North Carolina State Board of Dental Examiners v. Federal Trade Commission

PUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 12-1172

THE NORTH CAROLINA STATE BOARD OF DENTAL EXAMINERS,

Petitioner,

v.

FEDERAL TRADE COMMISSION,

Respondent.

---------------------------------

AMERICAN DENTAL ASSOCIATION; AMERICAN OSTEOPATHIC
ASSOCIATION; AMERICAN VETERINARY MEDICAL ASSOCIATION;
AMERICAN ACADEMY OF PEDIATRIC DENTISTRY; AMERICAN ACADEMY OF
PERIODONTOLOGY; AMERICAN ASSOCIATION OF ORTHODONTISTS;
AMERICAN ASSOCIATION OF DENTAL BOARDS; FEDERATION OF STATE
MEDICAL BOARDS; AMERICAN MEDICAL ASSOCIATION; NORTH CAROLINA
MEDICAL SOCIETY; SOUTH CAROLINA MEDICAL ASSOCIATION; MEDICAL
SOCIETY OF VIRGINIA; WEST VIRGINIA STATE MEDICAL
ASSOCIATION; NATIONAL ASSOCIATION OF BOARDS OF PHARMACY;
NORTH CAROLINA BOARD OF PHARMACY; THE FEDERATION OF STATE
BOARDS OF PHYSICAL THERAPY; THE FEDERATION OF ASSOCIATIONS
OF REGULATORY BOARDS; THE ASSOCATION OF SOCIAL WORK BOARDS;
THE AMERICAN ASSOCIATION OF VETERINARY STATE BOARDS; THE
FEDERATION OF CHIROPRACTIC LICENSING BOARDS; THE FEDERATION
OF STATE MASSAGE THERAPY BOARDS; INTERNATIONAL CONFERENCE OF
FUNERAL SERVICE EXAMINING BOARDS, INCORPORATED; THE NATIONAL
ASSOCIATION OF LONG TERM CARE ADMINISTRATOR BOARDS; THE
NATIONAL BOARD FOR CERTIFICATION IN OCCUPATIONAL THERAPY,

Amici Supporting Petitioner,

AMERICAN ANTITRUST INSTITUTE,

Amicus Supporting Respondent.
On Petition for Review of an Order of the Federal Trade
Commission. (No. 9343)

Argued: December 5, 2012 Decided: May 31, 2013

Before SHEDD, KEENAN, and WYNN, Circuit Judges.

Petition denied by published opinion. Judge Shedd wrote the
opinion, in which Judge Wynn joined. Judge Keenan wrote a
separate concurring opinion.

ARGUED: Noel Lee Allen, ALLEN, PINNIX & NICHOLS, P.A., Raleigh,
North Carolina, for Petitioner. Imad Dean Abyad, FEDERAL TRADE
COMMISSION, Washington, D.C., for Respondent. ON BRIEF: M.
Jackson Nichols, Catherine E. Lee, Nathan E. Standley, Brenner
A. Allen, ALLEN, PINNIX & NICHOLS, P.A., Raleigh, North
Carolina, for Petitioner. Richard A. Feinstein, Director,
Richard B. Dagen, William L. Lanning, Willard K. Tom, General
Counsel, John F. Daly, Deputy General Counsel for Litigation,
FEDERAL TRADE COMMISSION, Washington, D.C., for Respondent.
Jack R. Bierig, Dale E. Thomas, SIDLEY AUSTIN LLP, Chicago,
Illinois, for American Dental Association, American Osteopathic
Association, American Veterinary Medical Association, American
Academy of Pediatric Dentistry, American Academy of
Periodontology, American Association of Orthodontists, American
Association of Dental Boards, and Federation of State Medical
Boards, Amici Supporting Petitioner. Leonard A. Nelson,
AMERICAN MEDICAL ASSOCIATION, Chicago, Illinois; Stephen W.
Keene, NORTH CAROLINA MEDICAL SOCIETY, Raleigh, North Carolina;
J. Mitchell Armbruster, SMITH, ANDERSON, BLOUNT, DORSETT,
MITCHELL & JERNIGAN, L.L.P., Raleigh, North Carolina, for The
American Medical Association and the Medical Associations for
the States of North Carolina, South Carolina, Virginia, and West
Virginia, Amici Supporting Petitioner. Matthew W. Sawchak,
Stephen D. Feldman, ELLIS & WINTERS LLP, Raleigh, North
Carolina, for The National Association of Boards of Pharmacy and
The North Carolina Board of Pharmacy, Amici Supporting
Petitioner. Lee K. Van Voorhis, Jennifer A. Semko, Jeremy W.
Cline, BAKER & MCKENZIE, LLP, Washington, D.C., for The
Federation of State Boards of Physical Therapy, The Federation
of Associations of Regulatory Boards, The Association of Social
Work Boards, The American Association of Veterinary State
Boards, The Federation of Chiropractic Licensing Boards, The

2
Federation of State Massage Therapy Boards, International
Conference of Funeral Service Examining Boards, Incorporated,
The National Association of Long Term Care Administrator Boards,
and The National Board for Certification in Occupational
Therapy, Amici Supporting Petitioner. Richard M. Brunell,
Director of Legal Advocacy, AMERICAN ANTITRUST INSTITUTE,
Washington, D.C.; Peter C. Carstensen, UNIVERSITY OF WISCONSIN
LAW SCHOOL, Madison, Wisconsin; K. Craig Wildfang, Ryan W.
Marth, Scott M. Kranz, ROBINS, KAPLAN, MILLER & CIRESI L.L.P.,
Minneapolis, Minnesota, for American Antitrust Institute, Amicus
Supporting Respondent.

3
SHEDD, Circuit Judge:

The North Carolina State Board of Dental Examiners (the

Board) petitions for review of the Federal Trade Commission

(FTC) order finding that the Board violated the FTC Act, 15

U.S.C. § 45, by engaging in unfair competition in the market for

teeth-whitening services in North Carolina. For the following

reasons, we deny the petition.

I.

The Board is a state agency, N.C. Gen. Stat. § 90-48,

created because the “practice of dentistry” in North Carolina

affects “the public health, safety and welfare,” N.C. Gen. Stat.

