Amicus Brief — Goldfarb v. Virginia State Bar

Supreme Court, U. &

. FILED

| JAN 20 1975

| WICHAEL ROOK, IR., CLERK

In Tue

Supreme Court of the United States

Ocroser Term, 1974

No. 74-70

Lewis H. Gotprars and Ruta 8S. Gorprars,

Individually and as Representatives of the

Class of Reston, Virginia Homeowners,

Petitioners,

v.

Viremnia Strate Bar and Farrrax County

Bar AssociaTION,

Respondents.

On A Writ Or Cerrmorarnt To Tue Unrrep Strares

Court Or Appears For Tue Fourtra Crmcvir

AMICUS CURIAE BRIEF OF THE

STATE BAR OF TEXAS

Leroy JEFFERS

2010 First City Natl.

Bank Bldg.

Houston, Texas 77002

(713) 236-2330

Attorney for the State Bar

of Texas, Amicus Curiae

FIDELITY PRINTING COMPANY, HOUSTON

INDEX

QUESTIONS PRESENTED .................0.c.cc.ecccssssssessssessseseseseee

INTEREST OF THE STATE BAR OF TEXAS AS

EE

se OF, |,

I

I.

II.

Ill.

THE PRACTICE OF A LICENSED AND REGU-

LATED PUBLIC PROFESSION CONSTITUTING

A PART OF THE JUDICIAL DEPARTMENT OF

THE GOVERNMENT IS NOT “TRADE OR COM-

MERCE” WITHIN THE SCOPE OF THE SHER-

ON PS et,

A. The Issue is Not One of “Exemptions” But of Lack

of Coverage of a Judicially Governed Learned

URED DUURNEIIOD cecemnsnqretnemen

B. Both Predominant Judicial Expressions and Basic

Juristic Conceptions Support the Absence of Cov-

CURED ensue

C. This Court’s Decision in American Medical Asso-

ciation v. United States Relates to the Business of

Prepaid Group Health Plans Rather Than the

Medical Profession and Is Not Governing .............

D. Present and Future Policy Considerations Both

Support Judicial Control Rather Than Antitrust

Regulation of the Legal Profession ........................

MINIMUM FEE SCHEDULES PRINCIPALLY

RELATE TO LOCAL LEGAL SERVICES IN

PURELY INTRASTATE TRANSACTIONS BE-

YOND THE COVERAGE OF THE SHERMAN

ye

A. The Purchase of a Home and Other Strictly Local

Activities to Which Minimum Fee Schedules Prin-

cipally Relate Have No Substantial Effect on Inter-

GOERS CRNERGTED cescccscssssstrsssensssecessssessesnempemneneee

B. Minimum Fee Schedules Should Not in Any Event

Receive Federal Antitrust Condemnation, But

Coverage Must Be Determined on the Individual

Facts of Particular Transactions ......................0..

PROMULGATION OF MINIMUM FEE SCHED-

ULES BY A STATUTORY AGENCY OF THE

JUDICIAL DEPARTMENT CONSTITUTES

STATE ACTION BEYOND THE SCOPE OF THE

SHERMAN ANTITRUST ACT ...............cccceccesssessssesens

10

13

14

17

17

19

A. Parker v. Brown and Subsequent Cases Following

DS a GD, eicerrentennttissineenteceniieenininicn

B. The Issue Is Not One of Immunity or Exemption

ee TE Ge GD cenentnnnnetetnsteerenttenatianiinnes

C. In Any Lvent, Primary Jurisdiction Should Be

Accorded to the State Supreme Court and Not to

the Federal Antitrust Forum. ..................:cc: eens

D. Judicial Regulation of Statutory or Integrated

Bars Should Not Be Imperiled or Displaced by

Federal Regulatory Control Through the Federal

SS TD ccccitaccadantaneattnintennnntttictinensinneneetnn

CSS cctcercssmnsemerersessemecsnsennscormmenmnsmermegeemmmensnessessncesn

TABLE OF AUTHORITIES

Cases

Allstate Insurance Co. v. Lanier, 361 F.(2d) 870 (4th Cir.

BEEP caccccarsessustensummmpnnnncsoqsesncntadsineqistnmmniiatisnnininauendmmmeaim

American Medical Association v. United States, 317 U.S.

ee GED CEPEED ettetnsin

Atlantic Cleaners & Dyers, Ine. vy. United States, 286 U.S.

Ss Se CD ciseccntcnstennitrretensenrnrnenssienencceenninnanenenenenninees

Carter v. American Telephone & Telegraph Company, 365

F.(2d) 486 (Sth Cir. 1966), cert. denied, 385 ULS. 1008

STEED cxcscccresvscscninemnssnnmennmmnemssusnesseeseteennsetnnmbieninasennnsensesesesenes

Chieago Mereantile Exchange v. Deaktor, 414 U.S. 113

CTO ccsseremnesesnsntaemesssssestinneemantenennieemenanniene

Crain v. Blue Grass Stockyards Co., 399 F.(2d) 868 (6th

GR, TNE? = ecinessscesoccnctcetccosnssonntiiniveeninieinienntdannnennnniamunniiaeentats

Far Eastern Conferenee vy. United States, 342 U.S. 570

UTTITID | - cexscssiitsstnnntinteneesendepennntendenennsteanniansatinbieninnaneaninnmniaiasimees

Federal Baseball Club of Baltimore, Inc. v. National League,

oe Oe een

Gas Light Co. of Columbus v. Georgia Power Co., 440 F. (3a)

1135 (5th Cir. 1971), cert. denied, 404 U.S. 1062 (1972) ..

Locust Cartage Co. v. Trans American Freight Lines, ine.

GED FC) SES CBee Gas TC cccsmrescssnssesssssccssssesssecsssssctssce

Meat Cutters Union v. Jewel Tea Co., 381 U.S. 676 (1965) ....

The Nymph, 18 Fed. Can. 506 ..u............cccccscscccscsevssesecssocssescsesees

27

28

29

iil

Parker v. Brown, 317 U.S. 341 (1943) .........ccccccccsssesssersesssereenes 25, 26

Ricci v. Chicago Mercantile Exchange, 409 U.S. 289 (1973) 28

United States v. National Association of Real Estate Boards,

ee Se ED Saiehinniictiteiccdenicsiatdetinnistaenttiinaniibidereteientesesionss 11,15

United States v. National Society of Professional Engineers,

Civ. No. 2412-72 (D.D.C.) (Appendix, Department of Jus-

Ff ss RRR SSEESSET RETESET EnenDEEE rev ereE Ie 10, 12

United States v. Oregon Medical Society, 343 U.S. 326, 338

CURIE? | ciedtatinvanstesenenbanttatindseeinadaniieiennniiamneieemaneaniidnananeniiis 18

United States v. Oregon State Bar, Civ. No. 74-362 (De.

