Opposition Brief — Lawline v. American Bar Ass'n

f FILED |

OCT 29 1993

NO. 93-529 HE CLERIG

IN THE

Supreme Court of the Anited States

OCTOBER TERM, 1993

LAWLINE, et al,

Petitioners

v

AMERICAN BAR ASSOCIATION, et ai.,

Respondents

On Petition For A Writ Of Certiorari To The United

States Court Of Appeals For The Seventh Circuit

BRIEF OF RESPONDENT THE CHICAGO BAR

ASSOCIATION IN OPPOSITION TO PETITION

FOR WRIT OF CERTIORARI

RENE A. TORRADO, JR.

RICHARD H. SCHNADIG*

JANET M. HEDRICK

VEDDER, PRICE, KAUFMAN

& KAMMHOLZ

222 N. LaSalle Street

Suite 2600

Chicago, Illinois 60601

(312) 609-7500

Attorneys for Respondent

The Chicago Bar Association

*Counsel of Record

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QUESTIONS PRESENTED

. Whether the corrected Petition was “promptly substituted”

as required by Supreme Court Rule 33.7 after the original

Petition was rejected for formal defects.

Whether the Petition should be denied for mootness because

the disciplinary charges brought against petitioners were dis-

missed.

Whether the Court of Appeals ruled consistently with this

Court’s decisions in holding that the CBA’s alleged conduct

is immune from antitrust liability under Eastern Railroad

Presidents Conferemce v. Noerr Motor Freight, Inc., 365 U.S.

127 (1961).

. Whether the Petition fails to raise issues warranting review

by this Court because petitioners’ antitrust claims are barred

by the Clayton Act’s four-year statute of limitations.

Whether the Court of Appeals ruled consistently with this

Court’s decisions in holding that the constitutional claims

Tarkanian, 488 U.S. 179 (1988).

is

LIST OF PARTIES

The parties to the proceedings below were:

The petitioners:

Lawline, an unincorporated association of lawyers,

paralegals and laypersons;

Thomas Holstein;

LeNore Nelson;

Joyce Novak;

The respondents:

The Justices of the Supreme Court of Illinois;

The members of its Committee on Professional Respon-

sibility;

The members of its Attorney Registration and Disci-

plinary Commission (“ARDC’”’);

The United States Trustee for the Northern District of

Illinois;

The United States Trustee’s Assistant;

Five members of the executive committee of the District

Court for the Northern District of Illinois;

The American Bar Association (“ABA”’);

The Illinois State Bar Association (“ISBA”’); and

The Chicago Bar Association (“CBA”).

ill

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ...............0..0000:.

