Petitioners, husband and wife, contracted to buy a home in
Fairfax County, Va. and the lender who financed the purchase
required them to obtain title insurance, which necessitated a title
examination that could be performed legally only by a member of
respondent Virginia State Bar. Petitioners unsuccessfully tried to
find a lawyer who would examine the title for less than the fee
prescribed in a minimum fee schedule published by respondent
Fairfax County Bar Association and enforced by respondent Virginia
State Bar. Petitioners then brought this class action against
respondents, seeking injunctive relief and damages, and alleging
that the minimum fee schedule and its enforcement mechanism, as
applied to fees for legal services relating to residential real
estate transactions, constitute price-fixing in violation of § 1 of
the Sherman Act. Although holding that the State Bar was exempt
from the Sherman Act, the District Court granted judgment against
the County Bar Association and enjoined the publication of the fee
schedule. The Court of Appeals reversed, holding not only that the
State Bar's actions were immune from liability as "state action,"
Parke v. Bown, 317 U. S. 341, but
also that the County Bar Association was immune because the
practice of law, as a "learned profession," is not "trade or
commerce" under the Sherman Act; and that, in any event,
respondents' activities did not have sufficient effect on
interstate commerce to support Sherman Act jurisdiction.
Held: The minimum fee schedule, as published by the
County Bar Association and enforced by the State Bar, violates § 1
of the Sherman Act. Pp.
421 U. S.
780-793.
(a) The schedule and its enforcement mechanism constitute
price-fixing, since the record shows that the schedule, rather than
being purely advisory, operated as a fixed, rigid price floor. The
fee schedule was enforced through the prospect of professional
discipline by the State Bar, by reason of attorneys' desire to
comply with announced professional norms, and by the assurance that
other lawyers would not compete by underbidding. Pp.
421 U. S.
781-783.
Page 421 U. S. 774
(b) Since a significant amount of funds furnished for financing
the purchase of homes in Fairfax County comes from outside the
State, and since a title examination is an integral part of such
interstate transactions, interstate commerce is sufficiently
affected for Sherman Act purposes notwithstanding that there is no
showing that prospective purchasers were discouraged from buying
homes in Fairfax County by the challenged activities, and no
showing that the fee schedule resulted in raising fees. Pp.
421 U. S.
783-785.
(c) Congress did not intend any sweeping "learned profession"
exclusion from the Sherman Act; a title examination is a service,
and the exchange of such a service for money is "commerce" in the
common usage of that term. Pp.
421 U. S.
785-788.
(d) Respondents' activities are not exempt from the Sherman Act
as "state action" within the meaning of
Parker v. Brown,
supra. Neither the Virginia Supreme Court nor any Virginia
statute required such activities, and, although the State Bar has
the power to issue ethical opinions, it does not appear that the
Supreme Court approves them. It is not enough that the
anticompetitive conduct is "prompted" by state action; to be
exempt, such conduct must be compelled by direction of the State
acting as a sovereign. Here the State Bar, by providing that
deviation from the minimum fees may lead to disciplinary action,
has voluntarily joined in what is essentially a private
anticompetitive activity, and hence cannot claim it is beyond the
Sherman Act's reach. Pp.
421 U. S.
788-792.
497 F.2d 1, reversed and remanded.
BURGER, C.J., delivered the opinion of the Court, in which all
other Members joined except POWELL, J., who took no part in the
consideration or decision of the case.
Page 421 U. S. 775
MR. CHIEF JUSTICE BURGER delivered the opinion of the Court.
We granted certiorari to decide whether a minimum fee schedule
for lawyers published by the Fairfax County Bar Association and
enforced by the Virginia State Bar violates § 1 of the Sherman Act,
26 Stat. 209, as amended, 15 U.S.C. § 1. The Court of Appeals held
that, although the fee schedule and enforcement mechanism
substantially restrained competition among lawyers, publication of
the schedule by the County Bar was outside the scope of the Act
because the practice of law is not "trade or commerce," and
enforcement of the schedule by the State Bar was exempt from the
Sherman Act as state action as defined in
Parker v. Brown,
317 U. S. 341
(1943).