Ore.) (Petitioners’ Brief, Addendum B, B-19) ......0........... 9

United States v. Radio Corporation of America, 358 U.S. 334

EET © cncnincdeemusnennsmnssenamantianinnenieeensenentemmtainee 27

United States v. Western Pacific RR. Co., 352 U.S. 59 (1956) = 27

Washington Gas Light Co. v. Virginia Electric & Power Co.,

FT Re ee 26

Watts v. MKT RR. Co., 383 F.(2d) 571, 583 (5th Cir. 1967) 28

Statutes and Rules

Art. 320a, Vernon’s Texas Civil Statutes ......0..0....cccccccccecseeeeee 3

Art. 2226, Vernon’s Texas Civil Statutes .00.....0.......ccccccceseceseeees 25

Code of Professional Responsibility, Canon 1 ..................:0000 22

Code of Professional Responsibility, Canon 2 ....................0.0. 22

Code of Professional Responsibility, Canon 2-2 ..................-... 22

Code of Professional Responsibility, Canon 2-16 .................... 23, 29

Code of Professional Responsibility, Canons 2-17 and 2-18... 24

Code of Professional Responsibility, Canon 2-24 .................... 23

Code of Professional Responsibility, Canon 2-25 .................... 23

Fair Labor Standards Act, 29 U.S.C. 201, et seq. .........cccce 14

National Labor Relations Act, 29 U.S.C. 141 oo... ceeeeeeeee 14

Sherman Antitrust Act, 15 U.S.C. § 1 cccceccecccccceeeeeeees 5, 17, 18, 25

Solicitors’ Act 1957, as amended, 5 & 6 Eliz. 2 See. 56 ............ a

Title 14, App. Art. 12, S. 8, Vernon’s Annotated Texas

ID cncnnsessccsssssssssssssssssersnsmnemmsnanennsessncsssscsenmentanmaanmnnnpeens 21

SP Wee 00 WW cnesscnecessucnsemnetssinieninniaiiicntedineinnsinninniienmamamnensssessanien 15

Other Authorities

ABA Antitrust Developments 39 2000.0...........:cscccsseeeceeeseseeeeeneees 20

ee GREED GR ED cecescrmerenretersemcnmmemnnnenenens 16

iv

Pace

Be ee, i, TD cenicccsentitacesncncssiestinmsensictnesianccsneniemsscnessemmamennnes 16,17

58 ABA dn. 31 ....0:000:.. ssntiacicaniedinasibbiinadininisibinbatinesninddencdddseteatadiosniuniininn 16, 18

Brun, Stellung der freien Berufe im Wirtschaftsleben

( BBG) —ceccccccccccccceccsesscocccsconsscesccssssensssscsasesssssososenensososssossoosnocssssee 7

40 California State Bar Journal 720 .................000:csseeeesesseseseseee 16

Carr-Saunders and Wilson, The Professions (1933) .............. 7

Carr-Saunders, The Professions, Their Organization and

Place im Society (1928) ncrcccccscccccosscssscscssossccssssssssssecsssssesssesess 7

feuchtwanger, Der Staat und die freien Berufe, Staatsamt 7

ES Neen i

Handler, 72 Col. Li. Rev. 1, 13 (1972) cccccccccccscssssevsesersrcssssesssese 26, 27

OO) ES TG GOMIIIIS GD cccccccccccecnscnsenncnmtesneseessannnssersemmesemmenen: 16

OD Be, Be I, TI ceceeeesrrenceenicccccnepenensnsccnsscnnscnncccsncsnnssmiccenssesoonnenss 24

AR GER, BERR Gi GI cecennnncncccececenccsessnnnssncccnnssncccscccessnsqnscccsssesenensecees 16

38 Kentucky Bar Journal 35. ..............ccssssssessrssessrsessessserseseserses 16

IV Pound on Jurisprudence 348 .........cccccesssseeeseeseesseeeeeeeees 7

V Pound on Jurisprudence 676, et Sq. ....cccccccceceeereeseereseeeees 7

V Pound on Jurisprudence 677 0........:cccsccccsssscssssesessesssssssenes 9,13

V Pound on Jurisprudence 680 0.0... ccecsecseesseeeeseeeeeeenes 16

Pound, The Lawyer from Antiquity to Modern Times

CE TPO O casccseccassesenssensssnsesnvenansenccsccsncnsansnscasnesseqnenscsnqnenss s

Vol. 11, September 1973 Pro Bono Report ............. reamenemmsnciniees 16

Smith & Clifton, 52 ABA Jn. 1043 (1966) Lo eens 17

OD em, Tc, BR TID eccneccncccnccsnccctcnsnstnsennsccnnsnerscsccssemsetantnanntensesnets 24

Time, September 16, 1974, “The Law” ........ccccccccceeceeeeeeeeeeees 7

In THE

Supreme Court of the United States

Ocroser Term, 1974

No. 74-70

Lewis H. Gotprars and Ruts S. Goiprars,

Individually and as Representatives of the

Class of Reston, Virginia Homeowners,

Petitioners,

v.

Virersia State Bar and Farrrax County

Bar AssociaTION,

Respondents.

On A Writ Or Cerriorart To Tue Untrrep States

Court Or Apprats For Tue Fourtrnsn Circuit

AMICUS CURIAE BRIEF OF THE

STATE BAR OF TEXAS

QUESTIONS PRESENTED

This Amicus Curiae respectfully submits that the Ques-

tions Presented would be more accurately stated as follows:

1. Does the practice of the learned public profession of

law as a licensed member of the Judicial Department of the

State under a State Bar statute vesting the governance and

regulation of the practice in the Supreme Court of the State

to be exercised through the State Bar as an administrative

agency constitute “trade or commerce” within the intended

application of Section 1 of the Sherman Antitrust Act?

2

2. Does the performance by a lawyer licensed by and

practicing and residing within the State of legal services

performed wholly within the State with reference to essen-

tially local matters such as home purchases constitute

“trade or commerce among the several states or with for-

elen countries” within the meaning and application of

Section 1 of the Sherman Act?

3. Should minimum fee schedules promulgated by an

administrative agency of the Judicial Department of the

State in any event be adjudged to violate Section 1 of the

Sherman Antitrust Act without any reference to the com-

meree facts of the particular legal services rendered in

individual transactions?

4. Isa minimum fee schedule promulgated by an admin-

istrative agency of the Judicial Department of the State

with the legal approval of the Supreme Court of the State

in the nature of State action which is beyond the ambit and

application of the federal antitrust laws?

THE INTEREST OF THE STATE BAR

OF TEXAS AS AMICUS CURIAE

The State Bar of Texas desires leave to file this Amicus

Curiae Brief in support of the position of the Respondents.

Both Petitioners and Respondents have consented to the

filing of this Amicus Curiae Brief by letters from their

counsel of record to the counsel for the State Bar of Texas

which have been filed with the Clerk of the Court.

The State Bar of Texas is a statutory agency of the

State of Texas declared by law to be a part of the Judicial

Department of the State. The State Bar Act provides that

the State Bar, as “an administrative agency of the Judicial

Department of the State,” shall be governed by a Board of

3

Directors “composed of the officers of the State Bar, and

not more than thirty additional members, elected from geo-

graphical Bar Districts by the members of the State Bar.”

Article 320a, Vernon’s Texas Civil Statutes.

The filing of and the positions taken in this Amicus

Curiae Brief have been approved by unanimous action of

such Board of Directors.

All of the more than 25,000 lawyers licensed by the

Supreme Court of Texas are members of the State Bar

pursuant to provision of the State Bar Act (Article 320a,

supra) that “all persons who are now or who shall hereafter

be licensed to practice law in this State shall constitute and

be members of the State Bar, and shall be subject to the

provisions hereof and the rules adopted by the Supreme

Court of Texas.”