Ne cc occccvevcevececvesevees ii

ae iii

| TABLE OF AUTHORITIES .................00000:. v

! STATEMENT OF THE CASE AND FACTS.......... 1

A. The Courts’ Adoption of the ABA Model Code

Cen ok whe 2

B. Petitioners’ Allegations Against the CBA ...... 4

SUMMARY OF ARGUMENT..................00-- 6

Cs cesenvoues 8

A. The Petition Should Be Rejected As Untimely... 8

B. The Petition Should Be Denied Because The Case

Dt eee oe Cee e vee ned eele weeeeeees 8

C. The Seventh Circuit’s Rulings Relating To The

CBA Are Consistent With Applicable Decisions

DP cccucuueeatebeducdeececeoeses 10

1. The Seventh Circuit Correctly Ruled That

The CBA’s Alleged Conduct Is Exempt

From Antitrust Liability Under This Court’s

EE Svcuvecenevecseceeneeses 10

a. The ABA Code And Model Rules Do

Not Restrain Trade Of Their Own

a a ae 11

b. The CBA’s Ethics Opinions Do Not Re-

strain Trade Of Their Own Force..... 14

c. The CBA’s Alleged Conduct Had No

Anticompetitive Effect .............. 18

,

iv

Page

2. Independently, Petitioners’ Antitrust Claims

Against The CBA Are Time-Barred....... 19

D. The Seventh Circuit’s Holding That Petitioners’

Constitutional Claims Against The CBA Were

Properly Dismissed Because Petitioners Have

Failed To Allege State Action Under § 1983 Was

Correct Under This Court’s Decisions ......... 23

CPOTMINT ceersecndeuecscececeseesceseeteveves 26

Vv

TABLE OF AUTHORITIES

Cases

=

2361 State Corp. v. Sealy, Inc., 263 F. Supp. 845

Gad Gb. SEE ea ceUevcserdveceereveseunees 20

Allied Tube & Conduit Corp. v. Indian Head Inc.,

Ga ee ED 0:0 c0ccnn cetunedavasscess 11, 13, 14

American Medical Ass’n y. F.T.C., 638 F.2d 443

CE Gs: SEE was vvnccccskavenunsevuseess 17

Bates v. State Bar of Arizona, 433 U.S. 350 (1977) . 24

Bright v. Moss Ambulance Service, Inc., 824 F.2d

Sar Gs Ga BNE cecncecccndcvcceunsenes< 18

Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101 7

(7th Cir. 1984), cert. denied, 478 U.S. 1054

ERDEED bod ube vocncadessdéchededwusueeaces 18, 19

City of Columbia v. Omni Outdoor Advertising, Inc.,

Pere ee ere 18

Corti v. Fleisher, 93 Ill. App. 3d 517, 417 N.E.2d 764

CORR ls SUED he dvncccadecacsabesuvetdrens 16

Eastern Railroad Presidents Conference v. Noerr

Motor Freight, Inc., 365 U.S. 127 (1961) ... 7, 10-14, 18, 27

Federal Prescription Service, Inc. v. American Phar-

maceutical Ass’n, 663 F.2d 253 (D.C. Cir. 1981),

cert. denied, 455 U.S. 928 (1982) ............. 18

Federal Trade Commission vy. Superior Court Trial

Lawyers Ass’n, 493 U.S. 411 (1990)............ 12, 13

Flast v. Cohen, 392 U.S. 83 (1968) .............. 9

Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975) . ‘17, 18

Hanover Shoe, Inc. v. United Shoe Machinery Corp.,

245 F. Supp. 258 (M.D. Pa. 1965), vacated in part,

377 F.2d 776 (3rd Cir. 1963), aff'd in part, rev’d

he PEE, SHS Us BEk CSSD sc ccdccsccccvecess 20, 21

In re “Agent Orange” Product Liability Litigation,

611 F. Supp. 1452 (D.C. N.Y. 1985), later pro-

eee

lz

ceeding, 800 F.2d 14 (2d Cir. 1988), rev'd, 818

F.2d 216 (2d Cir. 1987), cert. denied, 484 U.S. 926

CROTD <6 ccdvesecdecedecesdesaveesen een 16

In re Corn Derivatives Antitrust Litigation, 748 F.2d

157 (3d Cir. 1984), cert. denied, 472 U.S. 1008

SEOEG c0cdeddedevevieeetveseentiaeeee 15

Iron Arrow Honor Soc. v. Heckler, 464 U.S. 67

TIPE oc ovecccevevesstecereevestsneenaan 4

Kaiser Aluminum & Chemical Sales, Inc. ¥.

Avondale Shipyards, Inc., 677 F.2d 1045 (Sth Cir.

1982), reh’g denied, 683 F.2d 1373, cert. denied,

oe Bo re 21

Keystone Resources, Inc. v. American Telephone and

Telegraph Co., 646 F. Supp. 1355 (W.D. Pa.

1986), aff'd, 826 F.2d 1056 (3rd Cir. 1987) ..... 21

KFC Corp. v. Marion-Kay Co., 620 F. Supp. 1160

GEE. EOE. TOG cccccvesseseesévcusseccesec 20

Kreuzer v. American Academy of Periodontology, 735

Poe BOTS GAG. Ge TOG ce cevccductvdccecs 17

L.A. Draper & Son v. Wheelabrator-Frye, Inc., 735

F.2d 414 (Lith Cir. 1984) ......ceccccccesees 19

Lawline v. American Bar Association, 738 F. Supp.

288 (N.D. Ill. 1990), aff'd, 956 F.2d 1378 (7th

GH WO cv cccccccccevevevseevevevereuserade 11

Lugar v. Edmondson Oil Co., 457 U.S. 922 (1982) . 26

Murphy v. Hunt, 455 U.S. 478 (1982)............ 10

National Collegiate Athletic Ass’n v. Tarkanian, 488

iS ]> PPePrererrrrrrr rrr rary 7, 23-27

Naxon Telesign Corp. v. Bunker Ramo Corp., 517 F.

Supp. 804 (N.D. Ill. 1981), aff'd, 686 F.2d 1258

Cree Ga Fe cccecscacacenganenneedeessus 21

O’Hara y. Ahigren, Blumenfeld and Kempster, 127

[ll.2d 333, 537 N.E.2d 730 (1989)............. 16

ee

Pace Indus., Inc. v. Three Phoenix Co., 813 F.2d 234

Gs DU vtccnatuusesdadedesseedcnonte

Pennsylvania Dental Ass'n v. Medical Service Ass’n of

Pennsylvania, 815 F.2d 270 (3d Cir.), cert. denied,

Ge ee ED bavdudsedvdvesseetenseces

Poster Exchange, Inc. v. National Screen Service

Corp., 517 F.2d 117, 128 (Sth Cir. 1975), cert.

denied, 423 U.S. 1054 and 425 U.S. 971 (1976)..

Powell v. McCormack, 395 U.S. 486 (1969) .......

Ratino v. Medical Service of Dist. of Columbia, 718

4 f — |. a ee ee

Rendell-Baker v. Kohn, 457 U.S. 830 (1982) ......

Schniederjon v. Krupa, 130 Ill. App. 3d 656, 474

N.E.2d 805 (Sth Dist. 1985) .........-cceeces

Steffel v. Thompson, 415 U.S. 452 (1974).........

Strickland v. Washington, 466 U.S. 668 (1984) ....

Surety Title Ins. Agency, Inc. v. Virginia State Bar,

431 F. Supp. 298, aff'd in part, rev'd in part, 571

F.2d 205 (4th Cir.), cert. denied, 456 U.S. 941

Pence binckundatundunenteeseessesenceces

U.S. v. Classic, 313 U.S. 299 (1941) ........0006.

United Mine Workers v. Illinois State Bar Associa-

i ee ee EF ED 0.0 60.066 0ceseeeebenes

United States Parole Comm. v. Geraghty, 445 U.S.

DT tvcécuestencenseneneseverdédeecee

Weinstein v. Bradford, 423 U.S. 147 (1975) .......

Wilk v. American Medical Ass’n, 719 F.2d 207 (7th

Cir. 1983), on remand, 671 F. Supp. 1465 (N.D.