I
In 1971 petitioners, husband and wife, contracted to buy a home
in Fairfax County, Va. The financing agency required them to secure
title insurance; this required a title examination, and only a
member of the Virginia State Bar could legally perform that
service. [
Footnote 1]
Page 421 U. S. 776
Petitioners therefore contacted a lawyer who quoted them the
precise fee suggested in a minimum fee schedule published by
respondent Fairfax County Bar Association; the lawyer told them
that it was his policy to keep his charges in line with the minimum
fee schedule, which provided for a fee of 1% of the value of the
property involved. Petitioners then tried to find a lawyer who
would examine the title for less than the fee fixed by the
schedule. They sent letters to 36 other Fairfax County lawyers
requesting their fees. Nineteen replied, and none indicated that he
would charge less than the rate fixed by the schedule; several
stated that they knew of no attorney who would do so.
The fee schedule the lawyers referred to is a list of
recommended minimum prices for common legal services. Respondent
Fairfax County Bar Association published the fee schedule although,
as a purely voluntary association of attorneys, the County Bar has
no formal power to enforce it. Enforcement has been provided by
respondent Virginia State Bar, which is the administrative agency
[
Footnote 2] through which the
Virginia Supreme Court regulates the practice of law in that State;
membership in the State Bar is required in order to practice in
Virginia. [
Footnote 3] Although
the State Bar has never taken formal disciplinary action to compel
adherence to any fee schedule,
Page 421 U. S. 777
it has published reports [
Footnote 4] condoning fee schedules, and has issued two
ethical opinions [
Footnote 5]
indicating that fee schedules cannot be ignored. The most recent
opinion states that
"evidence that an attorney
habitually charges
Page 421 U. S. 778
less than the suggested minimum fee schedule adopted by his
local bar Association, raises a presumption that such lawyer is
guilty of misconduct. . . . [
Footnote 6]"
Because petitioners could not find a lawyer willing to charge a
fee lower than the schedule dictated, they had their title examined
by the lawyer they had first contacted. They then brought this
class action against the State Bar and the County Bar [
Footnote 7] alleging that the operation
of the minimum fee schedule, as applied to fees for legal services
relating to residential real estate transactions, constitutes
price-fixing in violation of § 1 of the Sherman Act. Petitioners
sought both injunctive relief and damages.
After a trial solely on the issue of liability, the District
Court held that the minimum fee schedule violated the Sherman Act.
[
Footnote 8]
355 F.
Supp. 491 (ED Va.1973). The
Page 421 U. S. 779
court viewed the fee-schedule system as a significant reason for
petitioners' failure to obtain legal services for less than the
minimum fee, and it rejected the County Bar's contention that, as a
"learned profession," the practice of law is exempt from the
Sherman Act.
Both respondents argued that their actions were also exempt from
the Sherman Act as state action.
Parker v. Brown, supra.
The District Court agreed that the Virginia State Bar was exempt
under that doctrine because it is an administrative agency of the
Virginia Supreme Court, and, more important, because its
"minor role in this matter . . . derived from the judicial and
'legislative command of the State and was not intended to operate
or become effective without that command.'"
The County Bar, on the other hand, is a private organization,
and was under no compulsion to adopt the fee schedule recommended
by the State Bar. Since the County Bar chose its own course of
conduct, the District Court held that the antitrust laws "remain in
full force and effect as to it." The court enjoined the fee
schedule, 15 U.S.C. § 26, and set the case down for trial to
ascertain damages. 15 U.S.C. § 15.
The Court of Appeals reversed as to liability. 497 F.2d 1 (CA4
1974). Despite its conclusion that it
"is abundantly clear from the record before us that the fee
schedule and the enforcement mechanism supporting it act as a
substantial restraint upon competition among attorneys practicing
in Fairfax County,"
id. at 13, the Court of Appeals held the State Bar
immune under
Parker v. Brown, supra, and held the County
Bar immune because the practice of law is not "trade or commerce"
under the Sherman Act. There has long been judicial recognition of
a limited exclusion of "learned professions" from the scope of the
antitrust laws, the court said; that exclusion is based upon the
special form
Page 421 U. S. 780
of regulation imposed upon the professions by the States, and
the incompatibility of certain competitive practices with such
professional regulation. It concluded that the promulgation of a
minimum fee schedule is one of
"those matters with respect to which an accord must be reached
between the necessities of professional regulation and the dictates
of the antitrust laws."
The accord reached by that court was to hold the practice of law
exempt from the antitrust laws.
Alternatively, the Court of Appeals held that respondents'
activities did not have sufficient effect on interstate commerce to
support Sherman Act jurisdiction. Petitioners had argued that the
fee schedule restrained the business of financing and insuring home
mortgages by inflating a component part of the total cost of
housing, but the court concluded that a title examination is
generally a local service, and, even where it is part of a
transaction which crosses state lines, its effect on commerce is
only "incidental," and does not justify federal regulation.