Provision is made for the comprehensive regulation and

governance of the practice of law as follows:

“Irom time to time, as to the Court may seem

proper, the Supreme Court of Texas shall prepare and

propose rules and regulations for disciplining, sus-

pending, and disbarring attorneys at law; for the oper-

ation, maintenance, and conduct of the State Bar; and

prescribing a code of ethics governing the professional

conduct of attorneys at law.”

Provision is then made for the approval of such rules and

regulations by referendum of the membership of the State

Bar.

Pursuant to these provisions of the State Bar Act, Article

320a, Vernon’s Texas Civil Statutes, supra, a comprehen-

sive regulatory scheme governing the State Bar of Texas

and its members and regulating the practice of law and the

professional conduct of lawyers has been adopted under

4

such statutory authorities. State Bar Rules and a Code of

Professional Responsibility have been approved by the

State Bar of Texas and adopted and promulgated by the

Supreme Court of Texas.

The State Bar of Texas has officially adopted and pro-

mulgated minimum fee schedules now still in effeet as an

informational guide with it being published thereon:

“It should be at all times made clear that minimum

fee schedules constitute suggestions only as to fees that

have generally been found reasonable for particular

services. It must be emphasized that such minimum fee

schedules are not to be agreed upon and that they are

not enforceable. It should be stressed that no attempt

will be made to enforce them by disciplinary action,

coercion, threats or otherwise. It should also be pointed

out that failure to comply with minimum fee schedules

does not constitute any violation of the canons of ethies.

This statement is in accord with the views expressed by

the Antitrust Division of the United States Department

of Justice.”

The State Bar of Texas is committed to the maintenance

of minimum fee schedules and is accordingly vitally inter-

ested in clarifying their validity under the Sherman Anti-

trust Act.*

SUMMARY OF ARGUMENT

Lawyers are officers of the court. Admission to the prac-

tice of the profession, rules of practice and standards of

conduct, and duties to the court and to the public are

governed by the judiciary and not by the antitrust laws.

*The antitrust attacks being made on minimum fee schedules

imply that they constitute a dangerous recent innovation. They

are in fact of more ancient origin than the Sherman Act. One in

the archives of the State Bar of Texas adopted by the Belton,

Texas Bar Association bears a date of December 11, 1882. The

recent innovation is the antitrust attack on their long unques-

tioned validity.

4)

The Virginia State Bar, like the State Bar of Texas, is a

statutory ageney of the Judicial Department of the state

government. The practice of this statutory public profes-

sion, Which is comprehensively regulated and governed by

the judiciary with the aid of its statutory agency, is not

“trade or commerce among the several States, or with

foreign nations” within the scope and intendment of the

Sherman Antitrust Act, 15 U.S.C. § 1. The issue is not the

existence vel non of an “exemption” or “immunity” from

the statute extended to an elite “learned profession” but of

the reach and coverage of the antitrust statute.

In addition to the juristic truth that the pursuit of a

public profession by officers of the Judicial Department

of government is not “trade or commerce” within the cover-

age of the antitrust laws, the promulgation of minimum

fee schedules by an administrative agency of the Judicial

Branch of state government constitutes state action beyond

the ambit of the antitrust statutes. It is again not an issue

of “exemption” or “immunity” but of lack of coverage.

If not regarded as “state action” beyond the reach of the

Sherman Act, at the very least primary jurisdiction of any

attack on the validity of minimum fee schedules would be

reposed in the State Supreme Court and its statutory

agency who developed and adopted them.

Even if the pursuit of a regulated public profession was

“trade or commerce” and its governance and regulation by

a statutory agency of the Judicial Department of state gov-

ernment was not state action, the rendition entirely within

the state by a local lawyer of purely local legal services for

local citizens in matters entirely situated within the state,

such as generally covered by minimum fee schedules, does

not constitute “trade or commerce among the several States

or with foreign nations” so as to be within the reach and

coverage of the Sherman Antitrust Act. Public profession

6

and state action considerations aside, Sherman Act appli-

eation to minimum fee sehcdules still could not be deter-

mined on a blanket basis but would have to be adjudicated

on the interstate or intrastate facets of the individual trans-

action and the particular legal service preformed to which

a specifie fee in the schedule may have been applied. Home

buying is peculiarly local. Most legal services covered by

minimum fee schedules constitute local law practice for

local peeple on local matters strictly within the state. Here

the antitrust plaintiff's attempted reach must surely exceed

his grasp. A blanket federal antitrust condemnation of state

bar minimum fee schedules as such would ignore normal

commerce considerations in determining federal antitrust

application. Assuredly federal antitrust jurisdiction would

in no event be so imprecisely adjudicated.

ARGUMENT

I.

THE PRACTICE OF THE LEARNED PROFESSION OF

THE LAW TO WHICH MINIMUM FEE SCHEDULES

APPLY IS NOT “TRADE OR COMMERCE” COVERED

BY THE SHERMAN ANTITRUST ACT.

The practice of the learned, licensed and judicially regu-

lated profession of the law is a public profession by reason

of the Virginia statute, which, like the Texas statute and

that in thirty other states, establishes a State Bar as an

administrative agency of the Judicial Department of the

State of which all licensed lawyers of the State are mem-

bers. Such lawyers are therefore public officers of the

Judicial Department of the St: ‘e. Practice of the law as

a member of the Judicial Department of the State is there-

fore necessarily the pursuit of a learned public profession.

7

The characteristics of the legal profession are such as to

constitute it a public profession, even in the absence of a

statute making it such.

Dean Pound stated this truth as a General Juristie Con-

ception at IV Pound on Jurisprudence 348 as follows:

“A profession is a body of men pursuing a common

calling as a learned art and as a public service*®® — no

less a public service if it is at the same time an indi-

vidual means of livelihood. It is, therefore, an import-

ant social institution. Security of the institution de-

mands that its efficient functioning be maintained.

Hence where general rules of law carried out fully

would interfere with this the social interest is secured

by privilege.”

The lucid and lofty juristie conception of the legal pro-

fession stated by this timeless sage and scholar of the law

should be set out as a backdrop for the determination of

the issue of whether the practice of law is to be regarded

as “trade or commerce.” This is the deathless statement

of it at V Pound on Jurisprudence 676, et seq.:

“(ii) Nature and definition of a profession. His-

torically, the practice of law is a profession. It must

remain a profession if the purposes of representation

in litigation as part of the machinery of justice are to

be achieved. A profession is a group of men pursuing

a learned art as a common calling in the spirit of

public service — no less a public service because inci-

dentally it may be a means of livelihood. The exigencies

of the economic order require most persons to gain a

livelihood and the gaining of a livelihood is a purpose

to which they are constrained to devote their activities.

But while in all walks of life man must bear this in

459 Carr-Saunders and Wilson, The Professions (1933) ; Carr-

Saunders, The Professions, Their Organization and Place

in Society (1928) ;*feuchtwanger, Der Staat und die freien

Berufe, Staatsamt oder Sozialamt (1929); Bruno, Die

Stellung der freien Berufe im Wirtschaftsleben (1930).

