Petition — Boddicker v. Arizona State Dental Ass'n

IN THE ,

SUPREME COURT OF THE UNITED STA

October Term, 1981

VERNON S. BODDICKER, RICHARD W. PEAY,

HUGH L. THOMPSON and DWIGHT G. HUDSON,

Petitioners,

vs.

ARIZONA STATE DENTAL ASSOCIATION,

AN Arizona Non-Profit Corporation;

CENTRAL ARIZONA DENTAL SOCIETY

an Arizona Non-Profit Corporation;

AMERICAN DENTAL ASSOCIATION, an

Illinois Non-Profit Corporation,

Respondents.

ON WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ALFRED L. RUEBEL

ERHARD, COX & RUEBEL, P. C.

211 North ng Suite 500

Dallas, Texas 5201

(214) 741-6201

CARL W. DIVELBISS

101 North First Avenue, Suite 1950

Phoenix, Arizona 85003

(602) 257-8367

Attorneys for Petitioners

QUESTIONS PRESENTED FOR REVIEW

Did the United States Court of Appeals

for the Ninth Circuit err in affirming

the holding of the United States Dis-

trict Court that the compulsory cross-

membership requirements between the

three Respondents do not constitute an

illegal tying arrangement in violation

of Sherman Act and the Clayton Act?

Did the United States Court of gyeeess

for the Ninth Circuit err in affirming

the holding of the United States Dis-

trict Court that the yang tome cross-

membership requirements between the

three Respondents do not suppress com-

petition between dentists in violation

of the Sherman Act and the Clayton Act?

Did the United States Court of Appeals

for the Ninth Circuit err in affirming

the holding of the United States Dis-

trict Court that the Respondents have

not monopolized the area of dental

services supplied to dentists by these

Respondents in violation of the

Sherman Act?

Did the United States Court of als

for the Ninth Circuit err in fai

to hold that the compulsory cross-

membership requirements between the

three Respondents constitutes an un-

reasonable restraint of trade as a

matter of law in violation of the

Sherman Act?

INDEX

Questions Presented For Review

Opinions Delivered Below

Jurisdiction

The Statutory Provisions Involved

Statement of the Case

Reasons for Allowance of the Writ

Conclusion

TABLE OF AUTHORITES CITED

Cases:

a. 8 S.ct. 869,

871-872, n. g 2 19 L.Ed.2d 998

(1968)

sian v. Gulf Oil Co 561

r. 1977)

cert. denied 434 U.S. 1086, 98

S.Ct. 1280 (1978)

Page

oF fF YW YS WN

26

24

ii

Page

Catalano, Inc. v. Target Sales

T9725, 1928 (1980) ” we 23

Chatham Condominium Associations

Vv. ntu a nc. ”

. Ee

Fortner II, 429 U.S. 610, 619-620,

“OT S.tt.

t. 861, 867-868 (1977) 20

Goldfarb v. Cee atate Bar,

iain Sat i 8

23

Jee ' >. >.

2106-7, 2173-71981) pec

we >. 5

$77). ; 12

1 11 ‘Ss * 1

17,

r. 1975) cert.

denied 423 U.S. 1053, 96 S.Ct.

782, 46 L.Ed.2d 642 (1976) 16

tional v. U. »

12, 14-i5 (1947) _ es

iii

Miller v. Granados, 529 F.2d

Pa ahs

e514. 518,

2°. Ed’2d 543, 550 (1958)’

'

me ines: aa ze 7a 1211,

r r. 1976), cert.

denied 429 U.S. 823, "97 S.Ct.

74 (1976)

ed States v ffith,

> > + J q.

941, 945 (1948)

=. 's c., 371 U.S.

; > 104, 9

L.Ed.2d 11 (1962)

Page

10

23

10,11,

13,18,

20

15,21

16

22

10,13

18

17

iv

Page

United States v. National

Ssociation of Broadcasters

T98Z-I Trade Cases, 1 64567,

p. 73100 (D.C. D of C,

March 3, 1982) 11

17

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1981

NO.

VERNON S. BODDICKER, RICHARD W. PEAY,

HUGH L. THOMPSON and DWIGHT G. HUDSON,

Petitioners,

vs.

