SmileDirectClub, LLC v. Battle, No. 19-12227

• Citation: 969 F.3d 1134
• Decision Date: 11 August 2020
• Docket Number: No. 19-12227
• Parties: SMILEDIRECTCLUB, LLC, Plaintiff–Appellee, v. Tanja D. BATTLE, in her official capacity as Executive Director of the Georgia Board of Dentistry, et al., Defendants–Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

969 F.3d 1134

SMILEDIRECTCLUB, LLC, Plaintiff–Appellee,

v.Tanja D. BATTLE, in her official capacity as Executive Director of the Georgia Board of Dentistry, et al., Defendants–Appellants.

No. 19-12227

United States Court of Appeals, Eleventh Circuit.

August 11, 2020

Jeffrey S. Cashdan, Stephen B. Devereaux, Madison Kitchens, Adam Reinke, King & Spalding, LLP, Atlanta, GA, for Plaintiff-Appellee.

Andrew Alan Pinson, Christopher Michael Carr, Roger A. Chalmers, Bryan A. Thernes, Drew Waldbeser, Attorney General's Office, Michael A. Caplan, James William Cobb, Caplan Cobb, LLP, Atlanta, GA, for Defendants-Appellants.

Steven Mintz, Robert Nicholson, U.S. Department of Justice, Antitrust Division - Appellate Staff, Washington, DC, for Amicus Curiae United States of America.

Mark S. Hegedus, Federal Trade Commission, Office of the General Counsel, Washington, DC, for Amicus Curiae Federal Trade Commission.

Before JORDAN, TJOFLAT, and ANDERSON, Circuit Judges.

ANDERSON, Circuit Judge:

SmileDirectClub, LLC, brought the instant suit against the Georgia Board of Dentistry, including the Board's members in their individual capacities, alleging inter alia , antitrust, Equal Protection, and Due Process violations. Pursuant to Federal Rule of Civil Procedure 12(b)(6), the Board members moved to dismiss SmileDirect's complaint, which the district court granted in part and denied in part. They now appeal the denial of their motion to dismiss the complaint with respect to the alleged antitrust violations. After carefully reviewing the record, and with the benefit of oral argument, we affirm. We conclude that, based on the facts alleged in SmileDirect's complaint, the Board members are not entitled to state-action immunity under Parker v. Brown , 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), at this point in the litigation, and the district court properly denied their motion to dismiss.¹

I. BACKGROUND

For the purposes of our review at this stage, we accept all of the factual allegations in SmileDirect's complaint as true.

A. SmileDirect and the Georgia Board of Dentistry

SmileDirect is a company that offers orthodontic treatments, like teeth alignment, to its customers at a steep discount. It is able to afford that discount because, unlike most other orthodontists, it does not do in-person treatment. Instead, its patients go to one of its locations—called "SmileShops"—located around the country, which are staffed by SmileDirect technicians. At the "SmileShop," the technicians take digital scans of the patient's teeth, which are sent to SmileDirect's lab to create a model for treatment.

If the SmileDirect patient is in Georgia, the lab sends the model to a Georgia-licensed dentist or orthodontist for review. The doctor "then identifies any periodontal disease, cavities, or any other oral conditions that require[ ] further investigation or which would prevent the patient from being a candidate for" SmileDirect's treatment. Dist. Ct. Op. at 2. If there are no such problems, the doctor creates a patient-specific plan, which culminates in a prescription for SmileDirect's "clear aligners." The patient receives the aligners through the mail.

Enter the Georgia Board of Dentistry. The Board is organized under Title 43, Chapter 11, of the Code of Georgia. The Board is primarily made up of licensed, practicing dentists—along with one dental hygienist and one non-dental professional—who are appointed by the Governor. O.C.G.A. § 43-11-2. Thus, nine of the eleven current members of the Board are practicing dentists. It has broad power to regulate "those acts, services, procedures, and practices which may be performed by dental hygienists, dental assistants, or other persons at the direction of and under the supervision of a licensed dentist." Id. § 43-11-9.

On January 24, 2018, the Board voted to amend Rule 150-9-.02, which related to the "Expanded Duties of Dental Assistants." The proposed amendment added conducting "[d]igital scans for fabrication [of] orthodontic appliances

and models" to the list of expanded duties of dental assistants, Ga. Bd. of Dentistry R. 150-9-.02(aa), which requires "direct supervision" by a dentist, see

id. at 150-9-.01, .02. "Direct supervision and control as it pertains to a dental assistant shall mean that a dentist licensed in Georgia is in the dental office or treatment facility, personally diagnoses the condition to be treated, personally authorizes the procedures and remains in the dental office or treatment facility while the procedures are being performed by the dental assistant and, before dismissal of the patient, evaluates the performance of the dental assistant." Id. 150-9-.01(2). The practical effect of the proposed amendment would be to require that digital scans, like the ones conducted by SmileDirect at their "SmileShops," only take place when a licensed dentist is physically in the building where the scans are taking place, and to prohibit them otherwise.