§ 90-22(1)(a). The eight-member Board is comprised of six

licensed dentists, one licensed dental hygienist, and one

consumer member. N.C. Gen. Stat. § 90-22(b). Dentists elect

the six dental members, and dental hygienists elect the

hygienist member. Id. § 90-22(c). If an election ends in a

tie, the candidates are allowed to describe their positions on

issues that will come before the Board before a revote is held.

The Governor appoints the consumer member. The Board is funded

by fees paid by licensed dentists and dental hygienists in North

Carolina. Board members—other than the consumer member—are

required to maintain an active dentistry practice while serving,

and during the relevant time frame, several Board members

provided teeth-whitening services.

4
 North Carolina’s Dental Practice Act provides that it is

unlawful for an individual to practice dentistry in North

Carolina without a license from the Board. See N.C. Gen. Stat.

§ 90-29(a). Under the Dental Practice Act, a person “shall be

deemed to be practicing dentistry” if that person, inter alia,

“[r]emoves stains, accretions or deposits from the human teeth.”

N.C. Gen. Stat. § 90-29(b)(2). The Board has the “power” to (1)

refuse to issue a license to practice dentistry; (2) refuse to

renew a license; (3) revoke or suspend a license; or (4) take

other disciplinary measures “against a licensee as it deems fit

and proper.” N.C. Gen. Stat. § 90-41. If the Board suspects an

individual of engaging in the unlicensed practice of dentistry,

it may bring an action to enjoin the practice in North Carolina

Superior Court or may refer the matter to the District Attorney

for criminal prosecution. See N.C. Gen. Stat. § 90-40.1. This

power is hardly unique, however, because such actions may also

be maintained by the “Attorney General for the State of North

Carolina, the district attorney of any of the superior courts,”

or “any resident citizen.” Id. Moreover, the Board does not

have the authority to discipline unlicensed individuals or to

order non-dentists to stop violating the Dental Practice Act.

This case involves the market for teeth-whitening services

in North Carolina. Teeth-whitening is a popular cosmetic dental

procedure that is available in North Carolina, as in most

5
states, in several forms, including as an in-office dental

treatment, as dentist-provided take-home kits, as over-the-

counter products, and as services provided by non-dentists at

salons, mall kiosks, and other locations. Each of these teeth-

whitening services involves applying peroxide to the teeth by

means of a gel or strip, which triggers a chemical reaction that

results in whiter teeth. The services differ, however, in the

immediacy of the results, the ease of use, the necessity of

repeat applications, the need for technical support, and price.

Not surprisingly, in-office dentist whitening procedures are

fast, effective, and usually do not require repeated

applications, but they are also the “most costly” offering.

(J.A. 146). In contrast, over-the-counter whitening products

typically contain lower concentrations of peroxide and may

require multiple applications to achieve results, but they cost

far less.

Beginning in the 1990s, dentists started providing

whitening services throughout North Carolina. In about 2003,

non-dentists also started offering teeth-whitening services,

often at a significantly lower price than dentists. Shortly

thereafter, dentists began complaining to the Board about the

non-dentists’ provision of these services.

Relevant here, after receiving complaints from dentists,

the Board opened an investigation into teeth-whitening services

6
performed by non-dentists. A case officer (a dentist board

member) spearheaded the investigation, leading an investigatory

panel consisting of the Board’s Deputy Operations Officer, an

Investigator, and on occasion the Board’s legal counsel.

Although permitted to do so, neither the consumer member nor the

hygienist member participated in any of the teeth-whitening

investigations. During meetings, the Board discussed the

increasing number of complaints regarding non-dentist teeth-

whitening services and indicated to practicing dentists that the

Board was attempting to shut down these non-dentist providers.

As a result of the investigations, the Board issued at

least 47 cease-and-desist letters to 29 non-dentist teeth-

whitening providers. The letters were issued on official

letterhead and requested that the target cease and desist “all

activity constituting the practice of dentistry.” (J.A. 159).

Several letters indicated that the sale or use of teeth-

whitening products by a non-dentist is a misdemeanor. These

letters effectively caused non-dentists to stop providing teeth-

whitening services in North Carolina and also caused

manufacturers and distributors of teeth-whitening products used

by these non-dentist providers to exit or hold off entering

North Carolina. The Board also sent letters to mall operators

in an effort to stop malls from leasing kiosk space to non-

dentist teeth-whitening providers; additionally, the Board

7
contacted the North Carolina Board of Cosmetic Art Examiners to

request that the Cosmetic Board inform its members and licensees

to refrain from providing teeth-whitening services.

In sum, the Board successfully expelled non-dentist

providers from the North Carolina teeth-whitening market. On

June 17, 2010, the Federal Trade Commission issued an

administrative complaint against the Board, charging it with

violating 15 U.S.C. § 45, the FTC Act, by excluding non-dentist

teeth whiteners from the market. The Board moved to dismiss the

complaint, arguing that the FTC lacked jurisdiction over it and,

alternatively, that it was exempt from the federal antitrust

laws under the “state action” doctrine. An Administrative Law

Judge (ALJ) denied the motion, and the FTC affirmed.

Interlocutory Order In re North Carolina State Bd. of Dental

Exam’rs, 151 F.T.C. 607, 2011 WL 3568990 (FTC February 3, 2011)

(Interlocutory Order). In response, the Board filed a federal

declaratory action, raising the same grounds and requesting that

a federal court stop the administrative proceeding against it.

The district court dismissed that action as an improper attempt

to enjoin ongoing administrative procedure. 1 North Carolina

1
The Board has appealed that decision. See North Carolina
State Bd. of Dental Exam’rs v. FTC, No. 11-1679. In light of
our opinion in this petition for review, we have dismissed that
appeal as moot.

8
State Bd. of Dental Examiners v. FTC, 768 F. Supp.2d 818

(E.D.N.C. 2011).

The ALJ then held a merits trial and issued an opinion

finding that the Board violated the FTC Act. On appeal, the

FTC—applying a de novo standard of review—affirmed and entered a

final order against the Board that included a cease-and-desist

order enjoining the Board from, inter alia, continuing to

unilaterally issue extra-judicial orders to teeth-whitening

providers in North Carolina. In re North Carolina State Bd. of

Dental Exam’rs, 2011-2 Trade Cases P 77705, 2011 WL 6229615, at

*2-5 (FTC December 7, 2011) (Final Order).