ARIZONA STATE DENTAL ASSOCIATION,

an Arizona Non-Profit Corporation;

CENTRAL ARIZONA DENTAL SOCIETY

an Arizona Non-Profit Co ration;

AMERICAN DENTAL ASSOCIA >» an

Illinois Non-Profit Corporation,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Petitioners pray that a writ of cer-

tiorari issue to review the judgment

and opinion of the United States Court

of ls For the Ninth Circuit, en-

te in this proceeding on March 24,

1982, and the denial of the Petition

for Rehearing on May 7, 1982.

2

QUESTIONS PRESENTED FOR REVIEW

Did the United States Court of sgoeele

for the Ninth Circuit err in affirming

the holding of the United States Dis-

trict Court that the c lsory cross-

membership requirements between the

three Respondents do not constitute an

oy tying arrangement in violation

of Sherman Act and the Clayton Act?

Did the United States Court of Appeals

for the Ninth Circuit err in affirming

the holding of the United States Dis-

trict Court that the c lsory cross-

membership requirements between the

three ee do not suppress com-

petition between dentists in violation

of the Sherman Act and the Clayton Act?

Did the United States Court of ae pa

for the Ninth Circuit err in affirming

the holding of the United States Dis-

trict Court that the Respondents have

not monopolized the area of dental

services lied to dentists by these

Respondents violation of the

Sherman Act?

Did the United States Court of ls

for the Ninth Circuit err in failing

to hold that the compulsory cross-

membership requirements between the

three Respondents constitutes an un-

reasonable restraint of trade as a

matter of law in violation of the

Sherman Act?

3

OPINIONS DELIVERED BELOW

There was no formal opinion of the

United States District Court for the Dis-

trict of Arizona. However, the District

Court did enter a Minute Entry dated

March 3, 1975, dismiss the Amended

laint, which said Order is reproduced

in ppendix A to this Petition.

Appearing as ndix B to this Peti-

tion, is the initial Opinion of the Court

of Appeals, reversing the District Court,

as reported in 549 F.2d 626 (1977).

roduced in mndix C is the Order

of this Court de Certiorari, oa

October 3, 1977.

Appearing as ndix D are the Find-

of Fact, Conclusions of Law and

J nt, as entered by the District Court

on st 29, 1980.

Appearing as Appendix E is the Memo-

randum Decision of the Court of Appeals,

Ninth Circuit, entered March 24, 1982.

r as F is the Order

of t ee of serssise Ninth Circuit,

denying the Petition for Rehearing, en-

tered May 7, 1982.

JURISDICTION

The ju t of the Court of Appeals for

the Ninth Circuit was entered on March 24

1982 (App. E, infra). A timely Petition for

Rehearing was d on May 7, 1982 (App. F,

poe, The jurisdiction of this Court is

under 28 U.S.C. § 1254(1).

4

THE STATUTORY PROVISIONS INVOLVED

This action involves §§ 1 and 2 of the

Sherman Act (Title 15, U.S.C., §§ 1 and 2)

and § 16 of the Clayton Act (Title 15,

U.S.C., § 26, as amended). See Apps. G,

H and i, infra.

STATEMENT OF THE CASE

Petitioners are all licensed dentists

within the State of Arizona. Petitioners

Peay, Thompson and Hudson are e ed in

active practice, Petitioner Boddicker, for

reasons hereinafter discussed, having ter-

minated his practice in 1974. Respondent

Arizona State Dental Association rein-

after "ASDA") is an Arizona non-profit

corporation, incorporated in 1951. Re-

spondent Central Arizona Dental Society

eouutnstber “CADS") is also an Arizona

non-profit corporation, incorporated in

1961. The ASDA and CADS maintain a joint

office and place of business in Maric

County, Arizona. Re t American -

tal Association reinafter "ADA") is an

Illinois non-profit corporation, having

mea omens office and place of business

at cago, Illinois. Re dent ADA has,

by its Bylaws, designated Respondents ASDA

slashes, Seepqpabesie, ef thn Abas ant G2

cieties, respectively, o s

required Respondents ASDA and CADS, as a

condition to membership in the ASDA and

CADS, to require their respective members

to not only pay dues for said State

and local societies but, in addition, to

also pay dues for membership in the ADA.

This practice has been acquiesced in, nur-

tured, supported and enforced by the

5

Respondents ASDA and CADS and, in addition,

has been implemented in the Bylaws of the

ASDA and CADS. Thus, a dentist practicing

within Maricopa County, Arizona, wishing to

become a member of the CADS, tenders his

application to the CADS, along with the

dues for the ASDA and ADA. Upon acceptance

of his membership by the CADS, he automat-

ically becomes a member of the ASDA and ADA.

