United States v. Oregon State Bar

• Citation: 385 F. Supp. 507
• Decision Date: 25 November 1974
• Docket Number: No. 74-362.,74-362.
• Parties: UNITED STATES of America, Plaintiff, v. OREGON STATE BAR, Defendant.
• Court: U.S. District Court — District of Oregon

385 F. Supp. 507

UNITED STATES of America, Plaintiff, v. OREGON STATE BAR, Defendant.

No. 74-362.

United States District Court, D. Oregon.

November 25, 1974.

James E. Figenshaw, Antitrust Div. Dept. of Justice, San Francisco, Cal., Sidney I. Lezak, U. S. Atty., District of Oregon, Portland, Ore., for plaintiff.

Manley B. Strayer of Davies, Biggs, Strayer, Stoel & Boley, Portland, Ore., for defendant.

DECISION AND ORDER

MORELL E. SHARP,^* District Judge.

The United States brings this civil action to enjoin the Oregon State Bar from further publication, distribution or suggestion of a schedule of attorneys' fees. The complaint is filed and jurisdiction obtained under Section 4 of the Sherman Act, 15 U.S.C. § 4, alleging violation of Section 1 of the Act, 15 U.S.C. § 1. The Government alleges that defendant and various of its members and officers are engaged in an illegal conspiracy to fix prices. Only the Oregon State Bar is made a defendant to this suit.

The defendant moves for summary judgment pursuant to Fed.R.Civ.P. 56, asserting two legal defenses. First, defendant argues that the "state action" doctrine exempts its activities from Sherman Act scrutiny. Second, defendant claims that its activities are immune from antitrust suit by the "learned profession" exemption to the Sherman Act "trade or commerce" requirement.

The applicability of these two special exemptions is the only issue raised by defendant's motion. The Sherman Act validity of the fee schedule itself, viewed without regard to special exemptions, is not before the Court. The parties do not dispute any facts material to this motion.

In 1935 the Oregon legislature passed an act providing that all lawyers in the state must be members of the Oregon State Bar "which hereby is created an agency of the state to carry out the provisions of this Act." Ch. 28, Oregon Laws of 1935. Under the act as amended to date the Oregon State Bar is "a public corporation and an instrumentality of the Judicial Department of the government of the State of Oregon." O.R.S. 9.010.

A Board of Governors, elected by the membership, "is charged with the executive functions of the state bar and shall at all times direct its power to the advancement of the science of jurisprudence and the improvement of the administration of justice." O.R.S. 9.080. The Board of Governors is empowered, with the approval of the State Bar, to formulate rules of professional conduct; and when such rules are adopted by the Supreme Court, the Board has the power to enforce them. O.R.S. 9.490. Pursuant to this authorization, the Board of Governors formulated a Code of Professional Responsibility which was adopted by the Oregon Supreme Court on December 30, 1970, effective that date.¹

Canon 2 of the Code states:

"A lawyer should assist the legal profession in fulfilling its duty to make legal counsel available."

Disciplinary Rule 2-106, which accompanies this canon, provides:

"DR2-106 FEES FOR LEGAL SERVICES.

(A) A lawyer shall not enter into an agreement for, charge or collect an illegal or clearly excessive fee.

(B) A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee. Factors to be considered as guides in determining the reasonableness of a fee include the following:

(1) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly.

(2) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer.

(3) The fee customarily charged in the locality for similar legal services.

(4) The amount involved and the results obtained.

(5) The time limitations imposed by the client or by the circumstances.

(6) The nature and length of the professional relationship with the client.

(7) The experience, reputation, and ability of the lawyer or lawyers performing the services.

(8) Whether the fee is fixed or contingent.

(C) A lawyer shall not enter into an arrangement for, charge, or collect a contingent fee for representing a defendant in a criminal case." (Emphasis supplied)

The State Bar is charged with the responsibility of investigating complaints as to the conduct of attorneys and filing its recommendations with the Supreme Court. The Supreme Court, after notice and hearing, may affirm, adopt, modify, reverse or reject a recommendation; and may disbar, suspend or reprimand the attorney for breach of the statutory duties or the Code of Professional Responsibility. O.R.S. 9.541-9.580.