Ill. 1987), aff'd, 895 F.2d 352 (7th Cir. 1990), cert.

denied, 496 U.S. 927 (1990), and cert. denied, 498

ey Eb obi esol eis ¥ecads o6dks 0d cee

Woodbridge Plastics, Inc. v. Borden, Inc., 473 F.

Supp. 218 (S.D. N.Y), aff'd, 614 F.2d 1293 (2nd

lz

20, 21

20

17, 20

Page

Zenith Radio Corp. v. Hazeltine Research, Inc., 401

Se PDE Ceccceeccudawesbenescebadens 20

Statutes

Pe CD vnecencccecsenesssuasecaes 19

en EE eek écevucesedeceséeccenuns 5, 23

Ill.Rev.Stat. ch. LIOA, Art. VITI................ 2, 11

Ill.Rev.Stat. ch. 110A, Rules 1.1 ef seg. .......... 3, 22

Ill.Rev.Stat. ch. 110A, Rules 751-754 ........... 2

Miscellaneous Authorities

ABA Model Code, Canon 3, Disciplinary Rules 3-

DE Wade decaédadaseceecoavesensconss ae

ABA Model Rules 5.4(b), 5.5(b)................ 3, 4, 14

Northern District of Illinois General Rule 3.51 ... 3

Northern District of Illinois General Rule 3.54 ... 3, 11, 22

Supreme Court Rule 33.7........... PTTTT TTT Te 6, 8, 26

NO. 93-529

IN THE

Supreme Court of the Anited States

OCTOBER TERM, 1993

LAWLINE, et al.,

Petitioners

v.

AMERICAN BAR ASSOCIATION, et ai.,

Respondents

On Petition For A Writ Of Certiorari To The United

States Court Of Appeals For The Seventh Circuit

BRIEF OF RESPONDENT THE CHICAGO BAR

ASSOCIATION IN OPPOSITION TO PETITION

FOR WRIT OF CERTIORARI

STATEMENT OF THE CASE AND FACTS

The petitioners are Lawline, Thomas Holstein, LeNore Nelson

and Joyce Novak. Lawline is an association of lawyers and

laypersons. (Complaint, Count I, {]2.)' Holstein is a licensed at-

torney who serves as the managing director of Lawline. (Com-

plaint, Count I, 1.) Nelson is the head paralegal and office man-

ager of Lawline. (Complaint, Count I, 13.) Novak received infor-

mation concerning a Chapter 7 bankruptcy from Petitioner Nel-

son. (Compiaint, 1-4.)

Petitioners filed their complaint on August 19, 1988 and an

amended complaint on December 9, 1988, naming as defendants

'All citations to the “complaint” are to the First Amended Complaint

filed on December 9, 198%

2

numerous federal and state officials responsible for issuing and

enforcing the rules governing attorney conduct before the United

States District Court for the Northern District of Illinois (the

“Northern District”) and the Illinois courts. They include all

Justices of the Supreme Court of Illinois, members of its Attorney

Registration and Disciplinary Commission and the members of

the Executive Committee of the Northern District. Also named

as defendants are the American Bar Association (“ABA”), the

Illinois State Bar Association (“ISBA”’), the Chicago Bar Associ-

ation (“CBA”), the United States Trustee for the Northern Dis-

trict and his assistant.

Petitioners’ allegations against the CBA center on the CBA’s

supposed participation in the drafting and promulgation of the

ABA Model Code of Professional Responsibility (the “ABA

Model Code’’) and the ABA Model Rules of Professional Con-

duct (the “ABA Model Rules’’).

A. The Courts’ Adoption of the ABA Model Code and Rules.

The ABA Model Code, first published in 1969, prohibits the

practice of law by associations of lawyers and laypersons. ABA

Model Code, Canon 3, Disciplinary Rules 3-101, 3-103. In 1980,

the Illinois Supreme Court, using the ABA Model Code as its

blueprint, enacted the Illinois Code of Professional Responsibility

(the “Illinois Code”) to govern the professional conduct of attor-

neys practicing in Illinois. Ill.Rev.Stat. ch. 110A, Art. VIII. The

Illinois Supreme Court, through its Attorney Registration and

Disciplinary Commission (“ARDC”), was solely responsible for

enforcement of the Illinois Code. Ill.Rev.Stat. ch. 110A, Rules

751-754.

Canon 3 and Rules 3-101 and 3-103 of the Illinois Code, which

were identical to their ABA Code counterparts, provided:

CANON 3

A Lawyer Should Assist In Preventing

The Unauthorized Practice Of Law

|

3

Rule 3-101. Aiding Unauthorized Practice of Law

(a) A lawyer shall not aid 2 nonlawyer in the unauthorized

practice of law.

Rule 3-103. Forming a Partnership with a Nonlawyer

A lawyer shall not form a partnership with a nonlawyer if

any of the activities of the partnership consist of the practice

of law.

The Local Rules of the Northern District incorporate the ABA

Model Code provisions and also prohibit the practice of law by

associations of lawyers and laypersons. General Rule 3.54. Under

General Rule 3.51, the District Court’s Executive Committee has

exclusive responsibility for enforcing General Rule 3.54.?

In 1983, the ABA promulgated the ABA Model Rules which

were essentially the same as the Model Code and Illinois Code.