The Board petitions for review of the FTC’s final order,

raising three arguments: that it is exempt from the antitrust

laws under the state action doctrine; that it did not engage in

concerted action under § 1 of the Sherman Act; and that its

activities did not unreasonably restrain trade under § 1. We

address each in turn.

II.

A.

We begin with the Board’s contention that it is exempt from

the antitrust laws under the “state action” doctrine. 2 Under

2
The Board also argues that the FTC lacked jurisdiction
over it because it is not a “person” under the FTC Act, 15
U.S.C. § 45(a)(2). We find this argument to be without merit.
(Continued)
9
this doctrine, the antitrust laws do “not apply to

anticompetitive restraints imposed by the States ‘as an act of

government.’” City of Columbia v. Omni Outdoor Adver., Inc.,

499 U.S. 365, 370 (1991) (quoting Parker v. Brown, 317 U.S. 341,

352 (1943)). In Parker, the Supreme Court announced this

doctrine after recognizing that “nothing in the language of the

Sherman Act or in its history . . . suggests that its purpose

was to restrain a state or its officers or agents from

activities directed by its legislature.” 317 U.S. at 350-51.

The Parker Court cautioned, however, that a state cannot “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.

There are “three situations in which a party may invoke the

Parker doctrine.” South Carolina State Bd. of Dentistry v. FTC,

455 F.3d 436, 442 (4th Cir. 2006). First, a state’s own actions

The Supreme Court has held that a state is a “person” under the
Sherman Act and the Clayton Act. Jefferson Cnty. Pharm. Ass’n
v. Abbott Labs., 460 U.S. 150, 155 (1983) (Clayton Act); City of
Lafayette v. La. Power & Light Co., 435 U.S. 389, 395 (1978)
(Sherman Act). In Jefferson County, the Court noted it did not
“perceive any reason to construe the word ‘person’ in [the
Sherman] Act any differently than we have in the Clayton Act.”
Jefferson Cnty., 460 U.S. at 156. Given the similarities
between the FTC Act and the Clayton and Sherman Acts, we
likewise find that the Board is a “person” under the FTC Act.

10
“ipso facto are exempt” from the antitrust laws. 3 Hoover v.

Ronwin, 466 U.S. 558, 568 (1984). Second, private parties can

claim the Parker exemption if acting pursuant to a “clearly

articulated and affirmatively expressed as state policy” and

their behavior is “actively supervised by the State itself.”

California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc.,

445 U.S. 97, 105 (1980) (internal quotation marks omitted).

Third, as the Supreme Court recently reaffirmed, municipalities

and “substate governmental entities do receive immunity from

antitrust scrutiny when they act pursuant to state policy to

displace competition with regulation or monopoly public

service.” FTC v. Phoebe Putney Health Sys., Inc., 133 S.Ct.

1003, 1010 (2013) (internal quotation marks omitted).

Municipalities are not required to show the active-supervision

prong of the Midcal test, because, “[w]here the actor is a

municipality, there is little or no danger that it is involved

3
The Board repeatedly asserted at oral argument that it is
“sovereign” within the meaning of Parker. The Supreme Court has
recognized two entities as “sovereign” under Parker—the state
legislature and the state supreme court when “acting
legislatively.” Hoover v. Ronwin, 466 U.S. 558, 567-68
(1984)(citing Parker, 317 U.S. at 351 (legislature); and Bates
v. State Bar of Arizona, 433 U.S. 350, 360 (1977) (state supreme
court)). The actions of these entities are “ipso facto” exempt
from the antitrust laws. Id. at 568. It is obvious that a
state agency comprised of privately employed dentists is not the
“sovereign” equivalent of the state legislature or state supreme
court.

11
in a private price-fixing arrangement.” Town of Hallie v. City

of Eau Claire, 471 U.S. 34, 47 (1985) (emphasis in original). 4

The Court’s rationale stemmed from the fact that a

municipality’s conduct is “likely to be exposed to public

scrutiny” and “checked to some degree through the electoral

process.” Id. at 45 n.9. Thus, “at the end of the day a

municipality shares the state’s ‘immunity’ when but only when it
4
The Hallie Court also included the following footnote
addressing state agencies:

In cases in which the actor is a state agency, it is
likely that active state supervision would also not be
required, although we do not here decide that issue.
Where state or municipal regulation by a private party
is involved, however, active state supervision must be
shown, even where a clearly articulated state policy
exists.

Town of Hallie v. City of Eau Claire, 471 U.S. 34, 46 n.10
(1985). Relying on this footnote, the Board maintains that,
because it is categorized as a state agency by North Carolina,
it, too, is not required to show active supervision. This
footnote, however, does not bear quite the weight the Board
suggests. First, in Southern Motor Carriers Rate Conference,
Inc. v. United States, 471 U.S. 48, 57 (1985), issued the same
day as Hallie, the Court stated that Midcal continued to define
“most specifically” the situations in which “state agencies”
were entitled to the Parker exemption. Second, as the FTC
explained in rejecting the Board’s argument, “the dicta in
footnote 10 of Hallie must be reconciled with the Court’s other
language and reasoning in that same decision,” including its
discussion of Goldfarb v. Virginia State Bar, 421 U.S. 773
(1975), which we discuss infra at 15-16. Interlocutory Order,
151 F.T.C. at 625. Although we find the dicta in Hallie
inapplicable in the instant case, where the “state agency” is
composed entirely of private market participants, our opinion
should not be read as precluding more quintessential state
agencies from arguing that they need not satisfy the active
supervision requirement.

12
is implementing anticompetitive policies authorized by the

state.” Kay Elec. Coop. v. City of Newkirk, 647 F.3d 1039, 1042

(10th Cir. 2011).

While Parker is available in these three circumstances, in

Phoebe Putney the Court cautioned that “given the fundamental

national values of free enterprise and economic competition that

are embodied in the federal antitrust laws, ‘state-action

immunity is disfavored, much as are repeals by implication.’”

Phoebe Putney, 133 S.Ct. at 1010 (quoting FTC v. Ticor Title

Ins. Co., 504 U.S. 621, 636 (1992)). Thus, “we recognize state-

action immunity only when it is clear that the challenged

anticompetitive conduct is undertaken pursuant to a regulatory

scheme that ‘is the State’s own.’” Id. (quoting Ticor, 504 U.S.

at 635).

B.