On June 1, 1969, the Oregon State Bar published and distributed to its members a "Schedule of Minimum Fees and Charges." This schedule was prepared by the Bar's Committee on Economics of Law Practice. The duties and responsibilities of this committee are not defined by statute nor by bylaws of the Bar.

On April 1, 1973, the Oregon State Bar published and distributed to its members a "schedule of Suggested Fees and Charges." This schedule was a revision of the 1969 schedule made by various permanent employees of the Bar.

Both the 1969 and 1973 schedules were adopted and approved by the Board of Governors. Neither schedule was adopted or approved by the Oregon Supreme Court nor by the Oregon State Legislature.

I. THE "STATE ACTION" DOCTRINE

Section 1 of the Sherman Act, 15 U. S.C. § 1, provides:

"Every contract, combination . . . or conspiracy, in restraint of trade or commerce among the several States . . . is hereby declared to be illegal . . .."

While "immunity from the antitrust laws is not lightly implied," California v. Federal Power Commission, 369 U.S. 482, 485, 82 S.Ct. 901, 903, 8 L.Ed.2d 54 (1962), an exemption from antitrust law coverage for the activities of a state was carved out by the Supreme Court thirty-one years ago. Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943). The defendant in the instant case argues that this state action doctrine exempts its activities from Sherman Act attack.

The dimensions of this state action exemption have never been clear. Much of the language in Parker v. Brown, supra, generates confusion rather than clarification. Thus, while the Court exempts "state action or official action directed by a state," it declares that "a state does not give immunity to those who violate the Sherman Act by authorizing them to violate it, or by declaring that their action is lawful." 317 U.S. at 351, 63 S.Ct. at 314.

The line between immunity and illegality can be made less uncertain by an examination of the facts in Parker. In that case, a producer and packer of raisins challenged the raisin proration marketing program established pursuant to the California Agricultural Prorate Act. The program severely restricted the free marketing of raisins. Several factors figured significantly in the Court's analysis. First, the California Agricultural Prorate Act specifically authorized the establishment of proration marketing programs which would restrain competition and maintain prices. Second, although private producers were involved in the petition for, formulation of, and administration of the program, the program was not effective until approved by a state commission following at least two public hearings. This commission was composed of the state Director of Agriculture and eight gubernatorial appointees. Third, the Court found that the California scheme dovetailed with the federal Agricultural Adjustment Act, which authorized the Secretary of Agriculture to impose similar marketing restrictions and which recognized the existence of state programs.

Thus, the Court stated, 317 U.S. at 350-351, 63 S.Ct. at 313:

"But it is plain that the prorate program here was never intended to operate by force of individual agreement or combination. It derived its authority and its efficacy from the legislative command of the state and was not intended to operate or become effective without that command. We find nothing in the language of the Sherman Act or in its history which suggests that its purpose was to restrain a state or its officers or agents from activities directed by its legislature. In a dual system of government in which, under the Constitution, the states are sovereign, save only as Congress may constitutionally subtract from their authority, an unexpressed purpose to nullify a state's control over its officers and agents is not lightly to be attributed to Congress."

The most recent discussion of Parker v. Brown is found in New Mexico v. American Petrofina, Inc., 501 F.2d 363 (9th Cir. 1974), where the court concluded that if a state itself is the defendant in an antitrust suit, no further analysis is required before dismissing the claim pursuant to the state action doctrine. However, when the state is not the named defendant, the court must engage in a comprehensive examination of the legislative will. The court stated, at pp. 369-370:

"But these cases in which the state itself is not the defendant involved suits against allegedly private defendants who defended on the basis that the state has authorized their anti-competitive conduct. The alleged authorization is normally either a putative regulatory scheme or a state created corporation intended to manage a monopoly in the public interest.

"In either situation, it is necessary to determine whether the anti-competitive result actually is a goal of the state entitled to the state's immunity rather than a private group masquerading under the banner of `state action.' Such a determination necessarily involves an inquiry into legislative motives, and courts are understandably reluctant to apply the state's immunity to private parties without a clear indication by the state's legislature that the anti-competitive results have its sanction.

"But there is no indication from those cases that the legislature must declare its intent to

...