb was a class action in which the plaintiffs sought to attack, on antitrust grounds, the application ......
  • Nat'l Ass'n for the Advancement of Multijurisdiction Practice v. Castille, No. 15–1481.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • August 26, 2015
    ...for licensing practitioners and regulating the practice of professions.” King, 767 F.3d at 229 (quoting Goldfarb v. Va. State Bar, 421 U.S. 773, 792, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975) ) (internal quotation marks omitted). Because it regulates only the requirements for obtaining a license......
  • US v. Greater Syracuse Bd. of Realtors, Inc., No. 77-CR-57.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Northern District of New York
    • April 19, 1978
    ...B. A number of courts have considered the applicability of the Sherman Act to real estate transactions. In Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975), the Supreme Court considered the Act's interstate commerce requirement as it applies to a minimum fe......
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  • Partial Price-Fixing and Semi-Collusion
    • United States
    • Antitrust Bulletin Nbr. 66-4, December 2021
    • December 1, 2021
    ...a masquerade for anagreement to fix uniform prices, or it may in the future take on that character”).23. Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975).24. National Soc’y of Prof. Engineers v. United States, 435 U.S. 679, 682 (1978).25. Jeffrey L. Harrison & Price Fixing, Professions, ......
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    • Federal Register July 29, 2003
    • July 29, 2003
    ...schedule for legal services constituted illegal price fixing, notwithstanding the fact a state bar itself prescribed the schedule. \28\ 421 U.S. 773 A unanimous Court ruled against the bar, holding that the Sherman Act contained no exception for specific professions, even those regulated by......
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    ...schedule for legal services constituted illegal price fixing, notwithstanding the fact a state bar itself prescribed the schedule. \28\ 421 U.S. 773 A unanimous Court ruled against the bar, holding that the Sherman Act contained no exception for specific professions, even those regulated by......
  • Competitive impact statements and proposed consent judgments: National Council on Problem Gambling, Inc.,
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    • Federal Register October 23, 2003
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    ...is beyond debate that nonprofit organizations can be held liable under the antitrust laws.''); see also Goldfarb v. Virginia State Bar, 421 U.S. 773 The CAC also argues that the Proposed Final Judgment violates the First Amendment by ``the shackling of NCPG's future speech and assembly'' an......

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