We granted certiorari, 419 U.S. 963 (1974), and are thus
confronted for the first time with the question of whether the
Sherman Act applies to services performed by attorneys in examining
titles in connection with financing the purchase of real
estate.
II
Our inquiry can be divided into four steps: did respondents
engage in price-fixing? If so, are their activities in interstate
commerce or do they affect interstate commerce? If so, are the
activities exempt from the Sherman Act because they involve a
"learned profession?" If not, are the activities "state action"
within the meaning of
Parker v. Brown, 317 U.
S. 341 (1943), and therefore exempt from the Sherman
Act?
Page 421 U. S. 781
A
The County Bar argues that, because the fee schedule is merely
advisory, the schedule and its enforcement mechanism do not
constitute price-fixing. Its purpose, the argument continues, is
only to provide legitimate information to aid member lawyers in
complying with Virginia professional regulations. Moreover, the
County Bar contends that, in practice, the schedule has not had the
effect of producing fixed fees. The facts found by the trier belie
these contentions, and nothing in the record suggests these
findings lack support.
A purely advisory fee schedule issued to provide guidelines, or
an exchange of price information without a showing of an actual
restraint on trade, would present us with a different question,
e.g., American Column Co. v. United States, 257 U.
S. 377 (1921);
Maple Flooring Assn. v. United
States, 268 U. S. 563,
268 U. S. 580
(1925).
But see United States v. National Assn. of Real Estate
Boards, 339 U. S. 485,
339 U. S.
488-489,
339 U. S. 495
(1950). The record here, however, reveals a situation quite
different from what would occur under a purely advisory fee
schedule. Here, a fixed, rigid price floor arose from respondents'
activities: every lawyer who responded to petitioners' inquiries
adhered to the fee schedule, and no lawyer asked for additional
information in order to set an individualized fee. The price
information disseminated did not concern past standards,
cf.
Cement Mfrs. Protective Assn. v. United States, 268 U.
S. 588 (1925), but rather minimum fees to be charged in
future transactions, and those minimum rates were increased over
time. The fee schedule was enforced through the prospect of
professional discipline from the State Bar, and the desire of
attorneys to comply with announced professional norms,
see
generally American Column Co., supra at
257 U. S.
411;
Page 421 U. S. 782
the motivation to conform was reinforced by the assurance that
other lawyers would not compete by underbidding. This is not merely
a case of an agreement that may be inferred from an exchange of
price information,
United States v. Container Corp.,
393 U. S. 333,
393 U. S. 337
(1969), for here a naked agreement was clearly shown, and the
effect on prices is plain. [
Footnote 9]
Id. at
393 U. S. 339
(Fortas, J., concurring).
Moreover, in terms of restraining competition and harming
consumers like petitioners, the price-fixing activities found here
are unusually damaging. A title examination is indispensable in the
process of financing a real estate purchase, and since only an
attorney licensed to practice in Virginia may legally examine a
title,
see n 1,
supra, consumers could not turn to alternative sources for
the necessary service. All attorneys, of course, were practicing
under the constraint of the fee schedule.
See generally United
States v. Container Corp., supra, at
393 U. S. 337.
The County Bar makes much of the fact that it is a voluntary
organization; however, the ethical opinions issued by the State Bar
provide that any lawyer, whether or not a member of his county bar
association,
Page 421 U. S. 783
may be disciplined for "
habitually charg[ing] less than
the suggested minimum fee schedule adopted by his local bar
Association. . . ."
See supra at
421 U. S.
777-778, and n. 4. These factors coalesced to create a
pricing system that consumers could not realistically escape. On
this record, respondents' activities constitute a classic
illustration of price-fixing.
B
The County Bar argues, as the Court of Appeals held, that any
effect on interstate commerce caused by the fee schedule's
restraint on legal services was incidental and remote. In its view,
the legal services, which are performed wholly intrastate, are
essentially local in nature, and therefore a restraint with respect
to them can never substantially affect interstate commerce.
Further, the County Bar maintains, there was no showing here that
the fee schedule and its enforcement mechanism increased fees, and
that, even if they did, there was no showing that such an increase
deterred any prospective homeowner from buying in Fairfax
County.
