Real Estate Bar Association for Massachusetts, Inc. v. National Real Estate Information Services

United States Court of Appeals
For the First Circuit

No. 09-1809

THE REAL ESTATE BAR ASSOCIATION FOR MASSACHUSETTS, INC.,

Plaintiff, Appellant,

v.

NATIONAL REAL ESTATE INFORMATION SERVICES;
NATIONAL REAL ESTATE INFORMATION SERVICES, INC.,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Joseph L. Tauro, U.S. District Judge]

Before

Lynch, Chief Judge,
Torruella and Howard, Circuit Judges.

Douglas W. Salvesen with whom Anthony B. Fioravanti, and
Yurko, Salvesen & Remz, P.C. were on brief for the appellant.
Jonathan M. Albano, Brandon L. Bigelow, Julie S. Palmer, and
Bingham McCutchen LLP on brief for the Boston Bar Association,
amicus curiae.
Robert J. Muldoon, Jr., Jessica Gray Kelly, and Sherin and
Lodgen LLP on brief for the Massachusetts Bar Association, amicus
curiae.
Michael D. Ricciuti with whom Irene C. Freidel, Michael
DeMarco, Robert W. Sparkes, III, and K&L Gates LLP were on brief
for the appellees.

June 21, 2010
 LYNCH, Chief Judge. In November 2006 the Real Estate Bar

Association for Massachusetts, Inc. ("REBA") brought suit in state

court against National Real Estate Information Services, Inc.,

later also naming National Real Estate Information Services

(collectively "NREIS"), as REBA was given standing to do as a bar

association under Mass. Gen. Laws ch. 221, § 46B. REBA sought

declaratory and injunctive relief, claiming that certain activities

NREIS engaged in constituted the unauthorized practice of law under

Mass. Gen. Laws ch. 221, §§ 46, 46A. Those activities stemmed from

NREIS's provision of real estate settlement services and its

business as a title insurance agent.

NREIS removed the case to federal district court on

diversity grounds. The district court proved inhospitable to

REBA's claims. Although the Supreme Judicial Court of

Massachusetts ("SJC") had never opined on these modern conveyancing

practices by nonlawyers and had last addressed the general topic of

conveyancing in 1935, the district court construed the sparse state

case law and declared the practices at issue did not constitute the

unauthorized practice of law. The district court entered judgment

against REBA on its suit. See Real Estate Bar Ass'n for Mass.,

Inc. v. Nat'l Real Estate Info. Servs. (REBA I), 609 F. Supp. 2d

135, 143-44 (D. Mass. 2009).

The district court went further and issued injunctive and

declaratory relief against the bar association, finding for NREIS

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on its purported counterclaim, brought under 42 U.S.C. § 1983, that

REBA's very bringing of the lawsuit in state court had violated the

dormant Commerce Clause. Id. at 147. The court then ordered REBA

to pay attorney's fees and costs in the amount of $904,076.17 to

NREIS as a prevailing party under 42 U.S.C. § 1988. Real Estate

Bar Ass'n for Mass., Inc. v. Nat'l Real Estate Info. Servs. (REBA

II), 642 F. Supp. 2d 58, 73 (D. Mass. 2009).

REBA appeals from the district court's summary judgment

rulings and is supported by amicus briefs from two major bar

associations in Massachusetts. The Massachusetts Bar Association

argues the district court was wrong in finding there was no

violation of the unauthorized-practice-of-law statute. The Boston

Bar Association argues that the issuance of the injunction and

declaratory relief against REBA for having brought suit violated

the First Amendment. REBA also requests this court to certify to

the SJC the unauthorized-practice-of-law question that is the

subject of its suit and to reverse all relief against it on the

counterclaim.

We vacate the district court's judgment against REBA on

its unauthorized-practice-of-law claim. In Massachusetts, the

state judicial branch, and the SJC in particular, is solely

responsible for defining what is the practice of law. See

Superadio Ltd. P'ship v. Winstar Radio Prods., LLC, 844 N.E.2d 246,

250 (Mass. 2006) ("[T]he judicial department is necessarily the

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sole arbiter of what constitutes the practice of law. . . .")

(quoting Lowell Bar Ass'n v. Loeb, 52 N.E.2d 27, 31 (Mass. 1943)

(internal quotation marks omitted); see also In re Opinion of the

Justices, 194 N.E. 313, 316 (Mass. 1935). Because there is no

controlling precedent from the SJC which addresses whether NREIS's

various activities constitute the unauthorized practice of law and

because the answer to that question is unclear and may be

determinative of this litigation, we certify that question to the

SJC. See Mass. S.J.C. Rule 1:03; Ropes & Gray LLP v. Jalbert (In

re Engage, Inc.), 544 F.3d 50, 52 (1st Cir. 2008).

We also reverse the district court's decision on NREIS's

dormant Commerce Clause counterclaim. Without reaching the

question of whether a defendant may assert as a counterclaim that

the plaintiff is relying on an unconstitutional statute, we hold

that issuance of relief here was improper. REBA is not a state

actor, NREIS has not stated a dormant Commerce Clause claim against

REBA, and REBA's bringing of its suit against NREIS under Mass.

Gen. Laws ch. 221, § 46B is protected by the First Amendment of the

United States Constitution.

I.

We present the essential facts giving rise to this

controversy which, unless otherwise indicated, are uncontested.