Before adopting the Model Rules, the ABA House of Delegates

considered and rejected a proposed rule that would have permit-

ted associations of lawyers and nonlawyers to practice law. (Com-

plaint, Count I, {| 75-80.) Consequently, the ABA Model Rules

continue to prohibit the practice of law by such entities. Rule

5.4(b) states:

Petitioners also challenge “Rule 3-101(a) and 3-103(a) of the newly

proposed Illinois Code.” (Complaint, Count I, 419.) On February 8,

1990 the Illinois Supreme Court replaced the Code of Professional Re-

sponsibility with the Illinois Rules of Professional Conduct, Ill.Rev.Stat.

ch. 110A, Rules 1.1, et seg., which took effect August 1, 1990, after the

District Court’s order dismissing the complaint. As the District Court

noted, the provisions of the new Illinois Rules relating to professional

independence and the unauthorized practice of law are the same in

substance as those in the ABA Model Code and the old Illinois Code.

See new Illinois Rule 5.4(b) (“A lawyer shall not form a partnership

with a nonlawyer if any of the activities of the partnership consist of

the practice of law.””) and the new Illinois Rule 5.5 (“A lawyer shall not

... assist a person who is not a member of the bar in the performance

of activity that constitutes the unauthorized practice of law.”), as set

forth in the Petition at p. 44b.

4

[a] lawyer shall not form a partnership with a nonlawyer if

any of the activities of the partnership consist of the practice

of law.

Similarly, Rule 5.5(b) states that:

[a] lawyer shall not . . . assist a person who is not a member

of the bar in the performance of activity that constitutes the

unauthorized practice of law. (See petition, p. 43b).

Petitioners allege that a joint committee of the CBA and ISBA

prepared suggested revisions to the Illinois Code in light of the

ABA Model Rules. (Complaint, Count I, 4144.) The proposed

revisions, however, left unchanged the existing Illinois Code pro-

visions concerning the ability of lawyers and nonlawyers to form

an association for the purpose of practicing law. (Complaint,

Count I, 4152.) Accordingly, by 1982, the state of the law was

that both the Illinois Supreme Court and the Northern District

had adopted provisions prohibiting the practice of law by associ-

ations of lawyers that were essentially identical to the ABA’s

1983 model provisions.

B. Petitioners’ Allegations Against the CBA.

Petitioners contend that these ABA Model Code and Model

Rules provisions are the product of a conspiracy among the bar

associations to exclude associations of lawyers and laypersons

from the practice of law. (Complaint, Count I, 9205-210.) They

allege that the CBA is a party to this conspiracy because, al-

though it took no action, some of its members also belong to the

ABA or ISBA. (Complaint, Count I, 19.) They further allege that

two delegates representing the CBA in the ABA House of Dele-

gates voted against the proposed rule that would have permitted

associations of lawyers and laypersons to practice law under the

ABA Model Rules. (Complaint, Count I, 4989, 90.)

Petitioners also claim that, in furtherance of this alleged con-

spiracy, the CBA issued two ethics opinions concerning the un-

5

authorized practice of law, one in 1971, the other in 1977. They

contend that the CBA enforces these ethics opinions with threats

of governmental disciplinary proceedings and “peer pressure.”

(Complaint, Count I, 178, 220, 249.)

Petitioners also assert that in 1988 the United States Trustee

and his assistant reported to the ARDC that nonlawyers at

Lawline were giving legal advice in bankruptcy proceedings, and

later filed a motion in a bankruptcy proceeding to enjoin Lawline

from engaging in the practice of law in those proceedings (Peti-

tion pp. 1, 30a, 31a). These charges were dismissed after petition-

ers filed their lawsuit and before the District Court’s decision

(Petition p. 1).

Based on these allegations, petitioners assert antitrust and con-

stitutional claims against the CBA. Their principal antitrust

claim is that the CBA has combined and conspired with the other

bar associations to exclude entities such as Lawline from the

practice of law. (Complaint, Count I, 4209.) Petitioners allege as

well that the bar associations have engaged in a group boycott of

entities such as Lawline. (Complaint, Count I, 111.) As for their

constitutional claims, petitioners allege that the CBA has de-

prived them of constitutional rights, in violation of Section 1983

of the Civil Rights Act of 1871, as amended. Specifically, they

contend that the Illinois Code, the ABA Model Code and the

ABA Model Rules deprive them of their First Amendment rights

of freedom of speech and association. (Complaint, Count II,

94918, 19.)

The CBA’s motion to dismiss for failure to state a claim was

granted by the United States District Court for the Northern

District on May 24, 1990, as were those of the other defendants.

Petitioners filed a timely notice of appeal on July 20, 1990.

On February 25, 1992, the United States Court of Appeals for

the Seventh Circuit affirmed the District Court’s dismissal. The

6

Seventh Circuit ruled that the CBA’s conduct was immune from

antitrust liability because the source of the challenged restraints

was valid governmental action (the adoption by the state and

district courts of the Illinois Code and Northern District Rules,

respectively) rather than the CBA’s or other bar association con-

duct. The court dismissed petitioners’ constitutional claims

against the CBA for failure to allege state action. (Petition, pp.

33a-36a).? The Seventh Circuit also noted that petitioners were

never sanctioned by either the Illinois Supreme Court or the

Northern District and that respondents stipulated at oral argu-

ment that petitioners’ conduct was not prohibited by the ethics

rules at issue (Petition, p. 31a, n.2). Consequently, the Seventh

Circuit found that any argument concerning the application of

the rules to petitioners’ conduct was not before the court (id.).

On May 26, 1992, Petitioners filed their original Petition for a

Writ of Certiorari. However, the original Petition was rejected

because of various formal defects. Petitioners did not file their

corrected Petition until October 1, 1993, more than 16 months

after the original due date.