8

mind, in business and trade it is the primary purpose.

In a profession, on the other hand, it is an incidental

purpose, pursuit of which is held down by traditions

of a chief purpose to which the organized activities of

those pursuing the calling are to be direeted primarily

and by which the individual activities of the praecti-

tioner are to be restrained and guided,

Next to the idea of publie service the important ideas

in a profession are organization and pursuit of a

learned art. The condition of an unorganized body of

lawyers which obtained in the United States in the

nineteenth century gave to bar associations in the de-

eadence of professional organization something of the

look of trade associations or of dinner clubs. This was

the lingering effect of a general movement to depro-

fessionalize the traditionally professional callings and

put all callings in one eategory of money-making activi-

ties which was characteristic of frontier modes of

thought in the formative era of our institutions. After

formal organization lapsed or all but disappeared the

lawyer's tradition of solidarity and traditional inci-

dents of professional organization which survived were

of real value for our administration of justice. But the

ideal of the profession involves an inclusive and re-

sponsible organization toward which we have been

moving back steadily since the revival of bar associa-

tions in the last third of the nineteenth century and

more rapidly since the first quarter of the present

century in the development of the integrated bar in

more than half of the states.’

But in its idea and in its history a profession is a

body of learned men pursuing a learned art. Learning

is one of the qualities which sets off a profession from

a voeation or occupation. Professions are learned from

the nature of the art professed. But they have also a

cultural ideal side which furthers the exercise of the

7See the list in Pound, The Lawyer from Antiquity to

Modern Times (1953) 273-275.

9

art. Problems of human relations in society, problems

of disease, problems of the upright life guided by

religion are to be dealt with by the resources of culti-

vated intelligence by lawyer, physician and clergyman.”

Religion, medicine and law are not “trade or commerce”

because, under our system of law growing out of Judeo-

Christian conceptions, man born in the image of his Creator

is not a con \\ dity. Practitioners of medicine and religion

who minister .o his spirit, mind and body are not thereby

engaged in “trade or commerce.” The priesthood of the law

in protecting man as attorney and advocate in his “life,

liberty and pursuit of happiness,” and in his Constitutional,

statutory and common law rights of person and property,

is not just a part of the stream of “trade or commerce.”

The Amicus Curiae Brief of the United States De-

partment of Justice by denigrating the lawyer to “a self- -

employed businessman” or an “independent entrepreneur

of legal services” (Brief, pp. 12-13) in its effort to make

law practice “trade or commerce” becomes part of what

Dean Pound described as “a general movement to depro-

fessionalize the traditionally professional callings and put

all callings in one category of money-making activities

which was characteristic of frontier modes of thought in

the formative era of our institutions.” V Pound on Juris-

prudence 677.

A. The Issue Is Not Exemption But Coverage.

The Petitioner, the Amicus Curiae Brief of the Depart-

ment of Justice, and the District Court in United States v.

Oregon State Bar, Civil No. 74-362 (D. Ore.) ( Petitioners’

Brief, Addendum B, B-19), commit the common error of

declaring the minimum fee schedule to violate the Sherman

Antitrust Act because the Court cannot “create” or “forge”

10

a “new exemption” to the statute. Their mutual mistake is

that the issue of exemption is not reached until coverage

has first been found. No question of “eremption” arises

until the subject matter of law practice is first held to be

“trade or commerce” heeause that is all to which §1 of the

Sherman Act applies. The error is compounded by looking

to the derided “commercial nature” of the fee as deter-

minative of coverage rather than to the legal service which

the fee compensates. A clergy agreement upon minimum

honoraria for conducting baptismal, marital and funeral

services would not fall beyond the antitrust ambit because

there is an implied exemption of the prices for such profes-

sional services, but because the performance of these holy

rites by a man of the cloth is not “trade or commerce.”

The nature of the service performed and not the nature of

the compensation for it is determinative of coverage. It

requires this double error of transposing exemption and

coverage and of testing by price charged instead of by ser-

vice rendered to reach the conclusion that minimum fees on

legal services contravene the Sherman Act proscriptions

against restraint of “trade or commerce.”

B. Predominant Judicial Expressions and

Basic Juristic Conceptions Support the

Absence of Coverage.

The District Court in United States v. National Society of

Professional Engineers, Civ. No. 2412-72 (D.D.C.) (Appen-

dix, Department of Justice Amicus Curiae Brief) not only

erroneously fears “a dangerous form of elitism * * * to dole

out exemptions to our antitrust laws merely on the basis of

educational level * * * or the impact which the profession has

upon society’s health and welfare,” but also entirely misses

the sharp line of delineation between highly educated call-

11

ings and learned professions drawn at V Pound on Juris-

prudence 677 as follows:

“A profession, such as the ministry, medicine, law,

teaching, is much more than a calling which has a cer-

tain traditonal dignity. Certain other callings in recent

times have achieved or claim a like dignity, but lack the

essential primary purpose. For example, if an engineer

discovers a new process or invents a new mechanical

device he may obtain a patent and retain for himself a

profitable monopoly. If, on the other hand, a physician

discovers a new specific for a disease or a surgeon

invents a new surgical procedure they each publish

their discovery or invention to the profession and so to

the world. If a lawyer has learned through research or

experience something useful to the profession and so

to the administration of justice he publishes it in a

legal periodical or expounds it before a bar association

or in a lecture to law students. It is not his property.

He may publish it in a copyrighted book and so have

rights to the literary form in which he put it. But

the process or method or developed principle he has

worked out belongs to the world.”

The Justice Department Brief (p. 30) argues that some

legal services are “available from other sources, such as

real estate brokers and title companies,” and that because

these non-lawyer competitors are subject to the Sherman

Act under United States v. National Association of Reai

Estate Boards, 339 U.S. 485, lawyers must be as weil. Such

is not the case unless the real estate broker or the title

company is unlawfully engaged in the unauthorized prae-

tice of law. The contention is further exploded by the Real

Estate Boards decision which delineates between a trade

and a profession by quoting with approval from Justice

Story in The Nymph, 18 Fed. Cas. 506, this decisive

principle: ~

12

“Wherever any occupation, employment, or business

is carried on for the purpose of profit, or gain, or a

livelihood, not in the liberal arts or in the learned pro-

fessions, it is constantly called a trade.” (Emphasis

supplied). 389 U.S. 490.

The opinion, at p. 492, pinpoints the basis of Sherman Act

coverage for real estate brokers:

“Their activity is commercial and carried on for

profit.”

The Court had earlier followed the principle asserted by

Justice Story and quoted the same language from The

Nymph as decisive, including the sentence:

“In the first place, the word ‘trade’ is often and,

indeed, generally used in a broader sense, as equivalent

to occupation, employment, or business, whether manual

or mercantile.”

There is an express exclusion from the coverage of this

definition of those engaged “in the liberal arts or in the

learned professions.” Atlantic Cleaners d& Dyers, Inc. v.

United States, 286 U.S. 427, 436. It is made clear that the

definition of “trade” is not to be extended by the declaration

at p. 437 that Justice Story had defined the word “in the

general sense” and by “broad” definition.