The underlying legal dispute in this case is whether the

activities required to transfer title in real estate and to issue

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insurance policies on the transfer of title in whole or in part

constitute the practice of law. While the parties disagree as to

what specific activities are required to transfer title, they

generally agree that these transactions involve an inspection of

the seller's legal title to the real estate before the transfer

and, if necessary, resolution of any flaws in the seller's title to

the property; execution of legal documents and the exchange of

those documents and promised consideration at a "closing;" and

recording of the legal documents at the registry of deeds.

Title insurance policies are issued at the time of

closing by title insurance agents, who are independent of the title

insurance company, either to insure the owner or purchaser's

interest in the real estate or to insure the interest of the

mortgage lender. These policies incorporate an inspection of the

title at the time of the closing, and any unresolved defects,

liens, or encumbrances on the property may be identified as

exceptions to the policy.

REBA, formerly known as the Massachusetts Conveyancers'

Association, Inc., is a 150-year-old bar association with a

membership of approximately 3,000 Massachusetts real estate

attorneys. REBA's website describes its members as representing

"lenders, buyers, sellers, owners, landlords and tenants in every

real estate practice area and specialty including resolving title

issues and title insurance, commercial leasing, transactional

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matters for both residential and commercial property, affordable

housing, environmental, zoning, permitting and land use,

alternative dispute resolution and litigation." Real Estate Bar

Association of Massachusetts, About REBA,

http://www.reba.net/page/about (last visited June 3, 2010). It is

not an integrated bar,1 nor has the SJC delegated to it the

resolution of questions about what is the unauthorized practice of

law.

NREIS is a Pennsylvania-based corporation that provides

real estate closing (which NREIS also calls "vendor management")

and title insurance-related services for mortgage lenders

throughout the country. It is a member of the Title/Appraisal

Vendor Management Association ("TAVMA"), a national trade

association of companies providing real estate closing services.

NREIS's customers are mostly national mortgage loan companies.

NREIS provides these companies with centralized back-office

operations in support of their lending transactions. Aside from

third-party lawyers with whom NREIS contracts to attend closings,

NREIS does not employ any lawyers to provide its services. NREIS

asserts that it does not hold itself out to its customers as

1
"An 'integrated' bar is an association of attorneys in
which membership and dues are required as a condition of practicing
law in the jurisdiction." Schneider v. Colegio de Abogados de
Puerto Rico, 917 F.2d 620, 623 n.1 (1st Cir. 1990).

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practicing law or having the ability or qualifications to practice

law.

REBA has a history of attempting to curtail what it calls

"witness" or "notary" real estate closings, in which all of the

documents required to complete a real estate transaction are

compiled by nonlawyer third parties and an attorney only witnesses

the closing of the transaction.

REBA believes that the essential tasks involved in a real

estate transaction are an "interconnected series of activities that

must be performed in order to convey the various legal interests in

. . . real estate," and each of the activities must be overseen, if

not personally conducted, by an attorney. REBA's position is that

some mechanical tasks, such as creating title abstracts, may be

delegated to nonattorneys, so long as "the lawyer maintains a

direct relationship with the client, supervises the delegated work,

and has responsibility for the work product." REBA also alleges

that the issuing of title insurance policies is the practice of law

because title insurance policies are issued based on the

examination and legal analysis of the seller's legal title in the

property, which REBA asserts must be conducted by an attorney.

Consistent with its views, REBA has opposed bills in the

legislature that would formally recognize witness closings in

Massachusetts and has tried to persuade affiliated bar associations

to petition the SJC to adopt, through rulemaking, REBA's own

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definition of the practice of law into the Massachusetts Rules of

Professional Conduct. REBA also filed and won two lawsuits in 1993

and 2001 in Massachusetts Superior Court to enjoin local companies,

not run by lawyers, from providing real estate settlement services.

See Mass. Conveyancers Assoc., Inc. v. Colonial Title & Escrow,

Inc., No. Civ. 96-2746-C, 2001 WL 669280 (Mass. Super. Ct. 2001)

(finding the defendant corporation engaged in unauthorized practice

of law and enjoining the defendant from, inter alia, evaluating

title and closing agreements, drafting legal documents, explaining

legal documents at closing, and issuing title insurance policies

based on the defendant's title evaluations); Mass. Assoc. of Bank

Counsel, Inc. v. Closings, LTD, No. 903053C, 1993 WL 818916, at *2

(Mass. Super. Ct. 1993) (granting default judgment, finding

defendant engaged in unauthorized practice of law and enjoining

defendant from drafting instruments related to real estate and

giving advice in connection with real estate closings, as well as

"handling all aspects of residential real estate closings").

Neither decision was appealed to the SJC. This suit, REBA hoped,

would ultimately result in an authoritative judgment by the SJC on

these continuing issues.

NREIS both provides real estate closing services and acts

as a title insurance agent in Massachusetts. In helping to

coordinate a real estate closing, NREIS, at the lender's request,

may provide any of the following services in Massachusetts: (1)

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obtaining valuations of a property and third-party reports such as

tax certifications and flood reports; (2) obtaining title searches

from a third-party vendor; (3) drafting the settlement statement;

(4) scheduling the closing with a Massachusetts attorney who will

attend and transmitting the lender's documents to that attorney for

the closing; (5) disbursing settlement funds, held by NREIS in its

own bank account until the mortgage has been executed by a

borrower; and (6) ensuring that the transaction documents were

completed properly and properly recorded. NREIS describes these

activities as administrative and not legal.