In this case, the FTC first held that the Board was a

private party required to meet both prongs of Midcal and then

concluded that the Board could not show it was actively

supervised by North Carolina. The FTC rejected the Board’s

argument that, as a state agency, it was a substate governmental

entity that only had to show its actions were authorized by a

clearly articulated state policy. While recognizing that state

agencies may, in some instances, fall within Hallie, the FTC

found that the “Court has been explicit in applying the

13
antitrust laws to public/private hybrid entities, such as

regulatory bodies consisting of market participants” like the

Board. Interlocutory Order, 151 F.T.C. at 619. The FTC

explained that the “operative factor is a tribunal’s degree of

confidence that the entity’s decision-making process is

sufficiently independent from the interests of those being

regulated,” and that, because a decisive majority of the Board

was elected by dentists, it was required to meet the active-

supervision requirement. Id. The FTC found this conclusion was

supported by the policies underlying the state action doctrine:

Decisions that are made by private parties who
participate in the market that they regulate are not
subject to these political constraints unless these
decisions are reviewed by disinterested state actors
to assure fealty to state policy. Without such
review, “there is no realistic assurance that a
private party’s anticompetitive conduct promotes state
policy, rather than merely the party’s individual
interests.” Patrick v. Burget, 486 U.S. 94, 101
(1988). Therefore, allowing the antitrust laws to
apply to the unsupervised decisions of self-interested
regulators acts as a check to prevent conduct that is
not in the public interest.

Id. at 622.

Having reached this conclusion, the FTC then easily

determined that the Board was not actively supervised because it

pointed only to “generic oversight” that did “not substitute for

the required review and approval of the ‘particular

anticompetitive acts’ that the complaint challenges.” Id. at

630 (quoting Patrick, 486 U.S. at 101).

14
 C.

In its petition for review, the Board renews its contention

that, as a state agency, it is only required to show clear

articulation. Alternatively, the Board contests the FTC’s

conclusion that its conduct was not actively supervised. We

disagree with the Board on both counts.

First, we agree with the FTC that state agencies “in which

a decisive coalition (usually a majority) is made up of

participants in the regulated market,” who are chosen by and

accountable to their fellow market participants, are private

actors and must meet both Midcal prongs. Phillip E. Areeda &

Herbert Hovenkamp, 1A Antitrust Law: An Analysis of Antitrust

Principles and Their Application ¶ 227b, at 501 (3d ed. 2009).

See also Einer Richard Elhauge, The Scope of Antitrust Process,

104 Harv. L. Rev. 667, 689 (1991) (concluding that “financially

interested action is . . . ‘private action’ subject to antitrust

review”). This result accords with Supreme Court precedent as

well as our own.

For example, in Goldfarb v. Virginia State Bar, 421 U.S.

773 (1975), the Court addressed an ethical opinion enforced by

the Virginia State Bar Association that required attorneys to

abide by a minimum fee schedule. The Bar was a “state agency by

law,” id. at 790, with the “power to issue ethical opinions,”

15
id. at 791. The Court still denied the Parker exemption to the

Bar, concluding that:

The fact that the State Bar is a state agency for some
limited purposes does not create an antitrust shield
that allows it to foster anticompetitive practices for
the benefit of its members. Cf. Gibson v. Berryhill,
411 U.S. 564, 578-579 (1973). The State Bar, by
providing that deviation from County Bar minimum fees
may lead to disciplinary action, has voluntarily
joined in what is essentially a private
anticompetitive activity, and in that posture cannot
claim it is beyond the reach of the Sherman Act.

Id. at 791-92.

The key, according to the Goldfarb Court, was that the

Parker exemption did not permit the state agency to “foster

anticompetitive practices for the benefit of its members.” When

a state agency and its members have the attributes of a public

body—such as a municipality—and are subject to public scrutiny

such that “there is little or no danger that [they are] involved

in a private price-fixing arrangement,” active supervision is

not required. Hallie, 471 U.S. at 47. However, when a state

agency appears to have the attributes of a private actor and is

taking actions to benefit its own membership—as in Goldfarb—both

parts of Midcal must be satisfied. Requiring active supervision

over such entities ensures “the State has exercised sufficient

independent judgment and control so that the details of the

[challenged action] have been established as a product of

deliberate state intervention.” Ticor, 504 U.S. at 634.

16
 We have indicated—prior to Midcal and Hallie—that a state

agency operated by market participants must show active state

involvement. See Asheville Tobacco Bd. of Trade, Inc. v. FTC,

263 F.2d 502, 509 (4th Cir. 1959). In Asheville Tobacco, we

addressed conduct by a local board of trade comprised of market

participants. The board was “an administrative agency of the

State of North Carolina,” id. at 508, that was granted the

authority under state law to “make reasonable rules and

regulations” for selling “leaf tobacco at auction,” id. at 505.

We found that the board was required to show that it was

adequately supervised by the state because, in function, the

board was a private actor “organized primarily for the benefit

of those engaged in the business.” Id. at 509. 5 Of particular

relevance was the fact that the officers were appointed from the

board’s membership and not by the State—a factor also present in

this case. Id. at 510. See also Washington State Elec.

Contractors Ass’n, Inc. v. Forrest, 930 F.2d 736, 737 (9th Cir.

1991) (noting state regulatory council “may not” qualify as

“state agency” because it “has both public and private members,

and the private members have their own agenda”); FTC v. Monahan,

832 F.2d 688, 689-90 (1st Cir. 1987) (Breyer, J.) (noting state

5
In reaching this conclusion, we specifically found that we
were “not bound by the State court’s characterization of the
boards.” Asheville Tobacco, 263 F.2d at 509.

17
pharmacy board’s status as public or private “depends upon how

the Board functions in practice, and perhaps upon the role

played by its members who are private pharmacists”). 6

In sum, we agree with the FTC that, as here, when a state

agency is operated by market participants who are elected by

other market participants, it is a “private” actor.

Accordingly, it is required to satisfy both Midcal prongs to

obtain the Parker exemption.

D.