Out of the total amount of dues tendered

with his application, the CADS retains its

portion, remitting the balance to the ASDA,

which extracts its portion and remits the

ADA portion to its offices at Chicago,

following which the dentist is automati-

cally enrolled as a member of the ADA.

The ADA does not even so much as see a copy

of the membership application, enrolling

the member strictly on the basis of the

remittance by the ASDA.

The foregoing py ot as to the ini-

tial enrollment of a member, is also fol-

lowed in the collection of the annual mem-

bership dues, in that the CADS collects the

entire amount of the dues for the CADS,

ASDA and ADA, with the remittance and trans-

mittal being as aforesaid. The procedure

followed in Arizona is identical to the

procedure followed in each and every State

of the United States where there is a con-

stituent and/or csmpenent society of the

ADA. Admittedly, (1) there is no dentist

who is a member of any constituent or conm-

ponent society who is not also a member of

the ADA (Plaintiffs' Exhibit 50, p. 13 -

ADA Answer to Plaintiffs’ Interrogatory Ne.

59), and (2) there is no State within the

United States in which a constituent society

of the ADA does not exist (Pretrial Order,

p. 14, Lines 6-7, CR178).

6

Membership in the ADA does not require

the showing of any particular professional

ability or professional expertise. R.T.,

Vol. 1, p. » Line 23 - p. 61, Line 10.

Petitioners’ evidence shows that they,

as weli as all other dentists similarly

situated, derive particular benefits from

membership in the CADS and, to a lesser

degree, in the ASDA, but with only nominal,

if any, benefit from membership in the ADA;

that the only benefit which might be derived

from membership in the ADA is the receiving

of the Journal of the American Dental Asso-

ciation, but which can be obtained without

ADA membership. The primary, and most in-

portant, benefit derived from membership in

the CADS is the continuing dental educa-

tional eo conducted and made avail-

able by said Society, plus the og it —sppad

for exchange of information with fellow

practitioners who are also CADS members and

the referral of patients by fellow members.

And the ASDA, although providing only a

limited continuing educational progran,

does have an insurance program which is

important to its members. Petitioners’

testimony shows, specifically, that the

rofessional skills of any dentist are en-

nced or increased by his membership in

the CADS; that CADS membership enables a

dentist to have a more efficient and pro-

fessional operation of his office than a

non-member .

The evidence of the Petitioners also

shows that, without membership in the ADA,

Petitioners and all other dentists similarly

situated are deprived of the right to bel: ¢g

to any specialty group, or any professional

7

and/or technical society recognized by the

Respondent ADA.

The activities of the ADA are all con-

ducted in interstate commerce, including

the extraction of dues from Petitioners

and all other dentists similarly situated,

both in Arizona and each of the other

States. In 1972, the ADA collected dues

in excess of $6,000,000.00. 1979, this

figure had climbed to almost $15,000,000.00.

In the same period of time, the annual ADA

dues have increased from $70.00 r year

to tra Sha per year, with a further increase

to $300.00 per year under consideration.

Both Petitioner Boddicker and Petitioner

Peay objected to the payment of dues for

the ADA and, for the year 1972, tendered

dues for only the CADS and ASDA. Each was

threatened with expulsion from membership

unless the dues for all three organizations

were paid. See Plaintiffs' Exhibits 39-45.

Dr. Boddicker refused to pay the ADA dues

and was expelled from membership in all

three organizations. Dr. Peay, not wanting

to be deprived of his membership in the

CADS, finally relented and paid the dues

for all three organizations, doing so under

protest. Dr. Boddicker, a prosthodontist,

whose practice depended “eee referrals,

continued in practice until mid-1974, when

he finally decided to terminatehis practice,

due to the fact that he ceased receivi

any referrals from the CADS, plus a ¢ -

is of the referrals from members .

The Petitioners testified that, except

for the mandatory membership requirements,

as aforesaid, they would not have retained

membership in the ADA. R.T., Vol. l, p.

89, Lines 20-25; R.T., Vol. 2, p. il

my agg - p. 12, Line l and p. 37, Lines

REASONS FOR ALLOWANCE OF THE WRIT

This Petition raises questions of na-

tional rtance involving the applica-

tion of the antitrust laws and, particu-

larly, to professional organizations.