The title search is conducted by a third-party vendor

under contract to NREIS. One of those companies, Connelly Title,

itself does not employ any lawyers and purports only to provide

title abstracting services and no legal analysis. NREIS does not

conduct its own review of the title abstract provided by Connelly

Title.

When a lender-customer requests that NREIS provide a deed

for a transaction, NREIS contracts with another third-party vendor,

a Las Vegas, Nevada-based company. That company is not a law firm.

As to the closings themselves, NREIS schedules the

closing to be attended by a Massachusetts attorney, selected from

a list it maintains of around seventy-four lawyers. Before the

closing, NREIS sends the relevant documents to the attorney. NREIS

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does not provide any instructions as to how the attorney should

conduct the closing.

NREIS also acts as a title insurance agent on its

transactions when requested. When acting as an agent, NREIS does

not review the status of the real estate title. It prepares the

title insurance policy based on a title abstract provided by a

third-party vendor, simply copying the contents of the abstract

into the policy documents. NREIS issues polices for several

companies that write title insurance in Massachusetts, including

Stewart Title, First American, Ticor Title, and Old Republic.

II.

REBA filed its original complaint on November 6, 2006,

and its amended complaint on February 2, 2007, in Suffolk County

Superior Court, under Mass. Gen. Laws ch. 221, §§ 46, 46A, and 46B,

seeking declaratory judgment and an injunction against NREIS's

activities in Massachusetts. The statute, at § 46 states that

aside from corporations established to practice law, "[n]o

corporation or association shall practice or appear as an attorney

for any person other than itself" and explicitly prohibits

corporations from drafting legal documents or giving legal advice

not relating to their own businesses, or holding themselves out to

the public as being able to practice law. Id. § 46. Section 46A

provides in pertinent part that "[n]o individual, other than a

member, in good standing, of the bar of this commonwealth shall

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practice law, or, by word, sign, letter, advertisement or

otherwise, hold himself out as authorized, entitled, competent,

qualified or able to practice law." Id. § 46A.

Section 46B provides concurrent jurisdiction to the SJC

and Massachusetts superior courts to restrain violations of §§ 46,

46A, and 46C "upon petition of any bar association within the

commonwealth, or of three or more members of the bar of the

commonwealth, or of the attorney general, or of the district

attorney within his district." Id. § 46B.

REBA's amended complaint asserted there was a controversy

as to "whether Massachusetts law permits a non-lawyer who is not a

party to a real estate transaction to control and supervise the

conveyance of a legal interest in . . . real property . . . where

the only participation of an attorney is restricted to notarizing

documents at the settlement of the transaction." It sought

declaratory judgment that NREIS was engaged in the unauthorized

practice of law. The complaint further stated there was

disagreement as to whether NREIS could legally contract with

Massachusetts attorneys to provide legal services to third parties.

REBA sought declaratory judgment that "an attorney

retained to perform a conveyance of a legal interest in

Massachusetts real property on behalf of a bank or lender must have

a direct attorney-client relationship with the bank or mortgage

lender client, and that [NREIS is] not permitted to interpose

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[itself] into that attorney-client relationship or otherwise

control it." REBA also sought relief in the form of a preliminary

and permanent injunction against NREIS "engaging in any of the

activities which constitute a conveyance of real property unless

they are acting under the supervision or control of a Massachusetts

attorney." REBA did not seek monetary damages.

On February 6, 2007, NREIS removed the action, under 28

U.S.C. § 1441, to the federal district court in Massachusetts on

diversity grounds. REBA agreed to dismiss from the original case

the one nondiverse defendant, a Massachusetts attorney.

At the same time, NREIS filed in the federal district

court an answer to REBA's complaint denying REBA's allegations and

asserting what it styled as a counterclaim under 42 U.S.C. § 1983.

The counterclaim sought (1) declaratory judgment that Mass. Gen.

Laws ch. 221, § 46A, "if interpreted against NREIS as plaintiff

contends, violates the Dormant Commerce Clause of the U.S.

Constitution," (2) an injunction against REBA "preventing NREIS

from engaging in interestate commerce free from restrictive state

action," and (3) attorney's fees and costs.

III.

A. Certification of REBA's Claim to the SJC

We first vacate the district court's entry of judgment

against REBA on its unauthorized-practice-of-law claim. The

district court interpreted state law and held that NREIS's

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activities do not constitute the unauthorized practice of law under

Mass. Gen. Laws ch. 221, §§ 46, 46A. We certify questions

regarding REBA's claim to the SJC.

The Massachusetts certification rule provides for

certification "if there are involved in any proceeding before [the

federal court] questions of law of this State which may be

determinative of the cause then pending in the certifying court and

as to which it appears to the certifying court there is no

controlling precedent in the decision of this court." Mass. S.J.C.

R. 1:03 § 1; see also Hundley v. Marsh (In re Hundley), 603 F.3d

95, 98 (1st Cir. 2010) ("When Massachusetts law is at issue, the

SJC has provided that we may certify questions to it in cases where

we 'find[] no controlling precedent, and where the questions may be

determinative of the pending cause of action.'") (quoting In re

Engage, Inc., 544 F.3d at 52) (alternation in original).

The conditions for certification are met. Should the SJC

decide that the activities NREIS has engaged in do not constitute

the unauthorized practice of law, that "may be determinative" of

this case.