These arguments misconceive the nature of the transactions at
issue and the place legal services play in those transactions. As
the District Court found, [
Footnote 10] "a significant portion of funds furnished
for the purchasing of homes in Fairfax County comes from without
the State of Virginia," and "significant amounts of loans on
Fairfax County real estate are guaranteed by the United States
Veterans Administration and Department of Housing and Urban
Development, both headquartered in the District of Columbia." Thus,
in this class action, the transactions which create the need for
the particular legal
Page 421 U. S. 784
services in question frequently are interstate transactions. The
necessary connection between the interstate transactions and the
restraint of trade provided by the minimum fee schedule is present
because, in a practical sense, [
Footnote 11] title examinations are necessary in real
estate transactions to assure a lien on a valid title of the
borrower. In financing realty purchases, lenders require, "as a
condition of making the loan, that the title to the property
involved be examined. . . ." [
Footnote 12] Thus, a title examination is an integral
part of an interstate transaction, [
Footnote 13] and this Court has long held that
"there is an obvious distinction to be drawn between a course of
conduct wholly within a state and conduct which is an inseparable
element of a larger program dependent for its success upon activity
which affects commerce between the states. "
Page 421 U. S. 785
United States v. Frankfort Distilleries, 324 U.
S. 293,
324 U. S. 297
(1945).
See United States v. Yellow Cab Co., 332 U.
S. 218,
332 U. S.
228-229 (1947). Given the substantial volume of commerce
involved, [
Footnote 14] and
the inseparability of this particular legal service from the
interstate aspects of real estate transactions, we conclude that
interstate commerce has been sufficiently affected.
See
Montague & Co. v. Lowry, 193 U. S. 38,
193 U. S. 45-46
(1904);
United States v. Women's Sportswear Assn.,
336 U. S. 460,
336 U. S.
464-465 (1949).
The fact that there was no showing that home buyers were
discouraged by the challenged activities does not mean that
interstate commerce was not affected. Otherwise, the magnitude of
the effect would control, and our cases have shown that, once an
effect is shown, no specific magnitude need be proved.
E.g.,
United States v. McKesson & Robbins, Inc., 351 U.
S. 305,
351 U. S. 310
(1956). Nor was it necessary for petitioners to prove that the fee
schedule raised fees. Petitioners clearly proved that the fee
schedule fixed fees, and thus "deprive[d] purchasers or consumers
of the advantages which they derive from free competition."
Apex Hosiery Co. v. Leader, 310 U.
S. 469,
310 U. S. 501
(1940).
See United States v. Socony-Vacuum Oil Co.,
310 U. S. 150
(1940).
Where, as a matter of law or practical necessity, legal services
are an integral part of an interstate transaction, a restraint on
those services may substantially affect commerce for Sherman Act
purposes. Of course, there may be legal services that involve
interstate commerce in other fashions, just as there may be legal
services that
Page 421 U. S. 786
have no nexus with interstate commerce, and thus are beyond the
reach of the Sherman Act.
C
The County Bar argues that Congress never intended to include
the learned professions within the terms "trade or commerce" in § 1
of the Sherman Act, [
Footnote
15] and therefore the sale of professional services is exempt
from the Act. No explicit exemption or legislative history is
provided to support this contention; rather, the existence of state
regulation seems to be its primary basis. Also, the County Bar
maintains that competition is inconsistent with the practice of a
profession because enhancing profit is not the goal of professional
activities; the goal is to provide services necessary to the
community. [
Footnote 16]
That, indeed, is the classic basis traditionally
Page 421 U. S. 787
advanced to distinguish professions from trades, businesses, and
other occupations, but it loses some of its force when used to
support the fee control activities involved here.
In arguing that learned professions are not "trade or commerce,"
the County Bar seeks a total exclusion from antitrust regulation.
Whether state regulation is active or dormant, real or theoretical,
lawyers would be able to adopt anticompetitive practices with
impunity. We cannot find support for the proposition that Congress
intended any such sweeping exclusion. The nature of an occupation,
standing alone, does not provide sanctuary from the Sherman Act,
Associated Press v. United States, 326 U. S.
1,
326 U. S. 7
(1945), nor is the public service aspect of professional practice
controlling in determining whether § 1 includes professions.
United States v. National Assn. of Real Estate Boards, 339
U.S. at
339 U. S. 489.
Congress intended to strike as broadly as it could in § 1 of the
Sherman Act, and to read into it so wide an exemption as that urged
on us would be at odds with that purpose.
The language of § 1 of the Sherman Act, of course, contains no
exception. "Language more comprehensive is difficult to conceive."