Al this action was brought by only

four dentists, the facts involve thousands

of other dentists similarly situated, scat-

tered throughout the United States. And a

great deal of confusion exists as to the

relative rights and obligations of profes-

sional organizations and their members,

beginning with Goldfarb v. Virginia State

r, 421 U.S. . Ct. »

with each case having its own peculiar set

of facts, with the result that each succes-

sive case has plowed almost virgin soil.

This case can have a resounding applica-

tion to dozens and dozens of professional

organizations in the United States. There-

fore, it is deserving of careful considera-

tion, and something other than the cavalier

treatment it has received in the District

Court and most recently, in the Court of

Appeals.

Each of the three Respondents is a unique

organization. Likewise, in other States,

the respective constituent and/or component

society is also a unique organization. For

a dentist who is disinterested in all of the

organizations, there is no market for any of

9

them. But to another dentist, there ma

be a market for one or more, but not all,

of the Respondent organizations. But the

Respondents, by their membership arrange-

ment, have created a forced market for the

unwanted and/or undesired organization

membership. Where a dentist desires to

belong to his local (component) society,

and even though he may, as a matter of

judgment, and ~~ because of his par-

ticular situation, determine he has no

need to belong to the constituent and/or

national a he is, nevertheless,

as a = on to nenbership 7 his com-

nent society, c ed to also pay men-

rship dues for, = to join, his consti-

tuent and national organizations.

Thus, the Court commits a basic error

when it confuses lack of a “competitive

market" with a forced market, i.e., an

unwanted membership in one or more of the

Respondent organizations.

It is fallacious to state that

"Membership in the local and state

groups cannot be characterized as a

product or service distinct from ADA

membership.",

for, as we have seen, a dentist in the

Federal Dental Services (Army, Navy, VA,

Public Health Service) is allowed to ob-

tain membership in the ADA, but without

membership in a constituent or component

society. Thus, the ADA, at least, gives

recognition to a separate and distinct

ADA membership.

10

The undesired or unwanted membership

can be compared to a product or merchandise

which a party is required to purchase as a

part of a tying arrangement in order to ob-

tain a desired product, even though he has

no need, and there is no "competitive mar-

ket" for the tied product. See Chatham

dominium Associations v. Centu

‘ 2 . re

dominium developers, in the sale of a

condominium, required the yeti to enter

into a 99-year recreational facilities lease;

and also Miller v. nados, 529 F.2d 393

(5th Cir. 1976), nets a condominium develo-

per, in the sale of a condominium, required

the purchaser to enter into an operational

management agreement.

In os

inc., ; ; rd Cir.

cert. denied 429 U.S. 823, 97 S.Ct. 74

(1976), the Court, —— from the

rthern Pacific Railwa landmark

case, says:

"Northern Pacific Ry: v. United States,

>. . = * . > >

L.Ed.2d 545, 550 (1958), perhaps the

fountainhead of tying law under § 1

of the Sherman Act, provided the fol-

lowing eT of the theory of

the law of tying:

"For our purposes a tying arrangement

may be defined as an agreement a

party to sell one product but only on

the condition that the buyer also

purchases a different (or tied) prod-

uct, or at least agrees that he will

not purchase that product from any

11

other supplier. Where such cmditions

are successfully exacted competition

on the merits with respect to the tied

product is inevitably curbed. Indeed

tying e Beyond th serve hardly any

meaere nd the suppression of com-

ion. standard oi Co. of ae

ornia and Standar tions nited

States, 337 U.S. 293, 305- 706 “69 S.ct.

TOST, 1058, 93 L.Ed. 1371. They deny

competitors free access to the market

for the tied product, not because the

— imposing the tying requirements

s a better product or a lower price

but because of his power or leverage

in another nautiet. At the same time

buyers are forced to forego their free

choice between competing products."