There is no controlling precedent from the SJC. A 1935

opinion of the SJC, In re Opinion of the Justices, notes that the

practice of law "embraces conveyancing." 194 N.E. at 317. But

there is no controlling precedent that establishes a definition for

"conveyancing" or the extent of activities that constitute

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conveyancing. The district court correctly noted that there was no

SJC precedent "directly on point" on what activities constituted

conveyancing and that "the SJC has not explicitly addressed whether

the practice of law embraces all the interconnected activities of

a real estate conveyance." REBA I, 609 F. Supp. 2d at 142-43. The

district court was also correct to note that state law provided

little "guidance as to the level of involvement an attorney must

have" in the conveyancing activities. Id. at 143.

Of course, "even in the absence of controlling precedent,

certification would be inappropriate where state law is

sufficiently clear to allow us to predict its course." In re

Engage, Inc., 544 F.3d at 53. This is not such a case. The

district court's conclusion that the statute has not been violated

is at least in tension with the view of the two state trial court

determinations in Massachusetts, and perhaps one determination by

a single SJC justice. REBA cites a decision by a single justice in

a disciplinary case, In re Eric Levine, No. BD-2002-075, 2004 WL

5214985 (Mass. St. Bar Disp. Bd. 2004), which found a suspended

attorney had engaged in the practice of law when the attorney

continued to provide closing services following his suspension,

even though a licensed attorney attended the actual closings. Id.

at *2. These opinions, as the district court recognized, are not

opinions of the full SJC and so are not dispositive. REBA I, 609

F. Supp. 2d at 142.

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 NREIS, in turn, relies on several SJC opinions holding

that certain other economic activities, such as filling in tax

forms, preparing a reaffirmation form in a bankruptcy proceeding,

and conducting research on real estate titles in the registry of

deeds and then reporting and making recommendations to a lawyer

based on the research, did not constitute the practice of law. See

In re Chimko, 831 N.E.2d 316, 321-22 (Mass. 2005); Goldblatt v.

Corp. Counsel of Boston, 277 N.E.2d 273, 277 & n.4 (Mass. 1971);

Lowell Bar Ass'n, 52 N.E.2d at 34. None of those authorities is

analogous to this case, and NREIS itself acknowledges that they do

not directly address REBA's claim.

Unlike other certification cases in which there is mere

risk of error by the federal courts in ruling on state law issues,

see Boston Gas Co. v. Century Indem. Co., 529 F.3d 8, 13 (1st Cir.

2008), here there are even stronger reasons to commit these

questions to the SJC in the first instance. Apart from the lack of

certainty in state law, it is especially appropriate to certify

this question to the SJC because whether NREIS's various activities

here constitute the unauthorized practice of law raises serious

policy concerns regarding the practice of law that will certainly

impact future cases. Such policy judgments are best left to the

SJC, which is responsible for defining the practice of law in

Massachusetts. See In re Engage, Inc., 544 F.3d at 57; Boston Gas

Co., 529 F.3d at 14-15.

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 Indeed, the interests of federalism are best served by

certification. We have been particularly mindful of those concerns

and have certified before when the issues concern the SJC's control

over the practice of law. E.g., In re Engage, Inc., 544 F.3d at

57-58 (certifying, inter alia, the question of whether a state

attorney lien statute applies to "patents and patent

applications"). Federal law recognizes that states have "an

especially great" interest in regulating the practice of law.

Goldfarb v. Va. State Bar, 421 U.S. 773, 792 (1975) ("The interest

of the States in regulating lawyers is especially great since

lawyers are essential to the primary governmental function of

administering justice . . . ."). The authority to regulate the

practice of law has been left to the states "[s]ince the founding

of the Republic." Leis v. Flynt, 439 U.S. 438, 442 (1979).2

2
We note that REBA sought to obtain a ruling in state
court and that its efforts were thwarted by the removal of the case
to the federal court. REBA did not choose to have the state law
question decided by a federal court. NREIS made that decision
through removal. The existence of diversity sufficient to permit
the exercise of federal jurisdiction is an insufficient reason to
deprive the SJC of its normal role as arbiter of what constitutes
the practice of law in Massachusetts.
NREIS argues that REBA failed to move for certification to the
SJC in the district court and for that reason we must have a
compelling reason to certify. This factor is one of many to be
considered in the exercise of our discretion. See Boston Car Co.,
Inc. v. Acura Auto. Div., Am. Honda Motor Co., Inc., 971 F.2d 811,
817 n.3 (1st Cir. 1992). This court has discretion to certify
questions to the SJC when a party fails to move for certification
in the district court, or to do so sua sponte. Hundley, 603 F.3d
at 98; In re Engage, Inc., 554 F.3d at 57 n.10; Me. Drilling and
Blasting, Inc. v. Ins. Co. of N. Am., 34 F.3d 1, 3 (1st Cir. 1994).
The arguments for certification in this case are compelling.

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 There are also strong federalism interests that are

furthered by providing the state courts with the opportunity to

decide on underlying unsettled questions of state law. Cf. Growe

v. Emison, 507 U.S. 25, 32 (1993) (noting circumstances in which

"principles of federalism and comity dictate" deferring to state

courts, such as "when the federal action raises difficult questions

of state law bearing on important matters of state policy").

We therefore certify to the Massachusetts SJC the

following questions:

1. Whether NREIS's activities, either in whole or in

part, based on the record in this case and as described in the

parties' filings, constitute the unauthorized practice of law in

violation of Mass. Gen. Laws ch. 221, §§ 46 et seq.