United States v. South-Eastern Underwriters Assn.,
322 U. S. 533,
322 U. S. 553
(1944). And our cases have repeatedly established that there is a
heavy presumption against implicit exemptions,
United States v.
Philadelphia National Bank, 374 U. S. 321,
374 U. S.
350-351 (1963);
California v. FPC, 369 U.
S. 482,
369 U. S. 485
(1962). Indeed, our cases have specifically included the sale of
services within § 1.
E.g., American Medical Assn. v. United
States, 317 U. S. 519
(1943);
Radovich v. National Football League, 352 U.
S. 445 (1957). Whatever else it may be, the examination
of a land title is a service; the exchange of such a service for
money is "commerce"
Page 421 U. S. 788
in the most common usage of that word. It is no disparagement of
the practice of law as a profession to acknowledge that it has this
business aspect, [
Footnote
17] and § 1 of the Sherman Act,
"[o]n its face, . . . shows a carefully studied attempt to bring
within the Act every person engaged in business whose activities
might restrain or monopolize commercial intercourse among the
states."
United States v. South-Eastern Underwriters Assn.,
supra, at
322 U. S. 553.
In the modern world, it cannot be denied that the activities of
lawyers play an important part in commercial intercourse, and that
anticompetitive activities by lawyers may exert a restraint on
commerce.
D
In
Parker v. Brown, 317 U. S. 341
(1943), the Court held that an anticompetitive marketing program
which "derived its authority and its efficacy from the legislative
command of the state" was not a violation of the Sherman Act
because the Act was intended to regulate private practices, and not
to prohibit a State from imposing a restraint as an act of
government.
Id. at
317 U. S.
350-352;
Olsen v. Smith, 195 U.
S. 332,
195 U. S.
344-345 (1904). Respondent State Bar and respondent
County Bar both seek to avail themselves of this so-called state
action exemption.
Page 421 U. S. 789
Through it legislature, Virginia has authorized its highest
court to regulate the practice of law. [
Footnote 18] That court has adopted ethical codes
which deal in part with fees, and, far from exercising state power
to authorize binding price-fixing, explicitly directed lawyers not
"to be controlled" by fee schedules. [
Footnote 19] The State Bar,
Page 421 U. S. 790
a state agency by law, [
Footnote 20] argues that, in issuing fee schedule reports
and ethical opinions dealing with fee schedules, it was merely
implementing the fee provisions of the ethical codes. The County
Bar, although it is a voluntary association and not a state agency,
claims that the ethical codes and the activities of the State Bar
"prompted" it to issue fee schedules, and thus its actions too, are
state action for Sherman Act purposes.
The threshold inquiry in determining if an anticompetitive
activity is state action of the type the Sherman Act was not meant
to proscribe is whether the activity is required by the State
acting as sovereign.
Parker v. Brown, 317 U.S. at
317 U. S.
350-352;
Continental Co. v. Union Carbide,
370 U. S. 690,
370 U. S.
706-707 (1962). Here, we need not inquire further into
the state action question, because it cannot fairly be said that
the State of Virginia, through its Supreme Court Rules, required
the anticompetitive activities of either respondent. Respondents
have pointed to no Virginia statute requiring their activities;
state law simply does not refer to fees, leaving regulation of the
profession to the Virginia Supreme Court; although the Supreme
Court's ethical codes mention advisory fee schedules, they do not
direct either respondent to supply them, or require the type of
price floor which arose from respondents' activities.
Page 421 U. S. 791
Although the State Bar apparently has been granted the power to
issue ethical opinions, there is no indication in this record that
the Virginia Supreme Court approves the opinions. Respondents'
arguments, at most, constitute the contention that their activities
complemented the objective of the ethical codes. In our view, that
is not state action for Sherman Act purposes. It is not enough
that, as the County Bar puts it, anticompetitive conduct is
"prompted" by state action; rather, anticompetitive activities must
be compelled by direction of the State acting as a sovereign.
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.
[
Footnote 21]
Cf. Gibson
v. Berryhill, 411 U. S. 564,
411 U. S.
578-579 (1973). The State Bar, by providing that
Page 421 U. S. 792
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. [
Footnote 22]
Parker v. Brown, supra, at
317 U. S.
351-352. Its activities resulted in a rigid price floor
from which petitioners, as consumers, could not escape if they
wished to borrow money to buy a home.