>» P- "(D. Cc. D of Cc ae 2 3, 1982),

the issue involved a regulation — biting

a television station from advertising more

than one product in a mB ee lasting

less than sixty seconds. In passing, and

ae a se violation, and in ref-

erence to Nor zs Fachtts Raj lway Co. v.

mon 1gupre, a pp.-

- tying cases, to be sure, are not

technically applicable in this in-

stance because the additional amount

of commercial time advertisers are

required to purchase under the multi-

ple ; product standard does not repre-

sent a ‘different product’ from the

time the advertisers actually desire

to purchase. However, the susiouale

12

underlying the rule against tying--

that sellers should be precluded from

using their market power to force a

buyer to purchase and to for some-

ching he does not want--a tres pre-

cisely in S case. as used its

dominance in the television industry

to require companies who desire to

advertise more than one product on

television to buy more than they wish

to purchase. Thus, the coercive use

of market power to restrict buyers’

decision-making which is at the heart

of tying is also present in the provi-

sion at issue here. See P. Areeda,

Antitrust Analysis ¢ 541 (1981)."

Watesseving taterted.)

In ian v. lf Oil Corp., 561 F.2d

434 cert. denied 434

r.

U.S. 1086, 98 S.Ct. 1280 (1978), the Court,

in commenting upon Ungar, states:

"It has never been an element of plain-

tiff's case to disprove, nor even a

permitted defense, that the tied prod-

uct is superior to others available on

i ss

See also Heatransfer rR v. wep eeganen-

at A. G., >. > .

To prove a per se illegal tie-in, a

claimant must es ish things:

(1) “* * * an agreement by a party to

sell one product but only on the

13

condition that the buyer also

purchases a different (or tied)

product he *" Northern Pacific

(2) That the seller

"has sufficient economic power

with respect to the tying product

to appreciably restrain free com-

petition in market for the

tied product. * * *" T[bid. at

p. 6; and

(3) that

"a "not insubstantial’ amount of

interstate commerce is affected."

Ibid. , of

rica r : “

- rd Cir. wee? tl cert.

denied 429 U.S. 823, 97 S.Ct. 74

(1976).

The activities of the ADA run a gamut

ranging from the sale of hundreds of cata-

log items to the sale of various publica-

tions, including the ADA Journal and the

solicitation of advertising therefor,

accreditation of dental programs for hos-

itals, colleges and universities, and a

st of other material, services and pro-

grams, none of which are independently

offered by any of the constituent and

component societies. On the other hand,

the State I< ow nena naan of offers a

separate an stinct group of products

and services to its members. tihewiee,

14

the local (component) society offers a

third group of products and/or services,

such as referral services, seminars,

education ¥ewy and, most importantly,

exchange of ideas and information with

fellow members. The testimony of the

Petitioners was that, in the order of in-

ortance, the local society was the most

eorsans. followed by the State society

and, to a much lesser degree, the ADA.

However, as we have seen, regardless of

the importance of the prngrene and/or

services rendered by either organization,

or the reasons for membership, or the

benefits to be derived therefrom, a den-

tist has no choice and, accordingly, must

support all three organizations and their

programs, whatever they might be, in order

to have the benefit of the program of one

organization.

The ADA has been in existence for ap-

os peep ninety years, the ASDA since

951, and the CADS since 1961, and the

tying membership arrangement has been in

effect during entire period the ASDA

and CADS have been in existence. But in

considering the question of economic power

“with respect to the tying product", and

al h the ADA, by its By-laws, and prior

to 1951, established uirements as to

menbership, the CADS and ASDA, and likewise

all constituent and component societies in

the United States, have nurtured, acqui-

esced in and, frankly, enforced the men-

bershi uirements, as imposed by the

ADA. sed upon the testimony, it would

Goes that, on a local basis at least

the CADS has economic power <o% to that

of the ASDA or the ADA. Locally, it is

15

the CADS which offers the greatest bene-

fits to a dentist, and the CADS, like the

ASDA and the ADA, has "the only game in

town", with the result that a dentist has

no alternative in seeking the services

offered by the CADS, and is compelled,

whether voluntarily or involuntarily, to

epess and be a member of, the ASDA and

The Ninth Circuit Opinion states:

"Finally, even if ADA membership is a

product distinct from membersh

the ADA's constituent and component

societies, the latter derive no econ-

omic benefit from sales of ADA men-

berships, the alleged ‘tied product’

so that no per llegal avian

arrangement can found."

However, in Rob 521 F.

Supp. 842, 907 oe Pa TOBLy, it is said:

"A court will find the andesceay

collaboration even where the first

entity does not receive any benefit

from the concerted activity and

acts only in response to coercion.",

TOR ogee ree RCE

145 - n. -Ct. 869, 871-872,

n. 6, 19 L.Ed.2d $98 (1968) which, in

dealing with this same question, says:

c tion with retailers arose

"The combination with il

because their acquiescence in the

suggested prices was secured by

threats of termination; the combi-

nation with wholesalers arose

16

because they c rated in termi-

nating price-enttte retailers."