2. Whether NREIS's activities, in contracting with

Massachusetts attorneys to attend closings, violate Mass. Gen. Laws

ch. 221, §§ 46 et seq.

We would welcome the advice of the SJC on any other

relevant aspect of Massachusetts law which it believes would aid in

the proper resolution of the issues.

NREIS also argues that REBA raises a theory in its petition
for certification that REBA did not present to the district court:
that the individual steps in a real estate transaction, and not
just the process as a whole, constitute the practice of law. We
decline to reach this question.

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B. Issuance of Injunctive and Declaratory Relief against
REBA under § 1983 for Violation of the Dormant Commerce
Clause Was Error

The district court also granted summary judgment on

NREIS's counterclaim and issued injunctive and declaratory relief

against REBA.3 Our review of the district court's grant of summary

judgment is de novo. Family Winemakers of Cal. v. Jenkins, 592

F.3d 1, 5 (1st Cir. 2009). "We review a district court's grant of

a permanent injunction for abuse of discretion; we review its

underlying conclusions of law de novo and any factual findings for

clear error." Shell Co. (P.R.), Ltd. v. Los Frailes Serv. Station,

Inc., 605 F.3d 10, 19 (1st Cir. 2010).

We bypass the question of whether a defendant may assert

as a counterclaim that a statute if construed to apply would

violate the dormant Commerce Clause.4 Whatever the procedural

vehicle, the theory of the counterclaim as to which injunctive

relief was granted is not viable for a number of reasons.

3
Based upon these findings, the court concluded that NREIS
was a prevailing party in a § 1983 action and awarded attorney's
fees and costs of $904,076.17 against REBA under § 1988. Because
we vacate the findings of liability on all theories, NREIS cannot
be a prevailing party, and it is not entitled to relief.
4
The parties have not briefed this question, and so we
vacate the district court's holding on other grounds. We note,
however, that the assertion that a statute violates the dormant
Commerce Clause can be and usually is raised as an affirmative
defense, as NREIS also did in this case. See, e.g., Sadler v. NCR
Corp., 928 F.2d 48, 53-56 (2d Cir. 1991).

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 We start with the ambiguity in NREIS's theory, which

provided context for the odd configuration of arguments before the

district court. The counterclaim stated what appeared to be a

conventional defense: that if REBA's interpretation of the state

statute were adopted by the court then the statute, as so

interpreted (presumably by a court), would violate the dormant

Commerce Clause.

The counterclaim, however, also alleged that "[t]he

Amended Complaint by plaintiff and its interpretation of [Mass.

Gen. Laws. ch. 221, § 46A], is an act of economic protectionism by

Massachusetts lawyers against out-of-state competition for

settlement services." This could be read to allege an unusual

theory, that the filing of the complaint alleging unauthorized

practice was itself a violation of the dormant Commerce Clause.

REBA read the counterclaim to embody the first argument.

It argued to the district court that the statute, if interpreted by

a court to prohibit NREIS's activities, would not violate the

dormant Commerce Clause, thus interpreting the theory as a

conventional defense. Under that argument, if the court did not

interpret the statute to apply to NREIS's activities, then the

Commerce Clause claim would be hypothetical and not be reached.

NREIS, however, argued it was entitled to an injunction and

declaratory relief against REBA, mixing both readings of what its

theory was. In a reply brief, NREIS said it sought an injunction

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based on REBA's advocacy of its theory in the litigation, the

second reading.

The district court took up the second theory and enjoined

REBA "from enforcing on NREIS its interpretation of the practice of

law as encompassing (1) all the interconnected activities of a real

estate conveyance and (2) the issuance of title insurance." REBA

I, 609 F. Supp. 2d at 147 (emphasis added). The court held that

NREIS "is entitled to a declaratory judgment that REBA's

interpretation of the practice of law as encompassing all the

interconnected steps of a real estate conveyance violates the

Dormant Commerce Clause." Id. (emphasis added). The court said

its "holding address[ed] the constitutionality of REBA's

interpretation of what constitutes the unauthorized practice of law

. . . , not the constitutionality of sections 46 and 46A

themselves."5 Id. at 147 n.91.

The district court thus held that REBA's actions in

bringing a suit before a state court seeking an adjudication that

certain activities violated a state statute were themselves a

violation of the dormant Commerce Clause. More specifically, the

5
Indeed, the court could not have ruled on the
constitutionality of these provisions of state law because that
would, in light of its holding that these provisions were
inapplicable, have been an advisory opinion, forbidden by Article
III. Steir v. Girl Scouts of the USA, 383 F.3d 7, 16 (1st Cir.
2004) ("A court cannot hear an action that loses 'its character as
a present, live controversy of the kind that must exist if we are
to avoid advisory opinions on abstract propositions of law.'")
(quoting Hall v. Beals, 396 U.S. 45, 48 (1969) (per curiam)).

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court held that REBA's advocacy of the particular position in state

court that NREIS's activities violated the state law was a

violation of the dormant Commerce Clause.

After the court issued the injunction, REBA argued at the

hearing on attorney's fees that there had been nothing to enjoin

because the court had found no violation of the statute and so the

issue of whether enforcement of the statute would violate the

dormant Commerce Clause was not before the court. REBA also said

there was nothing left for the court to "enjoin" given the court's

ruling. REBA also argued it should not be enjoined for its

advocacy in filing a lawsuit, nor should it be made to pay

attorney's fees. The court rejected those arguments (and did so

without explanation). REBA II, 642 F. Supp. at 64.