SUMMARY OF ARGUMENT

The Petition should be denied because it is untimely, the case

is moot and the courts below did not misapply any controlling

legal standard of this Court.

Although as required by Rule 13.1, the original Petition was

filed within 90 days after the Seventh Circuit’s judgment, the

current Petition is untimely because it was rejected for various

defects in form and the corrected Petition was not “promptly

substituted” as required by Supreme Court Rule 33.7. Instead, it

was not filed until 16 months after the original due date.

3Although the District Court also had ruled that petitioners’ antitrust

claims were time-barred, the Seventh Circuit did not expressly address

this issue.

7

The case is moot because the disciplinary charges brought

against petitioners prompting their lawsuit were dismissed before

the District Court’s May 24, 1990 decision and no sanctions were

ever imposed on petitioners by any court. Therefore, they have

suffered no injury that can be redressed and no case or contro-

versy exists.

The Seventh Circuit’s rulings regarding the CBA not only do

not conflict with any decision of this Court but are entirely con-

sistent with them. Under the Noerr case, the CBA is immune

from antitrust liability for any alleged actions relating to the pub-

lication of model standards of attorney conduct, lobbying for

their adoption and issuing ethics opinions because the Illinois

Supreme Court and the Northern District enacted those same

standards into law and have sole authority and responsibility for

enforcing those laws. Allegations of a boycott or conspiracy fail

to defeat this immunity and no law is cited by petitioners to show

otherwise. Independently, the complaint allegations, even if

proved, would be insufficient to show that the alleged “con-

spiracy” had any anticompetitive effects.

Petitioners’ antitrust claims also are barred by the applicable

four-year statute of limitations. Their complaint does not allege

any anticompetitive act by the CBA within the four-year period.

This defect is not cured by petitioners’ assertion that the CBA is

part of an ongoing conspiracy because petitioners have not al-

leged any overt act by the CBA in furtherance of the conspiracy

within the limitations period. This Court’s “continuing violation”

rule requires more than petitioners’ allegation of a continuing

injury from a pre-limitations act.

With respect to petitioners’ constitutional claims, the Seventh

Circuit’s ruling that the CBA’s alleged activities did not amount

to state action was correct under this Court’s ruling in N.C.A.A.

iia aaa tet connote

8

v. Tarkanian, because the Illinois Supreme Court retained final

authority to accept or reject the model standards.‘

ARGUMENT

A. The Petition Should Be Rejected As Untimely

Petitioners submitted their original Petition for Writ of Certio-

rari on May 26, 1992, within 90 days of the Seventh Circuit’s

February 25, 1992 judgment. However, the original petition was

rejected because of various defects, including its failure to comply

with the form requirements of Supreme Court Rule 33.

Petitioners did not then file their current Petition until

October 1, 1993, more than 16 months after the original due date.

Under Supreme Court Rule 33.7 a petition rejected for formal

defects may be deemed untimely if new and proper copies are not

“promptly substituted.” That rule further provides that the Court

may impose appropriate sanctions for noncompliance, including

but not limited to dismissal of the action. The passage of 16

months is hardly “prompt.” It is the antithesis—dilatory and

incurable. In light of petitioner’s extraordinary delay, dismissal

of the action is appropriate for this reason alone.

B. The Petition Should Be Denied Because The Case Is Moot.

There ceased to be a live case or controversy here when the

disciplinary proceedings against petitioners were dismissed. Then

‘The same arguments have equal force with respect to the CBA’s

alleged participation with the Illinois Supreme Court’s Committee on

Professional Responsibility in drafting the 1990 Illinois Rules before

they were presented to the Illinois Supreme Court. The Committee did

not make the decision. And in any event, any activity relating to the

new Illinois Rules is irrelevant because those rules were not adopted

until 1990, after petitioners’ lawsuit was filed, and were identical in all

relevant respects to the 1980 Illinois Code. Therefore, the new Rules

could not have caused petitioners the injury they complain of and have

no bearing on this case.

9

threatened action by the United States Trustee for the Northern

District and his assistant and potential sanction by the ARDC

disappeared. All charges brought against petitioners both in the

bankruptcy court and before the ARDC were gone (Petition p.

9). Petitioners were not sanctioned by either the Illinois Supreme

Court or the Northern District and respondents agreed in oral

argument before the Court of Appeals that petitioners’ conduct

does not violate the ethics rules at issue (Petition p. 31a, n.2).

Consequently, there is no “case or controversy” between the par-

ties and the petition is moot.

To satisfy the constitutional case-or-controversy requirement,

this Court has consistently held that a litigant must have suffered

some actual injury that can be redressed by a favorable judicial

decision. See Iron Arrow Honor Soc. v. Heckler, 464 U.S. 67, 70

(1983). This requirement exists at every stage of the proceedings,

including the appellate stages. See Steffel v. Thompson, 415 U.S.

452, 459, n. 10 (1974).

Here, petitioners were never injured. All disciplinary charges

were dismissed and petitioners were never sanctioned. As a result,

they suffered no “actual injury” that can be redressed in court.

Therefore, petitioners no longer have a “personal” stake in this

litigation. See United States Parole Comm. v. Geraghty, 445 U.S.

388, 396-397 (1980), citing, Flast v. Cohen, 392 U.S. 83, 100-101

(1968).

