Ronwin v. State Bar of Arizona

• Decision Date: 08 September 1982
• Docket Number: No. 80-5004,80-5004
• Citation: 686 F.2d 692
• Parties: 1981-2 Trade Cases 64,414, 1982-83 Trade Cases 65,013 Edward RONWIN, Plaintiff-Appellant, v. STATE BAR OF ARIZONA, Carlock, George Read and Wanda Myers, Robert D. and Judith Wolfinger, Harold J. and Jane Doe Richmond, James L. and Jane Doe Karman, Howard H. and Jane Doe Hoover, Charles R. and Jane Doe, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 692

686 F.2d 692

1981-2 Trade Cases 64,414, 1982-83 Trade Cases 65,013

Edward RONWIN, Plaintiff-Appellant, v. STATE BAR OF ARIZONA, Carlock, George Read and Wanda Myers, Robert D. and Judith Wolfinger, Harold J. and Jane Doe

Richmond, James L. and Jane Doe Karman, Howard H. and Jane

Doe Hoover, Charles R. and Jane Doe, Defendants-Appellees.

No. 80-5004.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 16, 1981.

Decided Dec. 14, 1981.

As Amended on Rehearing Sept. 8, 1982.

Edward Ronwin, pro se.

Timothy J. Burke, Fennemore, Craig, von Ammon & Udall, Phoenix, Ariz., argued, for defendants-appellees; Philip E. von Ammon, Phoenix, Ariz., on brief.

Appeal from the United States District Court for the District of Arizona.

Before FERGUSON and BOOCHEVER, Circuit Judges, and HATTER, ^* District Judge.

HATTER, District Judge:

Ronwin sued the Arizona State Bar ("Bar") and the individual members (and their spouses) of the Committee on Examinations and Admissions of the Arizona Supreme Court ("Committee"), alleging that they had violated federal antitrust laws in grading the 1974 Arizona bar examination that Ronwin failed. The district court denied Ronwin's motion for recusal and dismissed the action for failure to state a claim, lack of jurisdiction, and lack of standing. We affirm the denial of the recusal motion, but reverse the dismissal decision as to the individual committee members ¹ and remand for further proceedings.

I FACTS

Ronwin took the Arizona bar examination in February, 1974. He was notified two months later that he had failed the examination. The Arizona Supreme Court refused to review his exam, and the United States Supreme Court denied certiorari. See Ronwin v. Committee on Examination and Admissions, 419 U.S. 967, 95 S.Ct. 231, 42 L.Ed.2d 183 (1974). ² Ronwin filed this antitrust action in March, 1978, alleging that defendants violated section 1 of the Sherman Act, 15 U.S.C. § 1, by illegally restricting competition among attorneys practicing in Arizona. The essence of Ronwin's complaint is that the Committee graded the exam to admit a predetermined number of persons, without reference to "achievement by each bar applicant of a pre-set standard (of competence)." For purposes of their motion to dismiss, defendants did not challenge the accuracy of Ronwin's allegations. ³

At the time Ronwin took the bar exam, the Committee was authorized to determine whether bar applicants possessed the "necessary qualifications and ... fulfill(ed) the requirements prescribed by the (Bar) board of governors as approved by (the Arizona Supreme Court) ...." Ariz.Sup.Ct. Rule 28(a) (1973) (amended in 1975 to create two separate committees). The Committee consists of seven active members of the State Bar who, upon the recommendation of the Bar's Board of Governors, are appointed by the Arizona Supreme Court. Id. As Ronwin noted in paragraph II of his complaint, the State Bar is a private entity to which all Arizona lawyers belong, and the individual defendants were members of "the Committee ... and, as such, presided over and conducted the process by which applicants for membership in (the) Bar were examined...."

II DISMISSAL OF RONWIN'S ACTION

The district court gave three reasons for dismissing the action: (1) the complaint failed to state a claim upon which relief could be granted; (2) the court lacked jurisdiction over the subject matter; and (3) Ronwin lacked standing to seek the relief requested. These reasons will be discussed seriatim.

A. Failure to State a Claim-State-Action Immunity

The district court's ruling that Ronwin had failed to state a claim was apparently based on its acceptance of defendants' argument that bar grading procedures are immune from federal antitrust laws. Relying primarily on Bates v. State Bar of Arizona, 433 U.S. 350, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977), the defendants argue that, even assuming, arguendo, the grading formula was anticompetitive, the Committee's status as a state agent renders its actions absolutely immune from antitrust liability. We disagree.

In Bates, the Supreme Court held that a disciplinary rule adopted by the Arizona Supreme Court and enforced by the Arizona state bar, which prohibited lawyers from advertising, did not violate the federal antitrust laws under the state-action exemption first announced in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943). 433 U.S. at 359-61, 97 S.Ct. at 2696-97. The Court stressed that the real party in interest was the Arizona Supreme Court because it had adopted the challenged restraint. Because the challenged restraint had been specifically adopted by the state acting, through the State Supreme Court, as sovereign, it therefore reflected a clear and affirmative articulation of state policy. Id. at 361-62, 97 S.Ct. at 2697-98. In the present case, by contrast, the challenged restraint was not adopted or directly authorized by the Arizona Supreme Court.