Second, having concluded that the Board must satisfy both

Midcal prongs, we likewise agree with the FTC that the Board

cannot satisfy Midcal’s active-supervision prong. In Midcal,

the Court found that California did not actively supervise the

wine-selling scheme at issue because California law: (1) “simply

6
Although the Board points to several cases concluding that
a state agency did not have to demonstrate active supervision,
these cases do not create the bright-line rule that the Board
requests. See Earles v. State Bd. of Certified Public
Accountants of Louisiana, 139 F.3d 1033, 1041 (5th Cir. 1998);
Bankers Ins. Co. v. Florida Residential Prop. & Cas. Joint
Underwriting Ass’n, 137 F.3d 1293, 1296-97 (11th Cir. 1998);
Hass v. Oregon State Bar, 883 F.2d 1453, 1460 (9th Cir. 1989);
Gambrel v. Kentucky Bd. of Dentistry, 689 F.2d 612, 620-21 (6th
Cir. 1982). Instead, in each case, those courts merely
determined that the particular state agency at issue was more
akin to a municipality than a private actor. See, e.g., Earles,
139 F.3d at 1041 (noting the “Board is functionally similar to a
municipality”); Hass, 883 F.2d at 1460 (review of state
provisions left “no doubt that the Bar is a public body, akin to
a municipality for purposes of the state action exemption”).

18
authorizes price setting and enforces the prices established by

private parties”; (2) “neither establishes prices nor reviews

the reasonableness of the price schedules”; (3) does not

“regulate the terms of fair trade contracts”; (4) and does not

“monitor market conditions or engage in any ‘pointed

reexamination’ of the program.” Midcal, 445 U.S. at 105–06. The

Court reinforced that our national policy in favor of robust

competition “cannot be thwarted by casting such a gauzy cloak of

state involvement over what is essentially a private price-

fixing arrangement.” Id. at 106. As the Court later noted,

“[t]he mere presence of some state involvement or monitoring

does not suffice.” Patrick, 486 U.S. at 101.

North Carolina has done far less “supervision” in this case

than the Court found wanting in Midcal. Here, the cease-and-

desist letters were sent without state oversight and without the

required judicial authorization. The Board has pointed to

certain reporting provisions and “good government” provisions in

North Carolina law, but those fall far short of the type of

supervision in Midcal that was nonetheless considered deficient.

As the FTC explained, “[t]his sort of generic oversight,

however, does not substitute for the required review and

approval of the ‘particular anticompetitive acts’” challenged by

the FTC. Interlocutory Order, 151 F.T.C. at 630 (quoting

Patrick, 486 U.S. at 101).

19
 III.

We next turn to the question of whether the FTC properly

found that the Board’s behavior violated the FTC Act. The FTC’s

factual findings are conclusive if supported by substantial

evidence, Telebrands Corp. v. FTC, 457 F.3d 354, 358 (4th Cir.

2006), and, while we review legal issues de novo, we “give some

deference to the Commission’s informed judgment that a

particular commercial practice is to be condemned as ‘unfair,’”

FTC v. Indiana Fed’n of Dentists, 476 U.S. 447, 454 (1986).

“The [FTC Act] forbids a court to ‘make its own appraisal of the

testimony, picking and choosing for itself among uncertain and

conflicting inferences.’” Id. (quoting FTC v. Algoma Lumber

Co., 291 U.S. 67, 73 (1934)).

The FTC Act makes unlawful “[u]nfair methods of

competition.” 15 U.S.C. § 45(a)(1). In this case, the FTC

determined that the Board’s conduct violated § 45(a)(1) because

it was a violation of § 1 of the Sherman Act, which we have

previously recognized is a “species” of “unfair competition.”

South Carolina Bd. of Dentistry, 455 F.3d at 443 n.7.

Accordingly, because the FTC limited its review to whether the

Board’s conduct violated § 1, we do the same. Section 1 of the

Sherman Antitrust Act prohibits “[e]very contract, combination .

. ., or conspiracy, in restraint of trade.” 15 U.S.C. § 1. To

establish a § 1 antitrust violation, a plaintiff must prove “(1)

20
a contract, combination, or conspiracy; (2) that imposed an

unreasonable restraint of trade.” Dickson v. Microsoft Corp.,

309 F.3d 193, 202 (4th Cir. 2002). Here, the Board challenges

both of these requirements, arguing that, under the

intracorporate immunity doctrine, see Copperweld Corp. v.

Independence Tube Corp., 467 U.S. 752, 771 (1984), it is

incapable of conspiring with itself, and that, to the extent

that doctrine does not apply, the FTC failed to prove a

combination or conspiracy that imposed an unreasonable restraint

of trade.

A.

Section 1 of the Sherman Act applies “only to concerted

action,” American Needle, Inc. v. National Football League, 130

S.Ct. 2201, 2208 (2010), and “unilateral conduct is excluded

from its purview,” Oksanen v. Page Memorial Hosp., 945 F.2d 696,

702 (4th Cir. 1991). In American Needle, the Court recognized

that “[a]greements made within a firm can constitute concerted

action . . . when the parties to the agreement act on interests

separate from those of the firm itself” such that “the intrafirm

agreements may simply be a formalistic shell for ongoing

concerted action.” American Needle, 130 S.Ct. at 2215. See

also Am. Chiropractic Ass’n v. Trigon Healthcare, Inc., 367 F.3d

212, 224 (4th Cir. 2004) (recognizing “independent personal

stake exception” to Copperweld). As the American Needle Court

21
explained, “substance,” not “form” determines whether an “entity

is capable of conspiring under § 1,” and the key inquiry is

“whether there is a conspiracy between ‘separate economic actors

pursuing separate economic interests, such that the agreement

deprives the marketplace of independent centers of decision

making.’” Robertson v. Sea Pines Real Estate Co., 679 F.3d 278,

285 (4th Cir. 2012) (quoting American Needle, 130 S.Ct. at

2212).

Applying American Needle, the FTC concluded that “Board

members were capable of conspiring because they are actual or

potential competitors.” Final Order, 2011 WL 6229615, at *20.

Specifically, the FTC found that “Board members continued to

operate separate dental practices while serving on the Board,”

and that the “Board members had a personal financial interest in

excluding non-dentist teeth whitening services” because many of

them offered teeth-whitening services as part of their

practices. Id. The FTC continued by noting its conclusion was

“buttressed by the significant degree of control exercised by

dentist members of the Board with respect to the challenged

restraints.” Id. at *21.

We uphold the FTC’s finding that the Board has the capacity

to conspire under § 1. As American Needle made clear, concerted

action is satisfied when an agreement exists between “separate

economic actors” such that any agreement “deprives the

22
marketplace of independent centers of decision making.”