Because “‘the issues presented are no longer ‘live’ [and] the

parties lack a legally cognizable interest in the outcome,” the case

is moot. United States Parole Comm., 445 U.S. at 396, quoting,

Powell v. McCormack, 395 U.S. 486 (1969). Petitioners offer no

legal or factual support for their contrary argument (Petition

p. 9).

Even if petitioners were to argue that an exception exists be-

cause the case is “capable of repetition, yet evading review,” that

possibility is theoretical at best and that is not enough to avoid

10

the effect of mootness. See Murphy v. Hunt, 455 U.S. 478, 482

(1982). To come within the exception, there must be a “ ‘reason-

able expectation’ or a ‘demonstrated probability’ that ‘the same

controversy will recur involving the same complaining party.’ ”

Id. citing Weinstein v. Bradford, 423 U.S. 147, 149 (1975). No

facts justify that conclusion here. To the contrary, during oral

argument before the Seventh Circuit, respondents stipulated that

petitioners’ conduct was not prohibited by the ethics rules at

issue. In light of this stipulation, made in open court, there can

be no reasonable expectation that respondents will ever take ac-

tion causing the same controversy to arise again. Accordingly, the

petition should be denied for mootness if not otherwise denied.

C. The Seventh Circuit’s Rulings Relating To The CBA Are

Consistent With Applicable Decisions Of This Court.

1. The Seventh Circuit Correctly Ruled That The CBA’s

Alleged Conduct Is Exempt From Antitrust Liability

Under This Court’s Holding In Noerr.

The Seventh Circuit held that the CBA was immune from

federal antitrust liability under the principles articulated by this

Court in Eastern Railroad Presidents Conference v. Noerr Motor

Freight, Inc., 365 U.S. 127 (1961) (Petition, p. 33a). In Noerr, this

Court held that “[w]here a restraint upon trade or monopoliza-

tion is the result of valid governmental action, as opposed to

private action, no violation of the [Sherman] Act can be made

out.” 365 U.S. at 136. Because the enforceable source of the

alleged restraints on petitioners’ practice of law here was the

Illinois Code and Northern District Rules rather than the private

action by the CBA or other bar associations, the CBA’s alleged

conduct, if true, is immune from federal antitrust liability (Peti-

tion, p. 33a).°

5Although the Seventh Circuit did not expressly so rule, petitioners’

antitrust allegations against the CBA are independently time-barred

because the most recent act alleged of the CBA occurred more than four

years before the complaint was filed. The Sherman Act’s statute of

limitations is therefore an alternate basis to deny the petition.

* = eee

11

a. The ABA Code And Model Rules Do Not Restrain

Trade Of Their Own Force.

This Court’s ruling in Noerr provides that restraints on com-

petition that are the result of valid government action, rather than

private action, cannot violate the Sherman Act. Noerr, 365 U.S.

at 135-36. Further, restraints resulting from efforts to influence

government action do not give rise to antitrust liability, even if

those efforts are concerted and anticompetitively motivated. A/-

lied Tube & Conduit Corp. v. Indian Head Inc. , 486 U.S. 492, 499

(1988) The scope of Noerr immunity depends on the source of the

challenged restraint. Where, as here, government action causes

the restraint, then lobbying itself is protected because “those urg-

ing the governmental action enjoy absolute immunity from anti-

trust liability for the anticompetitive restraint.” Allied Tube, 486

U.S. at 499 (quoting Noerr, 365 U.S. at 136). Anticompetitive

private action that does not restrain competition “of its own

force’’ retains its Noerr immunity from antitrust scrutiny. Allied

Tube, 486 U.S. at 510.

As the District Court aptly noted, “[iJt is undisputed that if

plaintiffs are restrained from practicing law, it is because of the

Illinois Supreme Court’s enactment of the Illinois Code of Pro-

fessional Responsibility and the District Court’s adoption of Gen-

eral Rule 3.54.” Lawline v. American Bar Ass’n, 738 F. Supp. 288,

292 (N.D. Ill. 1990), aff'd, 956 F.2d 1378 (7th Cir. 1992). Once

the Illinois Code of Professional Conduct became law in 1980,

governmental agencies became responsible for enforcement of

those rules, and it was those agencies and the Illinois law, not the

Model Code or Model Rules, that restricted petitioners’ conduct.

Petitioners acknowledge as much in their complaint, stating:

The professional conduct of members of the Illinois bar is

governed by the Illinois Code of Professional Responsibility,

Ill. Rev. Stat. ch. 110A, Art. VIII. Rule 3-103 prohibits

lawyers from forming partnerships with non-lawyers if any

12

of the activities of the partnership consists of the practice of

law. ... These prescriptions and proscriptions of the Code

are administered in general by the defendant members of the

ARDC which is constituted by the Supreme Court of Illinois

under the Rules of the Supreme Court.

(Complaint, Count I, 1939-40.)

Indeed, petitioners never allege that the model standards had

any effect on them before they were adopted as law by the judi-

ciary. On the contrary, they allege that those standards were in

effect at the time they organized Lawline, and that they operated

undisturbed notwithstanding those standards until they were re-

ported to the ARDC (see Complaint, Count I, 929, 39, 190-92,

195; Count III, 9176-80). The ARDC, of course, enforced the

Illinois Code, not the model standards.

Consequently, petitioners’ argument that the model standards

restrain competition “of their own force” is unsupported by the

law or the factual allegations of their own complaint.