In a more analogous case, the Supreme Court held that the activities of a county and a state bar association in publishing and enforcing a minimum-fee schedule were not shielded by the state-action exemption. Goldfarb v. Virginia State Bar The threshold inquiry in determining if an anticompetitive activity is state action of the type the Sherman act was not meant to proscribe is whether the activity is required by the State acting as sovereign. Parker v. Brown, 317 U.S. at 350-352 (63 S.Ct. at 313-14); Continental Co. v. Union Carbide, 370 U.S. 690, 706-07 (82 S.Ct. 1404, 1414-15, 8 L.Ed.2d 777) (1962). Here we need not inquire further into the state-action question because it cannot fairly be said that the State of Virginia through its Supreme Court Rules required the anticompetitive activities of either respondent. Respondents have pointed to no Virginia statute requiring their activities; state law simply does not refer to fees, leaving regulation of the profession to the Virginia Supreme Court; although the Supreme Court's ethical codes mention advisory fee schedules they do not direct either respondent to supply them, or require the type of price floor which arose from respondents' activities.... It is not enough that, as the County Bar puts it, anticompetitive conduct is "prompted" by state action; rather, anticompetitive activities must be compelled by direction of the State acting as a sovereign.

421 U.S. 773, 788-92, 95 S.Ct. 2004, 2013-15, 44 L.Ed.2d 572 (1975). The Court stated:

Id. at 790-91, 95 S.Ct. at 2014-15.

Subsequent Supreme Court decisions underscore the distinction between Bates and Goldfarb. The Court has repeatedly emphasized in these more recent decisions that for the state-action exemption to apply the challenged restraint must be clearly articulated and affirmatively expressed as state policy and be actively supervised by the state itself. See, e.g., City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 410-13, 98 S.Ct. 1123, 1135-36, 55 L.Ed.2d 364 (1978); New Motor Vehicle Board of California v. Orrin W. Fox Co., 439 U.S. 96, 109, 99 S.Ct. 403, 411, 58 L.Ed.2d 361 (1978); California Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445 U.S. 97, 105, 100 S.Ct. 937, 943, 63 L.Ed.2d 233 (1980); Community Communications Co. v. City of Boulder, --- U.S. ----, ---- - ----, 102 S.Ct. 835, 839-41, 70 L.Ed.2d 810 (1982). The failure to meet either requirement precludes application of the antitrust immunity. Midcal, 445 U.S. at 105, 100 S.Ct. at 943.

Viewing the present case at this stage of the proceedings in light of the Court's state-action requirements, we conclude that the challenged grading procedure fails to qualify for antitrust immunity. It has not been established that the alleged restraint was "clearly articulated and affirmatively expressed as state policy," Midcal 's first requirement. Id. Like the defendants in Goldfarb, the defendants here have no statute or Supreme Court Rule to point to as directly requiring the challenged grading procedure. ⁴ See 421 U.S. at 790-91, 95 S.Ct. at 2014-15.

The fact that the Arizona Supreme Court has delegated to the Committee the general authority to examine applicants to determine if they are qualified to practice law and reviews the Committee's recommendations regarding admission does not alone clothe the Committee's unilateral grading policies with blanket immunity from the antitrust laws. "The national policy in favor of competition cannot be thwarted by casting such a gauzy cloak of state involvement" over actions of the Committee that were not affirmatively expressed as state policy by the Arizona court. Midcal, 445 U.S. at 106, 100 S.Ct. at 943. As the Court emphasized in Goldfarb, "(i)t is not enough that, as the ... Bar puts it, anticompetitive conduct is 'prompted' by state action; rather, anticompetitive activities must be compelled by direction of the State acting as a sovereign." 421 U.S. at 791, 95 S.Ct. at 2015. Accord, Phonetele, Inc. v. American Telephone and Telegraph Co., 664 F.2d 716, 736 (9th Cir. 1981).

The fact that the Committee was established by Supreme Court Rule and composed of members selected from the Bar by the Arizona Supreme Court is not, as defendants assert, dispositive in itself of the state-action question. ⁵ Although the defendants in the United States Supreme Court's state-action decisions were public bodies, or subdivisions of the state, that did not end the Court's analysis. The Court still looked to see whether the challenged restraints were clearly articulated and affirmatively expressed as state policy and were actively supervised by the state acting as sovereign. Thus, for instance, it was not dispositive that the restraints challenged in Parker, Orrin W. Fox, and Midcal were enforced, respectively, by a state commission, a state board, and a state department. 317 U.S. at 344, 63 S.Ct. at 310; 439 U.S. at 103, 99 S.Ct. at 408; 445 U.S. at 100, 100 S.Ct. at 940. In City of Lafayette,...