(Underscoring inserted. )

Thus, the law seems to be that if a person,

willingly or unwillingly, with or without

coercion, and with or without recei

any benefit, goes along, either actively,

or by mere acquiescence, an we com-

bination has been established. e also

illin . v. Terminal Flour Mills

. . @ Be

) cert. denied 423 U.S. 1053, 96 S.

Ct. 782, 46 L.Ed.2d 642 (1976).

Thus, the statement that the CADS de-

rives no economic benefit from sales of

ADA membership cannot be sustained because

the membership of the CADS is supported by

either the ASDA or ADA each time a dentist

seeks membership in either organization,

at which time he is compelled to accept

membership in the other two organizations.

Regardless of which door he knocks at, he

always winds up back at the door of his

component society. In other words, each

of the three Respondent o izations bene-

fits every time a dentist desires member-

ship in any one of the three organizations.

To summarize on the question of the

tying arrangement and its necessary ele-

WSSULUUBN PULLERS!

Memorial Park Cemetery A:

Str :

794 - Kit ~

S81), where the Court says:

. 1 r or Jominance in the

poe pe Fanny A not be shown.

» supra, 394 U.S. at 502,

17

89 S.Ct. at 1258; Northern v. see

wasn 2 supra 2a a :

cient economic power exists if

the ee of the ty product

has sufficient leverage in the market

to pnanenes peeete or to force a sig-

nificant r of buyers to accept

burdensome terms. Fortner I, supra,

394 U.S. at 501-03, -Ct. at

1257-58.

"It is unnecessary for appellant to

prove by voluminous economic data

that appellees have a strangle hold

on the tying market. See Markovits,

- ciproci and the Lever-

a ede °

Te sellers are of sufficient

size to exert some power, control or

dominance over the tying product, the

threshold standard of economic r

has been met.

Gtr. 1980). Geborn) (1110 al Sse

r. sborn gal ty

arrangement for supply of oil and

machinery), aaa denied, 366 U.S.

963, 81 S.Ct. 4, -Ed.2d 1255

(1961).",

and further stating:

"* * * we find that in order to answer

the question of economic power we

look to whether the characteristics

of the tying product are unique.",

citing Salt Co. v. U. S.

18

49, 83 S.Ct. 97, 104, 9 L.Ed.2d 11

38

(1962); and, of course rthern Pacific,

356 U.S. at 8-12 ‘Mppepeyp Pecitic a

s ra

519-21.

The interstate commerce question is no

longer an issue in this case, the Respon-

dents having conceded that the interstate

commerce question has been satisfied, and

the District Court so found.

¢ depanic completely missed the point ¢

° als etely se point on

the Suseien of suppression of competition,

restricting the issue to simply "competi-

tion between dentists".

mm . basic cong, Rey — the fact oo

t spondents r members ty

arrangement, have eliminated competition

as between themselves. It has been repeat-

edly held that

"The anti-trust laws are as much vio-

lated by the prevention of =a

tion as by its destruction.

334 U.S.

“ " -Ct. 5 (1948).

Thus, when either of the aieiiiliea,

collects a sepondente fee, each of the

other two Re ts also receives a fee.

Riva has n by the wayside. How-

ever, oiaiiien the unlawful —

tion, a dentist who chooses to

and to belong to, pee sees organ

is penalized, gt . a oxgnineticn,

thousands of co-practitioners, must earn

those additional dollars to not only pay

the membership for his local society, but

19

for his State and national 4 nh

Furthermore, from a age # ocal stand-

es the evidence shows t since the

ception of this litigation, dentists,

who are not members of any of the Respon-

dent organizations, have been allowed to

eye in the educational courses

— ed the same fees as the member

dentists, but the member dentist is pena-

lized because, in addit‘on to the fees

for the educational courses, he is also

peying for a membership fee in each of the

spondent organizations. Thus, competi-

tion is suppressed as between dentists,

as a direct and ~ oximate result of the

membership arrangement among the Respon-

dents, forc a dentist to pay out money

for a members which he may not want.

Petitioners testified, and Respondents

did not seriously dispute, that those den-

tists who belong to CADS have better

skills, make more » and are better

able to serve the public and, therefore,

the a care is improved, with the

resulting fit to the generai public.