Petitioners argue erroneously that the Noerr exemption does

not apply to the bar associations’ efforts in promoting the Model

Rules because those efforts constitute a “boycott” conducted by

business competitors (Petition, p. 10). Their argument, however,

was expressly rejected in petitioners’ cited authority, Federal

Trade Commission v. Superior Court Trial Lawyers Ass’n., 493

U.S. 411 (1990) (Petition p. 10). There, the Court held that a

boycott by a group of private attorneys who acted as court-ap-

pointed counsel in criminal cases in the District of Columbia

violated the antitrust laws even though the boycott was aimed at

forcing the District to increase their compensation for that work.

The Court ruled that the Noerr defense did not apply simply

because the group’s objective was the enactment of favorable leg-

islation. In so holding, the Court specifically distinguished situa-

tions like the one at hand where the alleged restraint on trade was

13

the consequence rather than the result of governmental action. It

said:

But in the Noerr case the alleged restraint of trade was the

intended consequence of public action; in this case the boy-

cott was the means by which respondents sought to obtain

favorable legislation. ... In Noerr, the desired legislation

would have created the restraint on the truckers’ competi-

tion; in this case the emergency legislative response to the

boycott put an end to the restraint.

493 U.S. at 424 (emphasis in original). Here, similarly, the alleged

restraint of trade was the consequence of the State’s restriction

contained in the [Illinois Code. Consequently, Superior Court

Trial Lawyers does not support petitioners’ argument.

Petitioners also rely on Allied Tube and argue that, like Allied

Tube, this is a case “where an economically interested party ex-

ercises decisionmaking authority in formulating a product stan-

dard.” (Petition p. 12.) But that similarity is not enough, because

Allied Tube also limited antitrust liability to “the effect the stan-

dard has of its own force in the marketplace.” Allied Tube, 486

U.S. at 510 (emphasis added).

In this case, the Model Code and Model Rules could not have

had anticompetitive effects beyond those resulting from the adop-

tion of the Model Code and Model Rules by the Illinois Supreme

Court and the Northern District. This critical fact distinguishes

this case from Allied Tube, where the association’s code had prac-

tical consequences in the marketplace unrelated to any adoption

of that code into state law. Those consequences included that

“private certification laboratories, such as Underwriters Labora-

tories, normally will not list and label an electrical product that

does not meet code standards; many underwriters will refuse to

insure structures that are not built in conformity with the code;

and many electrical inspectors, contractors and distributors will

not use a product that falls outside the Code.” 486 U.S. at 495-

496. No such independent anticompetitive effects are alleged

here.

x

ee

14

Petitioners also argue that Noerr immunity does not apply be-

cause the CBA somehow engaged in allegedly anticompetitive

acts directed toward other lawyers (Petition, p. 11). This conduct

supposedly consisted of participation in the 1983 ABA House of

Delegates debate over the Kutek Commission’s recommendation

to amend Model Rule 5.4 so that it would have allowed multi-

professional partnerships and associations. However, petitioners’

argument ignores the basic holding in Noerr which focuses on the

source of the challenged restraints. The alleged anticompetitive

actions of the CBA in the ABA House of Delegates occurred after

the Illinois Code and Northern District Rules had already been

enacted and after the Illinois Supreme Court had preempted the

field of attorney regulation. Thus, even if the CBA had voted to

change the Model Rules, the participants in the debates were

powerless to enforce any new rule because they had no authority

to change or enforce the Illinois Code. That power rested solely

in the Illinois Supreme Court. Again, the source of the alleged

restraint was the Code of Professional Responsibility enacted by

the Illinois Supreme Court, and not anything that the CBA did

in the ABA House of Delegates.

Because the CBA’s actions, the Model Code and the Model

Rules had no anticompetitive effects of their own force, the CBA

is immune under Noerr and Allied Tube. The Seventh Circuit’s

ruling was consistent with those decisions.

b. The CBA’s Ethics Opinions Do Not Restrain Trade Of

Their Own Force.

Also meritless is petitioners’ argument that the drafting and

distribution of ethics opinions have no antitrust immunity be-

cause they were aimed at other lawyers and have effect through

lawyer peer pressure and the ABA’s “market power” (Petition

pp. 15-16). As just shown, ethics opinions and peer pressure can

have no independent effect greater than statutory provisions that

carry the force of law. Moreover, petitioners’ assertions about the

15

ABA’s “market power” are irrelevant to this respondent, the

CBA. In any event, the CBA’s 1971 and 1977 ethics opinions

(Complaint, Count I, {178(c)) were merely advisory. Nowhere is

it alleged that the CBA has ever enforced its opinions by way of

internal disciplinary proceedings; nor is there any allegation that

lawyers are not free to disregard the CBA’s opinions. Therefore,

those opinions cannot restrain trade of their own force beyond the

restraints imposed by law.

Although petitioners acknowledge that the Illinois Supreme

Court and the District Court “exercise exclusive power to regu-

late and discipline attorney conduct” (Petition p. 17), they still

argue incorrectly that the ABA’s power is sufficient to “dictate

the uniform national standard of lawyer conduct embodied in its

ethics opinions” and Model Rules, which they claim are the “‘ex-

clusive source for state rules” (Petition p. 16). They also argue

that the federal courts “have traditionally looked to the ABA

ethics opinions” as a source of ethical standards (Petition p. 17).