The Board then sent the proposed amendment to Governor Nathan Deal, who was tasked with approving, modifying, or vetoing it. See O.C.G.A. § 43-1C-3. On April 30, 2018, he issued a "Certification of Active Supervision" to the Board, which "approve[d] the amendment to [the rule] for the purposes of active supervision review required by § 43-1C-3." Mot. to Dismiss, Ex. 2. The second paragraph of the Certification states:

Georgia law grants the Board authority to promulgate rules and regulations related to dental assistant services. As such, the amendment adopted by the Board is within its authority as granted by clearly articulated state policy. Therefore, I hereby approve the amendment to [the dental regulations] for the purposes of active supervision review required by [state law].

Id.

B. The Instant Lawsuit

In response to the amendment to Rule 150-9-.02, SmileDirect filed the instant lawsuit against the Georgia Board of Dentistry and its members, challenging the amended rule. It alleged, inter alia , that the Board's actions in amending the rule violated antitrust law, the Equal Protection Clause, and the Due Process Clause; it also sought a declaratory judgment that taking digital scans did not constitute the practice of dentistry such that the Board could lawfully regulate it. In response, the Board moved to dismiss the complaint, pursuant to Rule 12(b)(6). The district court granted the motion and dismissed SmileDirect's claims against the Board in its official capacity because of sovereign immunity, as well as the claims against the Board members for compensatory damages. The district court also dismissed SmileDirect's claim for declaratory judgment, holding that the amended rule fell squarely within the practice of dentistry subject to the regulation of the Board. However, the district court denied the motion with respect to the antitrust, Equal Protection, and Due Process claims against the Board members in their individual capacities. The Board appeals only from the district court's denial of its motion to dismiss the antitrust claim.² Thus, SmileDirect's Equal Protection and Due Process claims against the Board members remain pending in the district court, and the only issue before this Court on appeal involves SmileDirect's antitrust claim and the district court's denial of the Board members’ motion to dismiss it on the basis of state-action immunity under Parker v. Brown . The district court held "that SmileDirect's Sherman Act antitrust claim, as pleaded, is sufficient to survive a Rule 12(b)(6) motion to dismiss on Parker immunity grounds." Dist. Ct. Op. at 13.

II. DISCUSSION

A. Jurisdiction

Before proceeding to the merits of this case, we have an "obligation to satisfy ourselves that we have jurisdiction" over this appeal. See Boyd v. Homes of Legend, Inc. , 188 F.3d 1294, 1297 (11th Cir. 1999). SmileDirect argues that we do not have jurisdiction to hear the Board's appeal of the (partial) denial of its motion to dismiss because it does not fit within the collateral-order doctrine.

It is, of course, generally the case that parties can only appeal final decisions of district courts. See 28 U.S.C. § 1291. However, as the Supreme Court recognized in Cohen v. Beneficial Industrial Loan Corporation ,³ "an otherwise nonappealable interlocutory order is appealable if it (1) ‘conclusively determine[s] [a] disputed question,’ (2) ‘resolve[s] an important issue completely separate from the merits of the action,’ and (3) ‘[is] effectively unreviewable on appeal from a final judgment.’ " Freyre v. Chronister , 910 F.3d 1371, 1378 (11th Cir. 2018) (quoting Coopers & Lybrand v. Livesay , 437 U.S. 463, 468, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978) ).

Pursuant to binding precedent in this Circuit, a district court's denial of a Rule 12(b)(6) motion to dismiss based on state-action immunity is immediately appealable under the collateral order doctrine. Diverse Power, Inc. v. City of LaGrange , 934 F.3d 1270, 1272 & n.1 (11th Cir. 2019) ; Commuter Transp. v. Hillsborough Cty. , 801 F.2d 1286, 1289–90 (11th Cir. 1986). Diverse Power held: "[S]tate-action immunity is a form of immunity from suit, not merely from liability. And denials of immunity from suit—like denials of sovereign and qualified immunities—are immediately appealable under the collateral order doctrine." 934 F.3d at 1272 n.1 (citations omitted).⁴ Put another way, state-action immunity is "comparable to" qualified immunity for the purposes of applying the Cohen doctrine. Commuter Transp., 801 F.2d at 1289. Accordingly, we conclude that we have jurisdiction of the Board members’ appeal of the denial of its motion to dismiss because it implicates immunity from suit under the state-action doctrine.

SmileDirect's argument that private parties—and it asserts that the individual members of the Board members are private parties—are not entitled to immediately appeal under the collateral-order doctrine is at odds with our precedent. See Praxair, Inc. v. Fla. Power & Light , 64 F.3d 609, 611 (11th Cir. 199...