Indeed the distinction is perceived by the D.C. District

Court in United States of America v. National Society of

Professional Engineers, supra, which states:

“Unlike the lawyer’s brief or the scholar’s text which

convey thought, an engineer’s blueprints constitute a

necessary physical tool which combined with stand-

ardized techniques of manufacturing and construction,

yield a final, functional reduction to practice. In this

regard, professional engineering enjoys a maximum

interface within the products of construction and man-

13

ufacture.* * * This is not a case of indirect and in-

substantial impact by a so-called learned profession

upon interstate commerce.” (Department of Justice

Brief, Appendix 9a-10a).

The Department of Justice desires to subject law practice

to the Sherman Act for “the ultimate purpose” of “pres-

ervation of competition” (Department of Justice Amicus

Curiae Brief, p. 25). The precise and powerful answer to

the Antitrust Division bid for lawyer price competition is

phrased at V Pound on Jurisprudence 677 as follows:

“There is no such thing as competition for clientage

in a profession. Every lawyer should exert himself

fully to do his tasks of advice, representation, and

advocacy to the best of his ability. But competition

with fellow members of the profession in any other

way is forbidden. Competition belongs to activities

which are primarily acquisitive. It is not allowable in

those primarily for public service.”

C. American Medical Association v. United States

Relates to Prepaid Group Health Plans Rather Than

Practice of Medicine And Is Not Controlling.

Petitioners : rgue that American Medical Association v.

United States, 317 U.S. 519, is controlling on the question of

law practice constituting “trade or commerce” despite the

clear declaration of the Court on antitrust coverage of the

learned professions at page 528 that “we need not consider

or decide this question.” The Court held that a conspiracy

between a medical association and certain physicians to

restrain, binder and obstruct the business of Group Health

Association, Inc., an incorporated cooperative whose mem-

bers made prepayments to a plan under which they jointly

procured health and hospital services, constituted “a single

conspiracy to obstruct and restrain the business of Group

Health” and that “the calling or occupation of the individ-

14

ual physicians charged as defendants is immaterial if the

purpose and effect of their conspiracy was such obstruction

and restraint of the business of Group Health.” The charged

conspiracy aimed restraints at a business outside of the

profession. A comparable case would be a conspiracy of a

bar association and its lawyer members to restrain, hinder

or destroy the outside lawful business of a title company or

a group legal services plan. The decision expressly does not

govern the adoption of a minimum fee schedule within the

legal profession.

The distinction is implicit in the Court’s approving quo-

tation of the trial court jury charge as follows:

“If it be true...that the District Society, acting

only to protect its organization, regulated fair dealing

among its members, and to maintain and advance the

standards of medical practice, adopted reasonable rules

and measures to those ends, not calculated to restrain

Group Health, there would be no guilt, though the in-

direct effect may have been to cause some restraint

against Group Health.” (317 U.S. 533).

D. Present and Future Policy Considerations Both

Support Judicial Control Rather Than Antitrust

Regulation of the Legal Profession.

Repeated Congressional recognition of the policy need for

separate treatment of the professions in federal regulatory

statutes has been of such long standing as to be regarded

as historic. Professional employees are exempt from the

Fair Labor Standards Act because their compensation is

unrelated to hours of work. 29 U.S.C. 201, et seq. They are

segregated in separate units under the National Labor Re-

lations Act. 29 U.S.C. 141. Professional services have been

uniformly excluded from both state and federal competitive

bidding statutes. In England minimum fees for solicitors

15

are regulated by orders issued under the Solicitors’ Act of

1957, as amended, 5 & 6, Eliz. 2 Sec. 56.

In truth there are deep and broad concepts of public pol-

icy which point to the removal of all labor of the hand or of

the head from the strictures of the antitrust laws. Collective

action on wages and salaries is relieved from antitrust pro-

hibitions as a matter of policy by 15 U.S.C. § 17 because

“The labor of a human being is not a commodity or article

of commerce.” See Meat Cutters Union v. Jewel Tea Ceo.,

381 U.S. 676. In discussing antitrust immunity of combi-

nations to fix rates of pay, Mr. Justice Jackson, dissenting

in United States v. National Association of Real Estate

Boards, 339 U.S. 485, supra, at 496, said:

“I suppose this immunity is not confined to those

whose labor is manual, and is not lost because the labor

performed is professional.”

At this advanced stage of proven development the statu-

tory state bar, unified as an integrated part of the Judicial

Department of the State, surely must be established as

sound public policy. A concomitant part of that policy is

the government and regulation exclusively by the Judiciary

through its statutory agency of the practice of law as a

public profession, including admissions, discipline, ethics,

codes and standards of professional conduct, and all like

important areas including attorneys’ fees. Out of this policy

has developed far reaching programs of supplying legal

services to the indigent, of developing more readily avail-

able and more economical legal services for middle income

groups through group legal service plans, the advancement

of paralegal assistants and the development of specializa-

tion as aids to more competent, efficient and economical

legal services, the extensive development of lawyer referral

services to make legal services more accessible to the pub-

16

lic, and growing impetus for many other professional devel-

opments for the better service of the public.*

Along with this vital policy development of a public pro-

fession governed by the Judiciary through a statutory state

bar as its agency, there has developed a countermovement

for the deprofessionalization and the federalization of the

legal profession. Its present major thrust, among various

others that await in the wings, is the federal antitrust

attack on minimum fee schedules. It is respectfully sub-

mitted that displacing state judicial control of this area of

law practice by the imposition of antitrust proscriptions

applicable to “trade or commerce” would be deeply disrup-

tive to this advanced publie policy and a tremendous step

backwards to what Dean Pound more than twenty years

ago termed “a general movement to deprofessionalize the

traditionally professional callings and put all callings in one

category of money-making activities which was characteris-

tie of frontier modes of thought in the formative era of our

institutions.” He followed with the prophetic warning in

V Pound on Jurisprudence 680:

“Today the idea of a profession is again seriously

threatened. * * * Moreover, the endeavor of many call-

ings today to be classed as professions, although pri-

marily money-making in purpose and spirit, must be

taken into account. The movement to elevate the stand-

ards of business and of all callings is a worthy one, But

in elevating these, vigilance is needed that the purpose

is not achieved by pulling down the standards of the

old recognized professions to a common level with the

newer ones.”

A judgment for the Petitioners in this case would go far

toward such a “pulling down.”

*40 California State Bar Journal 720; 61 Illinois Bar Journal

536; 10 Hawaii Bar Journal 30; Vol. Il Sept. 1973 Pro Bono

Report; 58 ABA Jn. 31 (on the merits of minimum fee sched-

ules) ; 56 ABA Jn. 1164; 52 ABA Jn. 1043; 38 Kentucky Bar

Journal 35.

17

II,

MINIMUM FEE SCHEDULES PRINCIPALLY RELATE

TO LOCAL LEGAL SERVICES IN PURELY INTRA-

STATE TRANSACTIONS BEYOND THE COVERAGE

OF THE SHERMAN ANTITRUST ACT.

Even if the practice of law be cynically regarded as mere

“trade or commerce,” the legal services to which minimum

fee schedules generally apply still do not relate to transac-

tions substantially affecting “trade or commerce among the

several States or with foreign nations” within the reach

and application of § 1 of the Sherman Act. Generally there

will in no event be Sherman Act coverage because both the

legal service and the transaction to which it relates will be

strictly intrastate with no substantial effect on interstate or

foreign commerce. Minimum fee schedules viewed in their

entirety predominantly relate to matters in strictly intra-

state commerce and beyond even “the farthest reaches of

the commerce power.”

