Federal Trade Commission v. Superior Court Trial Lawyers Association

by John Paul Stevens

United States Supreme Court

493 U.S. 411

Federal Trade Commission  v.  Superior Court Trial Lawyers Association

No. Nos 88-1198, 88-1393  Argued: Oct. 30, 1989. --- Decided: Jan 22, 1990

Syllabus

A group of lawyers in private practice who regularly acted as court-appointed counsel for indigent defendants in District of Columbia criminal cases agreed at a meeting of the Superior Court Trial Lawyers Association (SCTLA) to stop providing such representation until the District increased group members' compensation. The boycott had a severe impact on the District's criminal justice system, and the District government capitulated to the lawyers' demands. After the lawyers returned to work, petitioner Federal Trade Commission (FTC) filed a complaint against SCTLA and four of its officers (respondents), alleging that they had entered into a conspiracy to fix prices and to conduct a boycott that constituted unfair methods of competition in violation of § 5 of the FTC Act. Declining to accept the conclusion of the Administrative Law Judge (ALJ) that the complaint should be dismissed, the FTC ruled that the boycott was illegal per se and entered an order prohibiting respondents from initiating future such boycotts. The Court of Appeals, although acknowledging that the boycott was a "classic restraint of trade" in violation of § 1 of the Sherman Act, vacated the FTC order. Noting that the boycott was meant to convey a political message to the public, the court concluded that it contained an element of expression warranting First Amendment protection and that, under United States v. O'Brien, 391 U.S. 367, 88 S.Ct. 1673, 20 L.Ed.2d 672, an incidental restriction on such expression could not be justified unless it was no greater than was essential to an important governmental interest. Reasoning that this test could not be satisfied by the application of an otherwise appropriate per se rule, but instead requires the enforcement agency to prove rather than presume that the evil against which the antitrust laws are directed looms in the conduct it condemns, the court remanded for a determination whether respondents possessed "significant market power." Held:

1. Respondents' boycott constituted a horizontal arrangement among competitors that was unquestionably a naked restraint of price and output in violation of the antitrust laws. Respondents' proffered social justifications for the restraint of trade do not make the restraint any less unlawful. Nor is respondents' agreement outside the coverage of the antitrust laws under Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464, simply because its objective was the enactment of favorable legislation. The Noerr doctrine does not extend to horizontal boycotts designed to exact higher prices from the government simply because they are genuinely intended to influence the government to agree to the conspirators' terms. Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 503, 108 S.Ct. 1931, 1939, 100 L.Ed.2d 497. Pp. 421-425.

2. Respondents' boycott is not immunized from antitrust regulation by NAACP v. Claiborne Hardware Co., 458 U.S. 886, 102 S.Ct. 3409, 73 L.Ed.2d 1215, which held that the First Amendment prevented a State from prohibiting a politically motivated civil rights boycott. Unlike the boycott upheld in Claiborne Hardware, the undenied objective of this boycott was to gain an economic advantage for those who agreed to participate. Id., at 914-915, 102 S.Ct., at 3426-3427. Pp. 425-428.

3. The Court of Appeals erred in creating a new exception, based on O'Brien, supra, to the antitrust per se liability rules for boycotts having an expressive component. The court's analysis is critically flawed in at least two respects. First, it exaggerates the significance of the "expressive component" in respondents' boycott, since every concerted refusal to do business with a potential customer or supplier has such a component. Thus, a rule requiring courts to apply the antitrust laws "prudently and with sensitivity," in the Court of Appeals' words, whenever an economic boycott has an "expressive component" would create a gaping hole in the fabric of those laws. Second, the Court of Appeals' analysis denigrates the importance of the rule of law that respondents violated. The court's implicit assumption that the antitrust laws permit, but do not require, the condemnation of price fixing and boycotts without proof of market power is in error, since, although the per se rules are the product of judicial interpretation of the Sherman Act, they nevertheless have the same force and effect as any other statutory commands. The court also erred in assuming that the categorical antitrust prohibitions are "only" rules of "administrative convenience" that do not serve any substantial governmental interest unless the price-fixing competitors actually possess market power. The per se rules reflect a longstanding judgment that every horizontal price-fixing arrangement among competitors poses some threat to the free market even if the participants do not themselves have the power to control market prices. Pp. 428-436.

272 U.S.App.D.C. 272, 856 F.2d 226 (CADC 1988), reversed in part and remanded.

STEVENS, J., delivered the opinion for a unanimous Court with respect to Parts I, II, III, and IV, and the opinion of the Court with respect to Parts V and VI in which REHNQUIST, C.J., and WHITE, O'CONNOR, SCALIA, and KENNEDY, JJ., joined. BRENNAN, J., filed an opinion concurring in part and dissenting in part, in which MARSHALL, J., joined, post, p. 436. BLACKMUN, J., filed an opinion concurring in part and dissenting in part, post, p. 453.

Ernest J. Isenstadt, Washington, D.C., for F.T.C.

Willard K. Tom, Washington, D.C., for Superior Court Trial Lawyers Ass'n, et al.

Justice STEVENS delivered the opinion of the Court.

Notes