III
We recognize that the States have a compelling interest in the
practice of professions within their boundaries, and that, as part
of their power to protect the public health, safety, and other
valid interests, they have broad power to establish standards for
licensing practitioners and regulating the practice of professions.
We also recognize that, in some instances, the State may decide
that "forms of competition usual in the business world may be
demoralizing to the ethical standards of a profession."
United
States v. Oregon State Medical Society, 343 U.
S. 326,
343 U. S. 336
(1952).
See also Semler v. Oregon State Board of Dental
Examiners, 294 U. S. 608,
294 U. S.
611-613 (1935). The interest of the States in regulating
lawyers is especially great, since lawyers are essential to the
primary governmental function of administering justice, and have
historically been "officers of the courts."
See Sperry v.
Florida ex rel. Florida Bar, 373 U. S. 379,
373 U. S. 383
(1963);
Cohen v. Hurley, 366 U. S. 117,
366 U. S.
123-124 (1961);
Law Students Research Council v.
Wadmond, 401 U. S. 154,
Page 421 U. S. 793
157 (1971). In holding that certain anticompetitive conduct by
lawyers is within the reach of the Sherman Act we intend no
diminution of the authority of the State to regulate its
professions.
The judgment of the Court of Appeals is reversed, and the case
is remanded to that court with orders to remand to the District
Court for further proceedings consistent with this opinion.
Reversed and remanded.
MR. JUSTICE POWELL took no part in the consideration or decision
of this case.
[
Footnote 1]
Unauthorized Practice of Law, Opinion No. 17, Aug. 5, 1942,
Virginia State Bar -- Opinions 239 (1965).
[
Footnote 2]
Virginia Code Ann. § 54-49 (1972) provides:
"The Supreme Court of Appeals may, from time to time, prescribe,
adopt, promulgate and amend rules and regulations organizing and
governing the association known as the Virginia State Bar, composed
of the attorneys at law of this State, to act as an administrative
agency of the Court for the purpose of investigating and reporting
the violation of such rules and regulations as are adopted by the
Court under this article to a court of competent jurisdiction for
such proceedings as may be necessary, and requiring all persons
practicing law in this State to be members thereof in good
standing."
[
Footnote 3]
Ibid.
[
Footnote 4]
In 1962, the State Bar published a minimum fee schedule report
that listed a series of fees and stated that they "represent the
considered judgment of the Committee [on Economics of Law Practice]
as to [a] fair minimum fee in each instance." The report stated,
however, that the fees were not mandatory, and it recommended only
that the State Bar
consider adopting such a schedule.
Nevertheless, shortly thereafter, the County Bar adopted its own
minimum fee schedule that purported to be "a conscientious effort
to show lawyers in their true perspective of dignity, training and
integrity." The suggested fees for title examination were virtually
identical to those in the State Bar report. In accord with Opinion
98 of the State Bar Committee on Legal Ethics, the schedule stated
that, although there is an ethical duty to charge a lower fee in a
deserving case, if a lawyer
"purely for his own advancement, intentionally and regularly
bills less than the customary charges of the bar for similar
services . . . [in order to] increase his business with resulting
personal gain, it becomes a form of solicitation contrary to Canon
27 and also a violation of Canon 7, which forbids the efforts of
one lawyer to encroach upon the employment of another."
App. 30.
In 1969, the State Bar published a second fee-schedule report
that, as it candidly stated, "reflect[ed] a general scaling up of
fees for legal services." The report again stated that no local bar
association was bound by its recommendations; however, respondent
County Bar again quickly moved to publish an updated minimum fee
schedule, and generally to raise fees. The new schedule stated that
the fees were not mandatory, but tempered that by referring again
to Opinion 98. This time, the schedule also stated that lawyers
should feel free to charge
more than the recommended fees;
and to avoid condemnation of higher fees charged by some lawyers,
it cautioned County Bar members that "to . . . publicly criticize
lawyers who charge more than the suggested fees herein might in
itself be evidence of solicitation. . . ."
[
Footnote 5]
Virginia State Bar Committee on Legal Ethics, Opinion No. 98,
June 1, 1960; Virginia State Bar Committee on Legal Ethics, Opinion
No. 170, May 28, 1971.
[
Footnote 6]
Ibid. The parties stipulated that these opinions are a
substantial influencing factor in lawyers' adherence to the fee
schedules. One reason for this may be because the State Bar is
required by statute to
"investigat[e] and report . . . the violation of rules and
regulations as are adopted by the [Virginia Supreme Court] to a
court of competent jurisdiction for such proceedings as may be
necessary. . . ."