American Needle, 130 S.Ct. at 2212 (internal quotation marks

omitted). The Board members—apart from the consumer member—are

active dentists who are required, by the Dental Practice Act,

N.C. Gen. Stat § 90-22(b), to be actively engaged in dentistry

during their Board tenure. As even the Board’s own expert

recognized, 7 the Board members’ active-service requirement can

create a conflict of interest since they serve on the Board

while they remain “separate economic actors” with a separate

financial interest in the practice of teeth whitening. Cf.

Oksanen, 945 F.2d at 706 (noting “a medical staff can be

comprised of physicians with independent and at times competing

economic interests” and thus “have the capacity to conspire as a

matter of law”). 8 Any agreement between the Board members thus

deprives the market of an independent center of decision making.

7
The Board’s expert testified that the Board is concerned
about the financial interests of dentists, and that there “is a
financial aspect” to the decision to exclude the non-dentist
teeth whiteners. (J.A. 580).
8
The fact that the Board members may have a unity of
purpose in the particular restraint at issue—expelling non-
dentist teeth whiteners from the market—does not render them
incapable of conspiring under § 1, because some “commonality of
interest exists in every cartel.” Los Angeles Memorial Coliseum
Comm’n v. NFL, 726 F.2d 1381, 1389 (9th Cir. 1984). The salient
fact is that the Board members, in their private business,
remain “separately controlled, potential competitors.” American
Needle, 130 S.Ct. at 2215.

23
 Moreover, the Board’s status as a single entity is not

dispositive because “[c]ompetitors ‘cannot simply get around’

antitrust liability by acting ‘through a third-party

intermediary or joint venture.’” American Needle, 130 S.Ct. at

2215-16 (quoting Major League Baseball Properties, Inc. v.

Salvino, Inc., 542 F.3d 290, 336 (2d Cir. 2008) (Sotomayor, J.,

concurring in judgment)). In Robertson, we rejected the

argument that the MLS listing service’s status as a “single

corporation” rendered it incapable of § 1 conspiracy because it

was “comprised of individual real estate brokerages that are

separately incorporated and that compete with each other in the

sale and purchase of real estate.” Robertson, 679 F.3d at 285.

Importantly, we found implausible the MLS’s contention that the

realtors could not violate § 1 because the “individual

brokerages acted only in their capacities as MLS board members.”

Id. at 284. Likewise, in this case the Board’s members are

separate economic actors who cannot escape liability under § 1

simply by organizing under a “single umbrella.” American

Needle, 130 S.Ct. at 2212.

B.

Having determined that the Board is capable of conspiring

under § 1, we next examine whether the FTC’s conclusion that the

Board engaged in concerted action is supported by substantial

evidence. Of course, concluding that the Board has the capacity

24
to conspire “does not mean, however, that every action taken” by

the Board “satisfies the contract, combination, or conspiracy

requirement of section one.” Oksanen, 945 F.2d at 706. Thus,

to be concerted action, the parties must have “a conscious

commitment to a common scheme designed to achieve an unlawful

objective.” Monsanto Co. v. Spray-Rite Service Corp., 465 U.S.

752, 768 (1984). We have indicated there must be “something

more” than independent action, such as “a unity of purpose or a

common design and understanding, or a meeting of the minds.”

Parkway Gallery Furniture, Inc. v. Kittinger/Pennsylvania House

Group, Inc., 878 F.2d 801, 805-06 (4th Cir. 1989). Concerted

action may be proven by “direct or circumstantial evidence.”

Monsanto, 465 U.S. at 768.

The FTC found both direct and circumstantial evidence to

support a finding of concerted action. First, the FTC concluded

that “[o]n several occasions, the Board discussed teeth

whitening services provided by non-dentists and then voted to

take action to restrict these services.” Final Order, 2011 WL

6229615, at *23. Second, the FTC found a “wealth” of

circumstantial evidence to the same effect—members “engaged in a

consistent practice of discouraging non-dentist teeth whitening

services” through their cease-and-desist letters and other

efforts. Id. The FTC found these communications were “similar”

and had the “common objective” of closing the market. Id. It

25
was this “consistency” and “frequency” that pointed to concerted

action. Id. Substantial evidence supports this conclusion. As

the FTC found, several of these letters were sent after votes by

the Board, and the lengthy consistent campaign of sending

letters and cease-and-desist orders is suggestive of coordinated

action. 9 Accordingly, we agree with the FTC that the Board

engaged in a combination or conspiracy under § 1.

IV.

Finally, the Board challenges the FTC’s conclusion that its

actions amounted to an unreasonable restraint of trade under

§ 1. As noted above, we review the FTC’s legal conclusion de

novo—while giving some deference to its expertise—and we uphold

its factual findings if supported by substantial evidence.

Indiana Fed’n of Dentists, 476 U.S. at 454. We have recognized

three forms of analysis for determining if conduct violates § 1:

(1) per se; (2) quick-look; and (3) rule of reason. Continental

Airlines, Inc. v. United Airlines, Inc., 277 F.3d 499, 508-09

(4th Cir. 2002). 10 “The boundaries between these levels of

9
The Board renews its argument—made with regard to the
state action doctrine—that enforcement of state law can never be
an antitrust conspiracy. As previously discussed, the Board was
acting to regulate third parties in a manner not authorized by
state law.
10
The per se analysis, which “permits courts to make
‘categorical judgments’ that certain practices, including price
fixing, horizontal output restraints, and market-allocation
(Continued)
26
analysis are fluid,” and they are “best viewed as a continuum.”

Id. at 509. “In all cases, however, ‘the criterion to be used

in judging the validity of a restraint on trade is its impact on

competition.’” Id. (quoting National Collegiate Athletic Ass’n

v. Bd. of Regents of Univ. of Okla., 468 U.S. 85, 104 (1984)).

The rule of reason applies “if the reasonableness of a

restraint cannot be determined without a thorough analysis of

its net effects on competition in the relevant market.” Id. In

some instances, an examination short of the rule of reason can

be substituted, that is, when a “quick look” indicates the

anticompetitive effect of the conduct “but procompetitive

justifications . . . also exist.” Id. “Rather than focusing

upon the category to which a particular restraint should be

assigned,” Polygram Holding, Inc. v. FTC, 416 F.3d 29, 35 (D.C.