But, to gain those skills, increase his

earnings and enhance his expertise, a den-

tist is saddled with -he cost of be

to the other two Respondent o izations.

In other words, by not being able to be-

long to the , 1£ he should so choose,

and being required to also be » and to

pay dues, to the ASDA and the » his

costs are increased, with a proportionate

decrease in his income, with the result

that there is a lessening of competition

between dentists. As we have seen, in

1972, the ADA collected dues in excess of

$6,000,000.00. By 1979, this figure had

20

climbed to almost $15,000,000.00. That

sum was contributed by eeeeony Ss

of the dentists practicing within t

United States, and serves to reduce the

income and/or purchasing power of the den-

tist or, if he passes it on to his pa-

tients, it is another burden carried by

the general public.

Finally, there is the statement by the

Ninth Circuit that

"x * * the District Court did not err

in finding that the defendant organi-

zations have not monopolized the

ractice of dentistry in Arizona.

e organizations, in fact, do not

e in the practice of dentistry,

nor members in them a pre-

condition for an Arizona dental

license."

Of course, we have to concede that the Re-

be agp ew do not practice dentistry, but

t about the g --the strangle hold--

which the Res nt o izations hold

ir respective (identical) members?

In Fortuer on 429 U.S. 610, 619-620,

od os : ins —— (1977), the Cause,

scuss question of monopo

and making reference to faternetionel Salt,

Loew s, 4

Pacific. supra, ta ty

"As the Court plainly stated in its

prior opinion in s case, these

decisions do not require that the

defendant have a monopoly or even a

dominant position t the

21

market for a ee product. See 394

They do, however, focus attention on

the question whether the seller has

the mf eed within the market for the

= product, to raise prices or to

re purchasers to accept burden-

came terms that could not exacted

in a completely c titive market.

In short, the question is whether the

seller has some advantage not shared

_ competitors in market for

tying product."

And a similar statement a sore in Robinson

521 F.S , 886-

Fa TERT} ere the Court says:

"In order to establish that a defendant

has committed the offense of asaeqers

roan oS st prove io?

ssess of monopoly power

the Calovant market and (3) the the will-

ful acquisition or Le of that

power as distinguished from growth or

deve oP t asa eee of a

superior product siness acumen, or

historic oetdent. 4 Vv

geet age i By

1703-04, 16 L.Ed.2d 778

(1966). A defendant possesses ~y~4

poly power if it has the ability to

the competitive variables of a

aoadast to the disadvan of con-

sumers without causing effective com-

titors to enter the Me Sor:

RiBh, "100 L.Ed. am

ar : ECO

22

1125, 1139, 90 L.Ed. 1575 (1946)."

And the Court's discussion of the market

percentage necessary to constitute a mono-

poly, on Page 887, certainly is most ap-

licable to this case, clearly demonstrat-

that the three Respondent organizations

very definitely have a monopoly in their

ay sphere of operation. And, as

we have shown, although the dues of the

Respondent organizations continue to in-

crease, an “effective” competitor has not

entered the “relevant market".

The fact that the Respondents do not

practice dentistry does not lessen their

ability to gain a strangle hold on their

membership and, by their unlawful member-

ship t arrangement, to extract fees

from t ntal profession, and there

cause damage. In other words, it is

dentist who stands within the range of fire

of the Respondents who suffers. den-

tist, whether he be, or not be, a member of

the Respondent organizations, is neces-

sarily, and directly, affected by their

activities. A similar situation is to be

found in Strax v. dit e, Inc.,

524 F.Supp. > oGe Weke “

which was a class action brought against

silver buyers, commodity brokerages, com-

modity exchanges, and others for alleged

antitrust violation and for alleged vio-

lations of the eee ee Act.

The defendants argued t the complaint

was defective because Strax did not allege

—_ he or the members of the proposed

class

"* * * entered into transactions

directly with the defendants, * * *"

23

However, Strax contended that he traded

in the very market which the defendants

are alleged to have manipulated, although

not directly with the defendants, and

that proof of the impact of defendants'

alleged action on that market would not

require speculation or attenuated theories

of causation. The Court upheld the con-

tention of Strax, on the basis that he and

the group which he proposed to represent

were wi the “target area" of the de-

fendants' alleged anticompetitive behavior;

"ke *& * that is, their anticompetitive

Te was ‘aimed’ at the plain-

t s.