A. The Legal Services To Which Minimum Fee Schedules

Apply Are Generally Strictly Intrastate And Without

Substantial Effect on Interstate Commerce.

Speaking in a different context, the Department of Jus-

tice Amicus Curiae Brief effectively admits the essentially

local and intrastate character of minimum fee schedules in

their application by such pronouncements as these:

“Not surprisingly, fee schedules appear to be used

most heavily by low-income lawyers.”*

“The primary impact of minimum fee schedules is

upon small businesses and middle income individuals,

* Time, Sept. 16, 1974, states in “The Law” that “about three-

quarters of the private attorneys in the U.S. work in offices that

have three lawyers or fewer.” Smith and Clifton, 52 ABA Jn.

1043 (1966), put it at 83%. A 1970 ABA survey put lawyer

median annual income at $21,260, 56 ABA Jn. 1164.

18

who only occasionally use legal services. Proponents

of such fee schedules assert that they are most useful

‘in routine affairs that affect the individual; divorce,

adoption, sale of a home, probating a smaller estate

or routine appearance in court.’ Miller & Weil, Let’s

Improve, Not Kill, Fee Schedules, 58 A.B.A. 31, 32

(1972). Such schedules also typically cover transac-

tions likely to be encountered by small businesses, such

as creation and dissolution of partnerships and corpo-

rations, bill collection, minor litigation, foreclosure and

bankruptey. See Arnould & Corley, supra, 57 A.B.A.J.

at 6957.

“By contrast, legal services for large enterprises

and persons of wealth tend to be unaffected by mini-

mum fees * * *.”

Strong authority that the essentially personal and local

legal services covered by minimum fee schedules do not

substantially affect interstate commerce so as to fal] within

the coverage of § 1 of the Sherman Act is United States v.

Oregon Medical Society, 343 U.S. 326, in which the Depart-

ment of Justice claimed § 1 and § 2 Sherman Act violations

through monopoly of group prepaid medical care plans

and restriction of competition in group prepaid medical

eare plans by the defendant state medical society and

defendant county medical societies sponsoring such plans.

In sustaining a finding that such plans did not substantially

affect interstate commerce under the Sherman Act, the

opinion by Mr. Justice Jackson states at 343 U.S. 338:

“Almost everything pointed to in the record by the

Government as evidence that interstate commerce is

involved in this case relates to across-state-line activi-

ties of the private associations. It is not proven, how-

ever, to be adversely affected by any allocation of ter-

ritories by doctor-sponsored plans. So far as any evi-

dence brought to our attention discloses, the activities

of the latter are wholly intrastate. The Government

19

did show that Oregon Physicians Service made a num-

ber of payments to out-of-state-doctors and hospitals,

presumably for treatment of policy holders who hap-

pened to remove or temporarily be away from Oregon

when need for services arose. These were, however,

few, sporadic and incidental.”

The principle that the peripheral interstate facets of a

local title examination by a local lawyer on the local pur-

chase of a local home do not convert the transaction into one

substantially affecting interstate commerce within the cov-

erage of the Sherman Act seems to be recognized in the

declaration in Federal Baseball Club of Baltimore, Inc, v.

National League, 259 U.S. 200, 209, that: “A firm of

lawyers sending out a member to argue a case * * * does not

engage in commerce because the lawyer goes to another

state.”

B. Antitrust Law Coverage Must in Any Event Be

Determined on Commerce Facts of Individual

Transactions and Not on a Blanket Basis.

Despite the fact that only the particular individual

facts of the Goldfarb home purchase are in evidence or in

issue, both the Petitioners by an attempted class action

device and the Justice Department in its amicus curiae

brief appear to seek a blanket antitrust condemnation of

minimum fee schedules per se without any reference to the

particular commerce facts of individual transactions to

which items in the minimum fee schedule may be applied.

It is basic to the Sherman Act that coverage is tested on the

commerce facts of particular transactions and not on a

blanket basis by the general nature of a business, industry

or profession.

Since the briefs in favor of the Petitioner here concede

that the transactions in issue are not in the “stream of

20

commerce”, the determination of coverage in any event has

to be made “under the ‘affecting commerce’ or quantitative

test, where the issue is whether the effect on commerce is

significant.” The quantitative test can only be applied on

the basis of the particular commerce facts of au individual

transaction to which a particular minimum fee provision is

applied. ABA Antitrust Developments 39.

Is antitrust coverage even arguable where one local resi-

dent conveys a home to another local resident and title

examination and conveyancing is done by a local lawyer

in an al! eash transaction or by the seller individually

carrying the mortgage loan or where the mortgage involves

no out-of-state lender or guarantor? What have the peri-

pheral and remote interstate facets of the Goldfarb home

purchase to do with the defense of a state criminal case or

municipal traffie ticket, the drafting and probating of the

will of a local citizen involving no out-of-state property, a

divorcee between two local residents with no out-of-state

property involved, or a myriad of other purely local trans-

actions having no interstate aspects whatever to which

minimum fee schedules are applied?

The judicial process is not well served by seeking a

broad brush antitrust obliteration of minimum fee schedules

in their entirety in total disregard of the fact that their

particular provisions are generally applied to transactions

having no interstate aspects whatever. Seemingly such

gross imprecision in adjudication should not be counte-

nanced., '

Petitioners concede the rubrie that “determinations

of commerce questions under the Sherman Act must be

resolved on a case-by-case basis” (Petitioners’ Brief p. 48).

Yet Petitioners move from that to seeking blanket treat-

ment of all of the cases of all of the home buyers in the

21

“bedroom communities” for northern Virginia. Both Peti-

tioners and the Department of Justice then seem to vault

from that bootlift level to a third plateau with a plea for a

sweeping, all-inclusive antitrust adjudication condemning

all minimum fee schedule provisions in all individual cases

now or hereafter, though the facts of such individual cases

involve neither home purchases nor northern Virginia and

are neither in evidence nor in issue. This surely must be

wholly impermissible.

ITI.

VIRGINIA MINIMUM FEE SCHEDULES ARE THE

PRODUCT OF STATE ACTION BY THE VIRGINIA

STATE BAR AS A STATUTORY AGENCY OF THE

SUPREME COURT OF VIRGINIA AND ARE NOT

WITHIN THE APPLICATION OF THE SHERMAN

ANTITRUST ACT.

Not only is the Virginia State Bar, like the State Bar of

Texas, a statutory agency of the Supreme Court of the

State and a part of its Judicial Department, but the adop-

tion of minimum fee schedules by official action of the

agency and promulgation by the Supreme Court constitutes

State action to which the Sherman Antitrust Act simply

does not apply.

In addition to its statutory status as an agency of the

Supreme Court of the State and its official role in enforce-

ment of Disciplinary Rules having the force of law, the

State action role of the Virginia State Bar, like that of

the State Bar of Texas,* has been made clearer still by the

official adoption by the State Bar and the official promulga-

tion by the Supreme Court of a comprehensive Code of

Professional Responsibility having the force of law. The

basic commitment of the State Bar to the ready availability

* Title 14, App. Art. 12, 8. 8, Vernon’s Annotated Texas Statutes.