1. The District Court Erred as a Matter of Law in
Affording Relief to NREIS

a. No § 1983 Claim Was Stated because REBA Is
Not a State Actor

Unless REBA was a "state actor" there can be no § 1983

claim against REBA. Tomaiolo v. Mallinoff, 281 F.3d l, 8 (1st Cir.

2002); Yeo v. Town of Lexington, 131 F.3d 241, 248-49 & n.3 (1st

Cir. 1997). The § 1983 counterclaim posited that REBA, an

otherwise private association, became a state actor by virtue of

the role given it by § 46B. The district court agreed, holding

that REBA, by bringing suit under § 46B and making the allegations

it did, became a state actor because REBA had assumed a traditional

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public function. REBA I, 609 F. Supp. 2d at 144 n.67. No other

theory of state action was argued or considered.

The public function theory requires a plaintiff to "show

more than the mere performance of a public function by a private

entity." Perkins v. Londonderry Basketball Club, 196 F.3d 13, 19

(1st Cir. 1999). A plaintiff must show that "the private party

performed a public function that has been 'traditionally the

exclusive prerogative of the state,'" Estades-Negroni v. CPC Hosp.

San Juan Capestrano, 412 F.3d 1, 5 (1st Cir. 2005) (quoting Blum v.

Yaretsky, 457 U.S. 991, 1005 (1982)). This is a demanding

standard, and the plaintiff has the burden to meet it. See

Perkins, 196 F.3d at 19.

Here it is clear that NREIS failed to meet its burden.

And the district court's ruling, which involved no analysis of

whether REBA's filing of a lawsuit and advocacy of a position in

court was traditionally and exclusively reserved to the state, was

in error.

Section 46B does not delegate to private actors functions

that are traditionally "exclusively reserved to the State." Id.

(emphasis in original). It does nothing more than grant bar

associations, along with three or more members of the Massachusetts

bar, the attorney general, and district attorneys, standing to

bring suit enforcing the unauthorized-practice-of-law statute.

Mass. Gen. Laws ch. 221, § 46B. An action undertaken by a private

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party does not become state action merely because the action is

authorized by state statute. Flagg Bros., Inc. v. Brooks, 436 U.S.

149, 164-66 (1978) (holding that the defendant warehouseman's sale

of goods pursuant to a statute authorizing self-help was not state

action); Estades-Negroni, 412 F.3d at 6.

The Commonwealth, as a matter of policy, chose to give

bar associations a defined role in bringing court actions to seek

a judicial determination whether the challenged actions constitute

the unauthorized practice of law. But that role was a limited one.

Section 46B grants the bar association itself no power to make a

determination as to whether the challenged activity is the

unauthorized practice of law. REBA could not itself determine

whether its interpretation was correct, nor could it enforce its

interpretation. Thus, while defining what is the unauthorized

practice of law is the exclusive function of state government, cf.

Goldfarb, 421 U.S. at 792, that is not what is at issue here. See

Lawline v. Am. Bar Ass'n, 956 F.2d 1378, 1384-85 (7th Cir. 1992)

(holding that bar associations that formulated but could not decide

unauthorized-practice-of-law rules were not state actors).

What is at issue--the bringing of a lawsuit to obtain a

declaration as to legality--is far from an exclusive function of

government. See Estades-Negroni, 412 F.3d at 8-9 (holding that

parties that filed a court petition seeking the plaintiff's

involuntary commitment did not thereby become state actors); cf.

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Nowicki v. Ullsvik, 69 F.3d 1320, 1324 (7th Cir. 1995) (finding

that an attorney's successful motion to exclude a paralegal from

participating in judicial proceedings on unauthorized-practice-of-

law grounds was not state action).

Further, § 46B specifically includes private entities and

people as well as public officials. It does not by its terms make

those private entities into public entities. REBA is not an

integrated bar, nor is it a Massachusetts state agency. "That a

private entity performs a function which serves the public does not

make its acts state action." Rendell Baker v. Kohn, 457 U.S. 830,

842 (1982). Nor is there another statute giving REBA enforcement

powers.6 Statutes restricting standing do not thereby transform

those granted standing into government actors.

REBA also could not be found a state actor under either

the state-compulsion or joint-action tests. See Estades-Negroni,

412 F.3d at 4-5. Neither has been alleged. As to the state-

compulsion test, there is no claim that the state "has exercised

coercive power or has provided such significant encouragement,

6
The parties apparently failed to call to the court's
attention our decision in Werle v. Rhode Island Bar Association,
755 F.2d 195 (1st Cir. 1985). There, a Committee of the Bar
Association sent a letter requesting that plaintiff cease and
desist from the practice of law. Id. at 197. The district court
held that this was insufficient to make the association a state
actor. Id. This court held that even if the bar association were
a state actor, the association would enjoy either absolute immunity
like prosecutors or qualified immunity like government officials.
Id. at 198.

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either overt or covert, that the [challenged conduct] must in law

be deemed to be that of the State." Id. at 5 (quoting Blum, 457

U.S. at 1004) (internal quotation marks omitted) (alteration in

original).