And we have that exact same situation

here, in that the Petitioners, and all

other dentists similarly situated, are

within the target area of the activities

of the Respondents. Petitioners, and all

other dentists similarly situated, have

It has been repeatedly held that

"When a particular concerted activity

a "SS _—_ of anticonm-

petitive t with no apparent po-

tentially redeeming value, the fact

that a practice may turn out to be

harmless in a particular set of cir-

cumstances will not prevent its being

declared unlawful per se." Catalano,

24

c. v. Target Sales, Inc., 446 U.S.

, -Ct. ; (1980) ;

see also Broadcast Music, Inc. v.

Columbia

1562 (1979).

Again, to focus the issues, we pose the

following questions:

A. Without the tying arrangement:

(1) Would all dentists who obtained

membership in their constituent

and component societies ilso

page ogg obtain membership

in the ADA

(2) Would all dentists obtain men-

bership in both their consti-

tuent and component societies,

or would they only obtain men-

re in one such organiza-

tion

B. If ADA membership is of value and

importance to a dentist, would not

the aver dentist obtain member-

ship in ADA, even on a volun-

tary, non-compulsory basis?

The Respondents cannot contend that ques-

tions A.(1) and B must be answered in the

negative. And if said questions can be

answered in the affirmative, then the Re-

spondents, and particularly the ADA, have

nothing to worry about. See

te

; 2113 (1981); where agents were :

25

uired to pay franchise fees to Equi

pos the Court posed the question: ewe

"If Equity did not impose these

franchise fees upon the agents,

there is no reason to believe that

any of its legitimate interests

would be affected."

It seems only reasonable to assume that

if the ADA provides any and all of the

services and benefits to the dental pro-

fession, as contended by the “apy ge ee

its membership would not suffer if placed

on a voluntary basis. For example, the

American Bar Association only requires

that an applicant for membership be duly

licensed to practice in some State, and

with no requirement as to membership in

any other organization. Nevertheless,

the ABA, over the years, has maintained

a membership consisting of a certain

percentage of all lawyers in the United

States, and with very little variance in

its membership, as related to the total

number of licensed Lawyers.

Respondents have never so much as even

nes any valid reason as to just why

membership in the three Respondent organi-

zations should be on an all-or-none basis,

and without any choice, except as to those

dentists in the Federal Dental Service.

The fact that membership in any of the

Respondent organizations is not a condi-

tion to practice, does not minimize the

claim of monopoly, but the fact that three

(3) corporations have conspired to kill

competition as between themselves and thus

26

deny a dentist such freedom of choice as

his professional standing, specialty, or

1, coupled with his pocketbook, may

ictate, certainly does suppress c ti-

tion as between dentists, particularly as

to the dentist who, for whatever reason,

finds himself in a position of not being

able to afford the total cost as mandated

by the Respondents, and also the ADA and

any other constituent and c nent socie-

ties. A dentist who is ong = open to accept,

and pay for, membership in constituent

society and the ADA, as a condition to men-

bership in his component society, suffers

financially and, in addition, his costs in

providing dental services to his patients

are thereby increased, with result dam-

age to himself and to the public at large.

As to any of the Respondents, including

any other constituent and/or component

society, if they, or any of them, have

merit and perform an important function

for a dentist, he will purchase a member-

ship, and without compulsion.

Under the facts, and the law of the

cases cited, it seems clear that the tying

arrangement maintained the Respondents

constitutes a per se violation and, there-

fore, Petitioners are entitled to judgment

as a matter of law.

CONCLUSION

In summary, it clearly appears that:

A. The decision of the Ninth Circuit

Court of Appeals, in affirming the

judgment of the District Court, is

27

clearly in conflict with the deci-

sions of other Federal Courts of

Appeals on the same subject matter;

B. The Ninth Circuit Court of Appeals,

in its opinion, has so far departed

from the accepted and usual course

of judicial ge yg as to call

for an exercise of the power of

supervision of this Court;

C. The decision of the Ninth Circuit

Court of Appeals is in conflict

with the applicable decisions of

this Court, as above set forth.

WHEREFORE, for the reasons set forth

in this Petition, a Writ of Certiorari

should be granted.

DATED: June 11, 1982.

RESPECTFULLY SUBMITTED,

s

ys for Petitioners

¢

APPENDIX