9»

of competent legal services to all its citizens is embodied

in the very first statement in Canon 1 of the Code of Pro-

fessional Responsibility :

“A basic tenet of the professional responsibility of

lawyers is that every person in our society should have

ready access to the independent professional services

of a lawyer of integrity and competence.”

This legal declaration of professional duty to the public

is expanded upon in Canon 2 as follows:

“A lawyer should assist the legal profession in ful-

filling its duty to make legal counsel available. The

need of members of the publie for legal services is met

ouly if they recognize their legal problems, appreciate

the importance of seeking assistance, and are able to

obtain the services of acceptabie legal counsel. Hence,

important functions of the legal profession are to edu-

cate laymen to recognize their legal problems, to facili-

tate the process of intelligent selection of lawyers, and

to assist in making legal services fully available.”

The professional duty as a matter of law of the legal pro-

fession to carry on public information and education pro-

grams for the benefit of the citizens is clearly and firmly

asserted in Canon 2-2 as follows:

“The legal profession should assist laymen to recog-

nize legal problems beeause such problems may not be

self-revealing and often are not timely noticed, There-

fore, lawyers acting under proper auspices should

encourage and participate in educational and public

relations programs concerning our legal system with

particular reference to legal problems that frequently

arise. Such educational programs should be motivated

by a desire to benefit the public rather than to obtain

publicity or employment for particular lawyers. Exam-

ples of permissible activities include preparation of

institutional advertisements and professional articles

*

23

fo lay publications and participation in seminars, lec-

tures, and civic programs.”

The Code deals comprehensively with the ethical stand-

ards to be employed in determining reasonable attorneys’

fees and is unequivocal in its mandate for the provision of

competent and adequate legal services in those cireum-

stances where the client is not able to pay such a reasonable

fee. Canon 2-24 recognizes that:

“Kven a person of moderate means may be unable

to pay a reasonable fee which is large because of the

complexity, novelty, or difficulty of the problem or

similar factors.”

Under these circumstances, it is declared in Canon 2-16:

“Nevertheless, persons unable to pay all or a portion

of a reasonable fee should be able to obtain legal

services, and lawyers should support and participate

in ethical activities designed to achieve that objective.”

The lawyer’s obligation to see that legal services are not

denied to any citizen because of inability to pay a reasonable

fee is stated in Canon 2-25 as follows:

“Historically, the need for legal services of those

unable to pay reasonable fees has been met in part by

lawyers who donated their services or accepted court

appointments on behalf of such individuals. The basic

responsibility for providing legal services for those

unable to pay ultimately rests upon the individual

lawyer, and personal involvement in the problems of

the disadvantaged can be one of the most rewarding

experiences in the life of a lawyer. Every lawyer, re-

gardless of professional prominence or professional

work load, should find the time to participate in serving

the disadvantaged. The rendition of free legal services

to those unable to pay reasonable fees continues to be

an obligation of each lawyer, but the efforts of indi-

vidual lawyers are often not enough to meet the need.

24

Thus, it has been necessary for the profession to insti-

tute additional programs to provide legal services.

Accordingly, legal aid offices, Lawyer Referral offices.

and other related programs have been developed, and

others will be developed, by the profession. Every

lawyer should support all proper efforts to meet this

need for legal services.”

Commentators have agreed than Canon 2 as quoted above

“is a near-radical departure from familiar ethical prin-

ciples; its axiomatic statement that the legal profession

has an affirmative ‘duty to make legal counsel available’ to

the general public, with its corollary that a lawyer has a

duty to assist the profession in fulfilling its duty, is new to

the legal profession.” 61 JI. Bar Jn, 134; 48 Tex. L. Rev.

285.

The Code also provides the governing principles in the

determination of reasonable attorneys’ fees for those able

to pay in Canon 2-17 and 2-18 as follows:

“KC 2-17. The determination of a proper fee re-

quires consideration of the interests of beth client and

lawyer, A lawyer should not charge more than a reason-

able fee, for excessive cost of legal service would deter

laymen from utilizing the legal system in protection of

their rights. Furthermore, an excessive charge abuses

the professional relationship between lawyer and client.

On the other hand, adequate compensation is necessary

in order to enable the lawyer to serve his client effee-

tively and to preserve the integrity and independence

of the profession.

EC-18. The determination of the reasonableness of

a fee requires consideration of all relevant cireum-

stances, ineluding those stated in the Disciplinary

Rules. The fees of a lawyer will vary according to

many factors, including the time required, his experi-

ence, ability, and reputation, the nature of the employ-

ment, the responsibility involved, and the results ob-

25

tained. Suggested fee schedules and economic reports

of state and local bar associations provide some guid-

ance on the subject of reasonable fees. * * * *”

No amount of attenuated reasoning can eseape the fact

that the adoption by a statutory agency and the promulga-

tion by the Supreme Court of such fee schedules to “provide

some guidance on the subject of reasonable fees” consti-

tutes state action.* The Code of Professional Responsibility

states a body of law governing the legal profession and of

the lawyer in the discharge of the duty of this publie pro-

fession to provide through its public officer members legal

services to the members of the public and the duties of

those officers of the court in determining the reasonable

fees to be charged to those able to pay. It is in this context

of a code of law governing the profession and its mem-

bers that fee schedules are promulgated in the light of the

declared duties of the profession and its members. Under-

girding this structure are Disciplinary Rules having the

force of law and a statutory agency with the lawful duty

and the lawful power to enforce them.

A. Parker v. Brown is Controlling.

Such state action is not within the application of Section

1 of the Sherman Act under Parker v. Brown, 317 U.S. 341,

and the array of cases folowing and reenforcing its rule

that state action through a statutory agency, even though

it be in the nature of self-regulation, is beyond the federal

* Article 2226, Vernon’s Texas Civil Statutes expressly adopts

State Bar Minimum Fee Schedules as follows: “The amount pre-

scribed in the current State Bar Minimum Fee Schedule shall

be prima facie evidence of reasonable attorney’s fees. The court,

in non-jury cases, may take judicial knowledge of such schedule

and of the contents of the case file in determining the amount

of attorney’s fees without the necessity of hearing further evi-

dence.”

26

antitrust ambit. In Parker v. Brown raisin producers pro-

posed production and sales quotas and adopted them by

referendum but they were approved by the statutory Com-

mission, just as minimum fee schedules are adopted pur-

suant to referendum by the statutory agency and in addi-

tion promulgated by the Supreme Court. It is state action

to which federal antitrust laws do not apply because:

“It is the state which has created the machinery for

establishing the prorate program. Although the organ-

ization ©f a prorate zone is proposed by producers,

and a prorate program, approved by the Commission,

must also be appreved by referendum of producers, it

is the state, acting through the Commission, which

adopts the program and which enforces it with penal

sanctions, in the execution of a governmental policy... .

The state in adopting and enforcing the prorate

program made no contract or agreement and it entered

into no conspiracy in restraint of trade or to establish

monopoly but, as sovereign, imposed the restraint as

an act of government which the Sherman Act did not

undertake to prohibit.”