For similar reasons, REBA also could not be found a

state actor under the joint-action test. There is no claim that

the state has "so far insinuated itself into a position of

interdependence with [REBA] that it must be recognized as a joint

participant in the challenged activity." Perkins, 196 F.3d at 21

(quoting Burton v. Wilmington Parking Auth., 365 U.S. 715, 725

(1961)). REBA is a private organization that operates

independently of the state government and is not a state actor.

b. No Dormant Commerce Clause Claim Was Stated

In addition, because REBA is not a state actor, but a

private actor, REBA itself cannot have violated the dormant

Commerce Clause. The dormant Commerce Clause is addressed to

actions by states. Or. Waste Sys., Inc. v. Dep't of Envtl.

Quality, 511 U.S. 93, 98 (1994) ("[T]he [Commerce] Clause has long

been understood to have a 'negative' aspect that denies the States

the power unjustifiably to discriminate against or burden the

interstate flow of articles of commerce."); Family Winemakers of

Cal., 592 F.3d at 4 n.1. For this reason as well, the dormant

Commerce Clause claim based on REBA's filing of the lawsuit should

have been dismissed.

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 c. Our Precedent in National Revenue Corp. v.
Violet Does Not Establish a Dormant Commerce
Clause Violation in This Case

Finally, the district court incorrectly reasoned that its

result was consistent with a 1986 decision of this court in

National Revenue Corp. v. Violet, 807 F.2d 285 (1st Cir. 1986). In

Violet there was a judicial determination that an unauthorized-

practice-of-law statute applied to certain debt collection

practices. Id. at 288. The issue was whether the statute, as

interpreted and applied to the plaintiff, violated the Commerce

Clause, as the plaintiff had asserted in defense. Id. A divided

panel of this court held that such an application constituted a

Commerce Clause violation. Id. at 290. This was an utterly

conventional application of a Commerce Clause defense.

In this case there was no judicial determination that the

statute applied to NREIS, only a nonfrivolous argument by REBA that

it did, and REBA cannot be found to have acted unconstitutionally

by making that argument.

2. The Injunction Violated REBA's First Amendment
Right to Petition

There is an even more fundamental problem with the award

of injunctive and declaratory relief based on REBA's having filed

suit in state court. These awards undercut First Amendment

protections given to the bringing of nonfrivolous lawsuits and

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allegations made in court pleadings.7 Indeed, by its literal terms

the injunction could be thought to enjoin REBA from taking this

appeal.

The right to petition the courts for redress implicates

the First Amendment right of free speech and right to petition the

government. See United Mine Workers of Am. v. Ill. State Bar

Ass'n, 389 U.S. 217, 222 (1967); NAACP v. Button, 371 U.S. 415,

429 (1965); Powell v. Alexander, 391 F.3d 1, 16-17 (1st Cir. 2004).

These principles have long standing in our constitutional

jurisprudence, and they include the right to file lawsuits that are

not baseless.8 BE & K Constr. Co. v. NLRB, 536 U.S. 516, 524-26,

7
We do not consider whether, if REBA were a state actor,
its filing of the lawsuit would be protected under the government
speech doctrine. See Pleasant Grove City v. Summum, 129 S. Ct.
1125, 1131-32 (2009); Sutliffe v. Epping Sch. Dist., 584 F.3d 314,
329-30 (1st Cir. 2009).
8
Even public employees, who are subject to far more
restrictions on their speech than private entities such as REBA,
enjoy some protection against retaliation for speech on matters of
public concern; albeit there are countervailing public interests.
Garcetti v. Ceballos, 547 U.S. 410, 417-20 (2006); Connick v.
Myers, 461 U.S. 138, 142 (1983); Pickering v. Bd. of Educ., 391
U.S. 563, 568 (1968); Curran v. Cousins, 509 F.3d 36, 44-45 (1st
Cir. 2007). As we said in Dixon v. International Brotherhood of
Police Officers, 504 F.3d 73 (1st Cir. 2007),

The First Amendment protects an individual's right to
petition the courts, but that right is not absolute. For
example, in the labor and antitrust contexts, "sham"
suits can lead to civil liability if those suits "were
both objectively baseless and subjectively motivated by
an unlawful purpose."

Id. at 86 (quoting BE & K Constr. Co. v. NLRB, 536 U.S. 516, 531
(2002)) (internal citation omitted).

- 27 -
530-31 (2002); Prof'l Real Estate Investors, Inc. v. Columbia

Pictures Indus., Inc., 508 U.S. 49, 56-61 (1993); Bill Johnson's

Rests., Inc. v. NLRB, 461 U.S. 731, 743-44 (1983). As our

certification of the question to the SJC demonstrates, REBA's

bringing of the declaratory judgment action and its advocacy

position were far from frivolous.

Nor is the claim against REBA based on a claimed

violation of a federal statute, such as the Sherman Act;9 it is

based on the Constitution. This case does not involve statutory

regulation of the activity of various market players, say, for

example, of lawyers functioning as debt collectors. Heintz v.

Jenkins, 514 U.S. 291, 293-94, 299 (1995) (holding that lawyers who

regularly collect consumer debt through litigation may be

considered "debt collectors" under the Fair Debt Collection

Practices Act, 15 U.S.C. §§ 1692-1692o, and are therefore subject

to liability for litigation activities); see also Jerman v.

Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 130 S. Ct. 1605,

1609-11 (2010).