Va.Code Ann. § 54-49 (1972). Therefore, any lawyer who
contemplated ignoring the fee schedule must have been aware that
professional sanctions were possible, and that an enforcement
mechanism existed to administer them.
[
Footnote 7]
Two additional county bar associations were originally named as
defendants, but they agreed to a consent judgment under which they
were directed to cancel their existing fee schedules, and were
enjoined from adopting, publishing, or distributing any future
schedules of minimum or suggested fees. Damage claims against these
associations were then dismissed with prejudice.
[
Footnote 8]
The court was satisfied that interstate commerce was
sufficiently affected to sustain jurisdiction under the Sherman Act
because a significant portion of the funds and insurance involved
in the purchase of homes in Fairfax County comes from outside the
State of Virginia. 355 F. Supp 491, 497 (ED Va.1973).
[
Footnote 9]
The Court of Appeals accurately depicted the situation:
"[I]t is clear from the record that all or nearly all of the
[County Bar] members charged fees equal to or exceeding the fees
set forth in the schedule for title examinations and other services
involving real estate."
497 F.2d 1, 12 (CA4 1974).
"'A significant reason for the inability of [petitioners] to
obtain legal services . . . for less than the fee set forth in the
Minimum Fee Schedule . . . was the operation of the minimum fee
schedule system.'"
Id. at 4.
"It is abundantly clear from the record before us that the fee
schedule and the enforcement mechanism supporting it act as a
substantial restraint upon competition among attorneys practicing
in Fairfax County."
Id. at 13.
[
Footnote 10]
The Court of Appeals did not disturb the District Court's
findings of fact. It simply disagreed on the conclusions of law
drawn therefrom.
[
Footnote 11]
It is in a practical sense that we must view an effect on
interstate commerce,
Swift & Co. v. United States,
196 U. S. 375,
196 U. S. 398
(1905);
Mandeville Island Farms, Inc. v. American Crystal Sugar
Co., 334 U. S. 219,
334 U. S. 233
(1948).
[
Footnote 12]
355 F. Supp. at 494
[
Footnote 13]
The County Bar relies on
United States v. Yellow Cab
Co., 332 U. S. 218
(1947), to support its argument that the "essentially local" legal
services at issue here are beyond the Sherman Act. There we held,
inter alia, that intrastate taxi trips that occurred at
the start and finish of interstate rail travel were "too unrelated
to interstate commerce to constitute a part thereof within the
meaning of the Sherman Act."
Id. at
332 U. S. 230.
The ride to the railway station, we said, "[f]rom the standpoints
of time and continuity . . . may be quite distinct and separate
from the interstate journey."
Id. at
332 U. S. 232.
Here, on the contrary, the legal services are coincidental with
interstate real estate transactions in terms of time, and, more
important, in terms of continuity they are essential. Indeed, it
would be more apt to compare the legal services here with a taxi
trip between stations to change trains in the midst of an
interstate journey. In
Yellow Cab, we held that such a
trip was a part of the stream of commerce.
Id. at
332 U. S.
228-229.
[
Footnote 14]
355 F. Supp. at 497.
[
Footnote 15]
The County Bar cites phrases in several cases that implied the
practice of a learned profession is not "trade or commerce" under
the antitrust laws.
E.g., Federal Club v. National League,
259 U. S. 200,
259 U. S. 209
(1922) ("a firm of lawyers sending out a member to argue a case . .
. does not engage in . . . commerce because the lawyer . . . goes
to another State");
FTC v. Raladam Co., 283 U.
S. 643,
283 U. S. 653
(1931) ("medical practitioners . . . follow a profession, and not a
trade. . .");
Atlantic Cleaners & Dyers v. United
States, 286 U. S. 427,
286 U. S. 436
(1932);
United States v. National Assn. of Real Estate
Boards, 339 U. S. 485,
339 U. S. 490
(1950). These citations are to passing references in cases
concerned with other issues; and, more important, until the present
case, it is clear that we have not attempted to decide whether the
practice of a learned profession falls within § 1 of the Sherman
Act. In
National Assn. of Real Estate Boards, we
specifically stated that the question was still open, 339 U.S. at
339 U. S. 492,
as we had done earlier in
American Medical Assn. v. United
States, 317 U. S. 519,
317 U. S. 528
(1943).