Cir. 2005), the “‘essential inquiry remains the same—whether or

not the challenged restraint enhances competition,’” California

Dental Ass’n. v. FTC, 526 U.S. 756, 780 (1999) (quoting Bd. of

Regents of University of Oklahoma, 468 U.S. at 104).

Application of a quick look is appropriate when “the experience

agreements,” are per se violative of § 1, is not at issue in
this case because the FTC utilized the “quick look” and full
rule of reason analysis. Continental Airlines, 277 F.3d at 509
(quoting Nw. Wholesale Stationers, Inc. v. Pac. Stationery &
Printing Co., 472 U.S. 284, 289 (1985)).

27
of the market has been so clear, or necessarily will be, that a

confident conclusion about the principal tendency of a

restriction will follow from a quick (or at least a quicker)

look, in place of a more sedulous one.” Id. at 781. In

applying this abbreviated analysis, however, a court “must

carefully consider a challenged restriction’s possible

procompetitive justifications.” Continental Airlines, 277 F.3d

at 510.

In this case, the FTC determined that the Board’s conduct

violated § 1 under both a quick-look analysis 11 and a full rule

of reason. Final Order, 2011 WL 6229615, at *18 (noting the FTC

analyzed the Board’s behavior under “the . . . modes of analysis

endorsed in Indiana Federation of Dentists,” including the quick

look approach and the rule of reason). Applying the quick look

approach, the FTC first concluded that the conduct was

“inherently suspect” because “[t]he challenged conduct is, at

its core, concerted action excluding a lower-cost and popular

group of competitors,” id. at *25, and “[n]o advanced degree in

economics is needed to recognize” that the behavior “is likely

11
The FTC referred to the quick look analysis as the
“inherently suspect” approach, consistent with its earlier
ruling in In re Polygram Holding, Inc., 136 F.T.C. 310 (2003),
aff’d Polygram Holding, Inc. v. FTC, 416 F.3d 29 (D.C. Cir.
2005).

28
to harm competition and consumers, absent a compelling

justification,” id. at *26.

We affirm the FTC’s mode of analysis and find that its

conclusion that the Board’s behavior was likely to cause

significant anticompetitive harms is supported by substantial

evidence. See Fashion Originators’ Guild of Am., Inc. v. FTC,

312 U.S. 457, 465 (1941) (holding that manufacturer’s boycott of

certain retailers “has both as its necessary tendency and as its

purpose and effect the direct suppression of competition”); Nw.

Wholesale Stationers, Inc. v. Pac. Stationery & Printing Co.,

472 U.S. 284, 294 (1985) (internal quotation marks omitted)

(noting “likelihood of anticompetitive effects is clear” in

group boycotts involving “joint efforts . . . to disadvantage

competitors by either directly denying or persuading or coercing

suppliers or customers to deny relations the competitors need in

the competitive struggle”). The Court has made clear that

practices like group boycotts are amenable to the quick look

approach—cases in which “an observer with even a rudimentary

understanding of economics could conclude that the arrangements

in question would have an anticompetitive effect on customers

and markets.” California Dental, 526 U.S. at 770. It is not

difficult to understand that forcing low-cost teeth-whitening

29
providers from the market has a tendency to increase a

consumer’s price for that service. 12

Of note here, the Supreme Court has cautioned that we

should be hesitant to quickly condemn the actions of

professional organizations because “certain practices by members

of a learned profession might survive scrutiny . . . even though

they would be viewed as a violation of the Sherman Act in

another context.” Nat’l Soc’y of Prof’l Eng’rs v. United

States, 435 U.S. 679, 686 (1978). See also Goldfarb, 421 U.S.

at 788 n.17 (“The fact that a restraint operates upon a

profession as distinguished from a business is, of course,

relevant in determining whether that particular restraint

violates the Sherman Act.”). That is, “[t]he public service

12
The Board argues that FTC failed to consider its
justification, that it “acted pursuant to state law,” and was
“motivated by public protection concerns.” (Appellant’s Br. at
57). The FTC found that, even assuming these were appropriate
justifications for anticompetitive behavior, the Board failed to
adduce factual support. The FTC recounted that the Board
members pointed to “theoretical” risks of teeth-whitening
services without “any clinical or empirical evidence validating”
the risks and that the Board could only point to four anecdotal
cases of consumer injury “over a multi-year period based on
products considered safe by the FDA and used over a million
times over the last twenty years.” Final Order, 2011 WL
6229615, at *33. The FTC likewise noted the “lack of
contemporaneous evidence that the challenged conduct was
motivated by health or safety concerns.” Id. We find this
conclusion supported by substantial evidence.

30
aspect” of a profession “may require that a particular practice

. . . be treated differently.” Goldfarb, 421 U.S. at 788 n.17.

The Supreme Court has likewise made pellucid, however, that

anticompetitive acts are not immune from § 1 because they are

performed by a professional organization. See, e.g., Arizona v.

Maricopa Cnty. Med. Soc’y, 457 U.S. 332, 347-51 (1982)

(condemning as a per se § 1 violation maximum fee setting

agreement by physicians); Indiana Fed’n of Dentists, 476 U.S. at

459-60 (finding horizontal agreement among dentists to be a § 1

violation under quick look analysis). We have also noted, “we

are not inclined to condone anticompetitive conduct upon an

incantation of ‘good medical practice.’” Virginia Acad. of

Clinical Psychologists v. Blue Shield of Virginia, 624 F.2d 476,

485 (4th Cir. 1980). In this case, the Board’s status as a

group of professionals does not condone its anticompetitive

practices. Accordingly, we conclude that substantial evidence

supports the FTC’s factual findings regarding the economic

effects of the Board’s actions and that those findings support

the conclusion that the Board’s behavior violates § 1. Indiana

Fed’n of Dentists, 476 U.S. at 465-66.

V.