It is irrelevant to REBA's First Amendment protection

that the district court ruled against REBA on the merits of REBA's

claim that NREIS's activities were the unauthorized practice of

9
By parallel, in light of First Amendment concerns, the
Supreme Court has construed the Sherman Act to prohibit only
lawsuits that are both objectively baseless and subjectively
intended to abuse process. Prof'l Real Estate Investors, Inc. v.
Columbia Pictures Indus., Inc., 508 U.S. 49, 60-61 (1993).

- 28 -
law. This First Amendment protection exists whether or not REBA's

nonfrivolous claims are ultimately found to be meritorious. BE &

K Constr. Co., 536 U.S. at 532. As the Supreme Court has pointed

out, even if reasonably based suits are ultimately unsuccessful,

such suits nonetheless advance some First Amendment interests,

including raising matters of public concern and allowing the

advancement and development of legal theories. Id. at 532. The

filing of such suits adds legitimacy to the court system as the

designated forum to resolve disputes. Id.

The district court's issuance of the injunction and

declaratory relief transgressed those First Amendment principles.

3. NREIS's Claim REBA Waived the Arguments that It Is
Not a State Actor and that It Is Entitled to First
Amendment Protections Fails

NREIS argues REBA has waived any argument as to its

status as a state actor or its entitlement to First Amendment

protection and that this court cannot, as a result, reach either

issue. It is true that REBA did not argue to the district court

that it was not a state actor or that its actions in bringing suit

and in advocating as it did were protected by the First Amendment.

We have no need to address whether NREIS had some obligation to

warn the court of the First Amendment hazards of its theory. Had

either side done so, the district court might, forewarned, have

stayed its hand.

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 NREIS's pleadings were unclear, and it appears to have

refocused its Commerce Clause theory from a conventional defense

that enforcement of an applicable statute against it would violate

the dormant Commerce Clause to a claim that the mere bringing of

suit under §§ 46 and 46A alleging a violation was itself prohibited

by the Commerce Clause. Because of the confusion caused by NREIS's

pleadings and briefing, REBA's arguments did not address the theory

on which the district court ultimately granted relief against it.

For this reason alone, we decline to find waiver on the First

Amendment argument.

Even if there were waiver, we would excuse it. It is a

matter of discretion in this court whether to reach the issues.

Montalvo v. Gonzalez-Amparo, 587 F.3d 43, 48 (1st Cir. 2009); Nat'l

Ass'n of Social Workers v. Harwood, 69 F.3d 622, 627 (1st Cir.

1995); see also Aroostook Band of Micmacs v. Ryan, 484 F.3d 41, 51

n.11 (1st Cir. 2007) (exercising the court's discretion to reach an

argument raised only in an amicus brief). In deciding whether to

reach issues we have considered: whether the litigant's failure to

raise the issue has deprived the court of appeals of useful

factfinding, or whether the issue was of a purely legal nature;

whether the argument was highly persuasive and failure to reach it

would threaten a miscarriage of justice; whether considering the

issue would cause prejudice or inequity to the adverse party;

whether the failure to raise the issue was inadvertent and provided

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no advantage; whether the issue was of constitutional magnitude;

and whether the issue implicates a matter of great public concern.

Montalvo, 587 F.3d at 48-49; Harwood, 69 F.3d at 627-28.

Both the state action and First Amendment issues satisfy

our criteria. REBA gained no advantage in failing to raise these

issues. REBA's failure to argue it was not a state actor before

the district court and its effort to raise the issue on appeal did

not deprive this court of any useful factfinding, nor does it

prejudice NREIS. Harwood, 69 F.3d at 627-28.

As to the First Amendment issue, it is clearly one of

"constitutional magnitude." Id. at 628. It is also an issue of

great public concern, id., having significance to the

administration of justice in the federal courts. No party bringing

suit should fear that its nonfrivolous advocacy of a reasonable

position in federal court will, on that basis alone, lead to an

injunction and declaration against it based on the dormant Commerce

Clause. Much less should a party be made, based on its conduct in

bringing such a suit, to fear the imposition of attorney's fees.

Further, this is a pure issue of law; no party is harmed by the

absence of fact finding. Id. at 627-28. The law is quite clear

and this court has received the benefit of briefing on the issue

from NREIS and the amicus Boston Bar Association.

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 IV.

This brings us to the appropriate relief. We vacate the

judgment of the district court entering judgment against REBA,

reverse all relief awarded on the counterclaim and vacate the award

of attorney's fees and costs.

We certify the questions specified below to the SJC:

1. Whether NREIS's activities, either in whole or in

part, based on the record in this case and as described in the

parties' filings, constitute the unauthorized practice of law in

violation of Mass. Gen. Laws ch. 221, §§ 46 et seq.

2. Whether NREIS's activities, in contracting with

Massachusetts attorneys to attend closings, violate Mass. Gen. Laws

ch. 221, §§ 46 et seq.

We would welcome the advice of the SJC on any other

relevant aspect of Massachusetts law which it believes would aid in

the proper resolution of the issues.

The clerk of this court is directed to forward to the

Massachusetts SJC, under the official seal of this court, a copy of

the certified questions and our decision in this case, along with

a copy of the briefs and appendix filed by the parties in the

federal proceeding and the district court record, which set forth

all facts relevant to the issues certified. We retain jurisdiction

over REBA's claims pending the SJC's determination. The case shall

be stayed until receipt of the response of the SJC.

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Costs of this appeal are awarded to REBA.

So ordered.

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