[
Footnote 16]
The reason for adopting the fee schedule does not appear to have
been wholly altruistic. The first sentence in respondent State
Bar's 1962 Minimum Fee Schedule Report states:
"'The lawyers have slowly, but surely, been committing economic
suicide as a profession.'"
Virginia State Bar, Minimum Fee Schedule Report 1962, p. 3, App.
20.
[
Footnote 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. It would be unrealistic to view the practice of professions as
interchangeable with other business activities, and automatically
to apply to the professions antitrust concepts which originated in
other areas. The public service aspect, and other features of the
professions, may require that a particular practice which could
properly be viewed as a violation of the Sherman Act in another
context be treated differently. We intimate no view on any other
situation than the one with which we are confronted today.
[
Footnote 18]
Virginia Code Ann. § 54-48 (1972) provides:
"Rules and regulations defining practice of law and prescribing
codes of ethics and disciplinary procedure. -- The Supreme Court of
Appeals may, from time to time, prescribe, adopt, promulgate and
amend rules and regulations:"
"(a) Defining the practice of law."
"(b) Prescribing a code of ethics governing the professional
conduct of attorneys at law and a code of judicial ethics."
"(c) Prescribing procedure for disciplining, suspending, and
disbarring attorneys at law."
In addition, the Supreme Court of Virginia, has inherent power
to regulate the practice of law in that State.
Button v.
Day, 204 Va. 547, 132 S.E.2d 292 (1963).
See Lathrop v.
Donohue, 367 U. S. 820
(1961).
[
Footnote 19]
In 1938, the Supreme Court of Virginia adopted Rules for the
Integration of the Virginia State Bar, and Rule II, § 12, dealt
with the procedure for setting fees. Among six factors that court
directed to be considered in setting a fee were "the customary
charges of the Bar for similar services." The court also directed
that,
"[i]n determining the customary charges of the Bar for similar
services, it is proper for a lawyer to consider a schedule of
minimum fees adopted by a Bar Association, but
no lawyer should
permit himself to be controlled thereby or to follow it as his
sole guide in determining the amount of his fee."
Rules for Integration of the Virginia State Bar, 171 Va. xvii,
xxiii. (Emphasis supplied.) In 1970, the Virginia Supreme Court
amended the 1938 rules in part, and adopted the Code of
Professional Responsibility, effective January 1, 1971. 211 Va. 295
(1970). Certain of its provisions also dealt with the fee-setting
procedure. In EC 2-18, lawyers were told again that fees vary
according to many factors, but that "[s]uggested fee schedules and
economic reports of state and local bar associations provide some
guidance on the subject of reasonable fees." 211 Va. at 302. In DR
2-106(b), which detailed eight factors that should be considered in
avoiding an excessive fee, one of the factors was "[t]he fee
customarily charged in the locality for similar legal services." DR
2-106(b)(3). 211 Va. at 313.
[
Footnote 20]
See supra at
421 U. S. 776
n. 2.
[
Footnote 21]
The District Court stated that the State Bar acted in only a
"minor role" as far as the price-fixing was concerned, 355 F. Supp.
at 496, and one member of the Court of Appeals panel was prepared
to exonerate the State Bar because its participation was so minimal
as to be insufficient to impose Sherman Act liability. 497 F.2d at
21 (Craven, J., concurring and dissenting). Of course, an alleged
participant in a restraint of trade may have so insubstantial a
connection with the restraint that liability under the Sherman Act
would not be found,
see United States v. National Assn. of Real
Estate Boards, 339 U.S. at
339 U. S. 495;
however, that is not the case here. The State Bar's fee schedule
reports provided the impetus for the County Bar, on two occasions,
to adopt minimum fee schedules. More important, the State Bar's
ethical opinions provided substantial reason for lawyers to comply
with the minimum fee schedules. Those opinions threatened
professional discipline for habitual disregard of fee schedules,
and thus attorneys knew their livelihood was in jeopardy if they
did so. Even without that threat, the opinions would have
constituted substantial reason to adhere to the schedules because
attorneys could be expected to comply in order to assure that they
did not discredit themselves by departing from professional norms,
and perhaps betraying their professional oaths.
[
Footnote 22]
The State Bar also contends that it is protected by the Eleventh
Amendment.
See Edelman v. Jordan, 415 U.
S. 651 (1974). Petitioners dispute this contention, and
the District Court had no occasion to reach it in view of its
holding. Given the record before us, we intimate no view on the
issue, leaving it for the District Court on remand.