In conclusion, we note that our decision today hardly

sounds the death knell for federal/state balance the Board

posits. For one, given our conclusion that the Board is a

31
private actor under the antitrust laws, there is no federalism

issue. To that end, we note that Board is represented by

private counsel and the State has never intervened in the

proceedings on the Board’s behalf. Cf. Maryland Stadium Auth.

v. Ellerbe Beckett, Inc., 407 F.3d 255, 264-65 (4th Cir. 2005)

(noting representation by state Attorney General was factor in

determining state control). At the end of the day, this case is

about a state board run by private actors in the marketplace

taking action outside of the procedures mandated by state law to

expel a competitor from the market. Despite these actions, if

the Board was actively supervised by the State, it would be

entitled to the Parker exemption. Today’s opinion simply

reinforces the Court’s admonition that federalism “serves to

assign political responsibility, not to obscure it.” Ticor, 504

U.S. at 636. As the FTC summarized:

allowing the antitrust laws to apply to the
unsupervised decisions of self-interested regulators
acts as a check to prevent conduct that is not in the
public interest; absent antitrust to police their
actions, unsupervised self-interested boards would be
subject to neither political nor market discipline to
serve consumers’ best interests.

Interlocutory Order, 151 F.T.C. at 622-23.

For the foregoing reasons, the Board’s petition for review

is denied.

PETITION DENIED

32
BARBARA MILANO KEENAN, Circuit Judge, concurring:

I am pleased to concur in the majority’s opinion. I write

separately to emphasize the narrow scope of our holding that the

North Carolina State Board of Dental Examiners (the Board) is a

private actor for purposes of the state action doctrine, and to

discuss the practical implications of our decision.

Under the Supreme Court’s precedent, private parties are

immune from the antitrust laws under the state action doctrine

when two criteria are met. See Cal. Retail Liquor Dealers Ass’n

v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980) (Midcal).

First, the challenged restraint must be “clearly articulated and

affirmatively expressed as state policy,” and, second, that

policy must be “actively supervised” by the state itself. Id.

In this context, it is useful to state what our opinion

does not hold. We do not hold that a state agency must always

satisfy the active supervision prong of the standard set forth

in Midcal to qualify for antitrust immunity under the state

action doctrine. Nor do we hold that a state agency comprised,

in whole or in part, of members participating in the market

regulated by that state agency is a private actor subject to

Midcal’s active supervision prong. Instead, our holding that

the Board is a private actor for purposes of the state action

doctrine turns on the fact that the members of the Board, who

are market participants, are elected by other private
participants in the market. See slip op. at 18 (“[W]hen a state

agency is operated by market participants who are elected by

other market participants, it is a ‘private’ actor.”).

If the Board members here had been appointed or elected by

state government officials pursuant to state statute, a much

stronger case would have existed to remove the Board from the

reach of Midcal’s active supervision prong. * See FTC v. Phoebe

Putney Health System, Inc., 133 S. Ct. 1003, 1010 (2013)

(holding that municipal and certain “substate” entities of

government receive immunity from antitrust scrutiny when they

act pursuant to clearly articulated and affirmatively expressed

state policy to displace competition, without regard to whether

their activities are actively supervised by the state).

*
The separate features supporting the Board’s position
included: (1) the North Carolina legislature’s designation of
the Board “as the agency of the State for the regulation of the
practice of dentistry in this State,” N.C.G.S. § 90-22(b); (2)
the designation of Board members as “State employees,” N.C.G.S.
§ 93B-16(b); (3) the Board members’ entitlement to sovereign
immunity and legal defense by the state attorney general,
N.C.G.S. §§ 93B-16(c), 143-300.3; (4) the oath Board members are
required to take promising to uphold North Carolina’s laws and
protect the health, safety, and welfare of the public, N.C.
CONST. art. VI, § 7; (5) the potential that Board members may be
punished by the North Carolina Ethics Commission if the members
act in a manner that presents a conflict of interest, N.C.G.S.
§§ 138A-10, 12(o); and (6) the review powers over the Board
enjoyed by the North Carolina Joint Legislative Commission on
Governmental Operations, which has the power to study state
agency activities regarding “conformity with legislative
intent,” N.C.G.S. § 120-76(1)(d).

34
 I further observe that subjecting the Board to Midcal’s

active supervision prong does not impose an onerous burden on

either the Board or the state. The Supreme Court explained that

“the requirement of active state supervision serves essentially

an evidentiary function: it is one way of ensuring that the

actor is engaging in the challenged conduct pursuant to state

policy.” Town of Hallie v. City of Eau Claire, 471 U.S. 34, 46

(1985) (emphasis added). Accordingly, if a state creates an

agency and directs that the members of that agency be selected

in a manner similar to the process employed here, the agency may

still enjoy antitrust immunity if, for example, the state

“monitor[s] market conditions or engage[s] in [a] ‘pointed

reexamination’” of the agency’s actions, Midcal, 445 U.S. at

106, or if the agency’s actions have been authorized by the

state’s judiciary or are subject to judicial enforcement

proceedings, Bates v. State Bar of Arizona, 433 U.S. 350, 361-62

(1977).

In this case, I do not doubt that the Board was motivated

substantially by a desire to eliminate an unsafe medical

practice, namely, the performance of teeth whitening services by

unqualified individuals under unsanitary conditions. The Board

was aware that several consumers had suffered from adverse side

effects, including bleeding or “chemically burned” gums, after

receiving teeth-whitening services from persons not licensed to

35
practice dentistry. Additionally, the Board was aware that many

of the “mall kiosks” where such teeth-whitening services are

performed lack access to running water. The Board also received

reports that non-licensed persons performed teeth-whitening

services without using gloves or masks, thereby increasing the

risk of adverse side effects. Accordingly, in my view, the

record supports the Board’s argument that there is a safety risk

inherent in allowing certain individuals who are not licensed

dentists, particularly mall-kiosk employees, to perform teeth-

whitening services.

North Carolina is entitled to make the legislative judgment

that the benefits of prohibiting non-dentists from performing

dental services related to stain removal outweigh the harm to

competition that results from excluding non-dentists from that

market. That kind of legislative judgment exemplifies the very

basis of the state action immunity doctrine. However, because

“state-action immunity is disfavored,” Phoebe Putney, 133 S. Ct.

at 1010, when the state makes such a judgment, the state must

act as the state itself rather than through private actors only

loosely affiliated with the state.

Here, the fact that the Board is comprised of private

dentists elected by other private dentists, along with North

Carolina’s lack of active supervision of the Board’s activities,

leaves us with little confidence that the state itself, rather

36
than a private consortium of dentists, chose to regulate dental

health in this manner at the expense of robust competition for

teeth whitening services. Accordingly, the Board’s actions are

those of a private actor and are not immune from the antitrust

laws under the state action doctrine. With these observations,

I am pleased to join the majority opinion.

37