On the authority of Parker v. Brown, imsurance rates

proposed by a rating bureau composed of insurance com-

panies subject to approval by the State Commissioner of

Insurance did not violate the Sherman Act. Allstate Insur-

ance Co. vy. Lanier, 361 F. (2d) 870 (4th Cir. 1966). Reduced

rates for all-electric homes to exclude the competition of

gas proposed by the electric company and approved by the

State Corporation Commission did not violate the Sherman

Act because it was state action. Washington Gas Light Co. v.

Virginia Electric & Power Co., 4388 F. (2d) 248 (4th Cir.

1971); Gas Light Co. of Columbus v. Georgia Power Co.,

440 IF. (2d) 1135 (5th Cir. 1971), cert. denied, 404 U.S.

1062 (1972). See Handler, 72 Col. L. Rev. 1, 13 (1972).

27

B. The Issue Is Not Exemption or Immunity

But Absence of Coverage.

Briefs by Petitioners and the Department of Justice

again both miss the mark in arguing against implied exemp-

tions or immunities. No issue of exemption or immunity is

even involved. Where a state action is present, federal

antitrust coverage is simply absent. Professor Handler puts

it that “the exception from antitrust coverage applies

whenever the pertinent state statute provides for ultimate

governmental control, regardless of the manner in which the

regulatory agency has carried out its duties.” Jd. 13.

C. Primary Jurisdiction of the State Supreme Court and

Its Statutory Agency Should in Any Event Apply.

Even if this were not such a clear case of state action

beyond the scope of the Sherman Act, it would appear that

primary jurisdiction should be accorded to the State

Supreme Court which promulgated the minimum fee sched-

ules adopted by its statutory agency which governs and

regulates the legal profession. Any attack on the minimum

fee sehedules as invalid, unlawful, anticompetitive or

unreasonable should first be made there rather than in the

antitrust forum of the federal court.

Far Eastern Conference v. United States, 342 U.S. 570

(1952); United States v. Western Pacific RR. Co., 352 US.

59 (1956) ; United States v. Radio Corporation of America,

358 U.S. 334 (1959); Carter v. American Telephone & Tele-

graph Company, 365 F. (2d) 486 (Sth Cir. 1966), cert.

demed, 385 U.S. 1008 (1967); Craim v. Blue Grass Stock-

yards Co., 399 F. (2d) 868 (6th Cir. 1968), and Locust

Cartage Co. v. Trans American Freight Lines, Inc., 430

F. (2d) 334 (1st Cir. 1970), constitute part of a long-

established line of cases currently culminating in the late

28

decisions of this Court in Ricci yv. Chicago Mercantile

Exchange, 409 U.S. 289 (19738), and Chicago Mercantile

Exchange v. Deaktor, 414 U.S. 113 (1973), all invoking

and applying primary jurisdiction of the federal or state

regulatory agency so as to stay what has been termed

“niece-meal, sporadic decisions by courts” which it is

declared “should not interfere with or bypass the statutory

schemes.” Watts v. MAT RR. Co., 383 F. (2d) 571, 5838 (Sth

Cir. 1967).

In the Ricci ease, the Court describes the primary juris-

diction process as being “where the regulatory regime is

administered by an agency, the Antitrust Court will stay

its hand to permit institution of administrative proceedings

if they are ‘likely to make meaningful contribution to the

resolution of this lawsuit.’ ” 409 U.S. 396. It would seem to

he implicit in the primary jurisdiction philosophy that at

the very least the antitrust court should stay its action

and defer primary consideration of any attack on the mini-

mum fee schedules as being anticompetitive, unreasonable

or unlawful to the State Supreme Court whose statutory

agency developed them after which “the Antitrust Court

will be in a position to make a more intelligent and sensitive

judgment as to whether the antitrust laws will punish what

an apparently valid rule of the [statutory ageney] permits.”

Id, 409 U.S. 307-3808,

D. Judicial Rather Than Antitrust Regulation of

the Legal Profession Should be Preferred.

The salutary, progressive and wholesome process of

regulation by the courts of their own officers and govern-

ment of the legal profession by the judiciary, which is a

rapidly developing rather than a merely emerging reform,

shovld not be impeded or disrupted by the intervention of

fede al antitrust regulation by lawsuit.

29

CONCLUSION

The minimum fee schedules in issue are a part of the

state judicial regulatory scheme implementing the Discipli-

nary Rules and the Code of Professional Responsibility,

including Canon 2-16;

“The legal profession cannot remain a viable force

in fulfilling its role in our society unless its members

receive adequate compensation for services rendered,

and reasonable fees should be charged in appropriate

cases to clients able to pay them.”

The laborer in the law “is worthy of his hire.” The involve-

ment of lawyer livelihood does not warrant abandoning the

grandeur of the Pound conception of the profession for the

culturally arid and drouth bitten concept of law practice

as shabby and greedy fee grubbing.

The law practice which the minimum fee schedules cover

is not “trade or commerce.” If it were so regarded, the legal

services to which the minimum fee schedules most generally

apply woald not substantially affect interstate commerce

so as to permit federal antitrust coverage. This in any

event would have to be determined on a case-by-case basis

from the individual commerce facts of particular transac-

tions to which a particular provision of the minimum fee

schedules might be applied. Such minimum fee schedules

are the product of state action and hence beyond the anti-

trust ambit. The Court of Appeals correctly left the govern-

ment and regulation of the legal profession, including mini-

mum fee schedules, with the State Supreme Court and its

30

statutory agency where they have been reposed by state

law and properly belong. The decision of the Court of

Appeals should be affirmed.

Respectfully submitted,

Leroy JEFFERS

Attorney for the

Siate Bar of Texas,

Amicus Curiae

First City National Bank

Bldg.

Houston, Texas 77002

January, 1975

31

PROOF OF SERVICE

I, John Leroy Jeffers, attorney for the State Bar of

Texas, Amicus Curiae herein, and a member of the Bar of

the Supreme Court of the United States, hereby certify

that, on the ............ day of January, 1975, I served three

copies each of the foregoing Amicus Curiae Brief of the

State Bar of Texas on the several parties to this action, as

follows:

On Lewis H. Goldfarb and Ruth S. Goldfarb, Petitioners,

Virginia State Bar, Respondent, and Fairfax County Bar

Association, Respondent, by mailing copies in duly ad-

dressed envelopes, with air mail postage prepaid, to their

respective attorneys of record, at their addresses of record,

as follows:

(1) To Alan B. Morrison, Esquire, attorney for Peti-

tioners, 2000 P Street N.W., Suite 700, Washington, D.C.,

20036 ;

(2) To Stuart H. Dunn, Esquire, Assistant Attorney

General, Commonwealth of Virginia, attorney for Respond-

ent Virginia State Bar, Supreme Court Building, 1101 East

Broad Street, Richmond, Virginia, 23219; and

(3) John H. Shenefield, Esquire, attorney for Respond-

ent Fairfax County Bar Association, c/o Hunton, Williams,

Gay & Gibson, P. O. Box 1535, Richmond, Virginia, 23212.

John Leroy Jeffers

Attorney for

The State Bar of Texas,

Amicus Curiae

2010 First City Natl. Bank Bldg.

Houston, Texas 77002

713 236-2330