But the cases cited by petitioners are not instructive. All involve

courts’ interpretations of ethical obligations in the absence of ap-

plicable state or federal rules preempting the field of lawyer regu-

lation (as distinct from this case) or are otherwise irrelevant.®

For example, in In re Corn Derivatives Antitrust Litigation, 748

F.2d 157, 160 (3d Cir. 1984), cert. denied, 472 U.S. 1008 (1985),

the court looked to the ABA Model Code only after specifically

noting that the court itself had adopted no official standards of

professional conduct. Similarly, United Mine Workers v. Illinois

State Bar Ass’n, 389 U.S. 217, 224-25 (1967), was decided before

the Illinois Code was adopted; moreover, the majority opinion

specifically stated that the views of the Illinois Supreme Court

were more relevant in evaluating the propriety of lawyer conduct

than were ABA ethics opinions. Thus, the court’s opinion under-

*Moreover, all of petitioners’ cases deal with the ABA’s opinions and

standards. None suggests that the CBA’s ethics opinions or standards

restrain trade of their own force.

einai ae

16

mines petitioners’ argument that the ABA’s opinions have inde-

pendent force after adoption of the Illinois Code. See also

Schniederjon v. Krupa, 130 Ill. App. 3d 656, 474 N.E.2d 805, 809

(Sth Dist. 1985) app. denied, 520 N.E.2d 393 (1988) (reviewirg

contract made before adoption of the Illinois Code); Corti v.

Fleisher, 93 Ill. App. 3d 517, 417 N.E.2d 764, 774, n. 1 (ist Dist.

1981) (reviewing contract made before adoption of the Illinois

Code, and looking to the ABA Code only after reviewing Illinois

common-law precedents and finding them insufficient); Jn re

“Agent Orange” Product Liability Litigation, 611 F. Supp. 1452,

(D.C. N.Y. 1985), later proceeding, 800 F.2d 14 (2d Cir. 1988),

rev'd, 818 F.2d 216 (2d Cir. 1987), cert. denied, 484 U.S. 926

(1987) (ABA Code not adopted as state law, but under consider-

ation for adoption, thus explaining the court’s reference to it).

In Strickland v. Washington, 466 U.S. 668, 688-89 (1984), reh.

denied, 467 U.S. 1267 (1984), the Court did not rely on any ABA

standard or rule, but made only a passing reference to the ABA

Standards for Criminal Justice (not in issue here), stating that

those standards are “guides” only and not determinative in de-

ciding what level of representation is reasonable for purposes of

the Sixth Amendment right to representation. Moreover, the

Court there was attempting to discern a national norm; conse-

quently, no one state’s rules could be relied upon as dispositive.

Thus, the case is distinguishable on several bases. Finally, in

O’Hara y. Ahlgren, Blumenfeld and Kempster, 127 I1.2d 333, 537

N.E.2d 730, 735-36 (1989) the only case cited by petitioners in

which the court reviewed both the Illinois Code and the ABA

model standards, the court looked first to the Illinois Code and

decided the case on that basis, turning to ABA opinions only for

guidance and additional support.

With respect to any of their cited cases or this case, petitioners

cannot seriously contend that a court would apply an advisory

ABA or CBA rule or opinion if such rule or opinion were in

conflict with the law adopted by the Illinois Supreme Court or

17

federal court in question. Indeed, the Court stated explicitly in

United Mine Workers, 389 U.S. at 224-25, that it would not fol-

low an informal opinion of the ABA that conflicted with the

stated views of the Illinois Supreme Court.

Petitioners’ remaining authorities (Petition, p. 15) lend no sup-

port for their position because, unlike the government-imposed

restrictions here, they all involve restraints imposed by private

entities where parallel state law restrictions were not in place and

the state had not preempted the field as it has done here. See Wilk

v. American Medical Ass’n, 719 F.2d 207 (7th Cir. 1983), on

remand, 671 F. Supp. 1465, 1470 (N.D. Ill. 1987), aff'd, 895 F.2d

352 (7th Cir. 1990), cert. denied, 496 U.S. 927 (1990), and cert.

denied, 498 U.S. 982 (1990); Kreuzer v. American Academy of

Periodontology, 735 F.2d 1479, 1482-83 (D.C. Cir. 1984); Ameri-

can Medical Ass’n y. F.T.C., 638 F.2d 443, 449-50 (2nd Cir.

1980), affd, 455 U.S. 676 (1982), reh. denied, 456 U.S. 966

(1982); Surety Title Ins. Agency, Inc. v. Virginia State Bar, 431 F.

Supp. 298, 301, 303, (E.D. Va. 1977), vacated, 571 F.2d 205 (4th

Cir.), cert. denied, 436 U.S. 941 (1978); Goldfarb v. Virginia State

Bar, 421 U.S. 773, 788-90, n. 19 (1975), reh. denied, 423 U:S.

886 (1975). In addition, none of those cases involved the Noerr

defense.

Moreover, in Surety Title and Goldfarb, the challenged ethics

Opinions were issued by a state bar association to which all law-

yers in the state were required by law to belong as a condition of

licensure, and which the legislature had anointed as an adminis-

trative agency of the state Supreme Court for the purpose of

investigating attorney violations of the Court’s rules. Goldfarb,

421 U.S. 773, n.2, 776-78, n. 6; Surety Title, 431 F. Supp. at 300.

That state-sanctioned authority, as the Court specifically noted in

Goldfarb, 421 U.S. at 778, n. 6, may have engendered influence

in the Virginia State Bar that is not present here. As a result, not

only were the Virginia State Bar’s ethics opinions the only source

of authority on the issues in question there, but they were backed

18

by the State Bar’s official authority to investigate deviations from

the standards they set forth. Thus, the ethics opinions considered

in those cases, unlike the CBA’s opinions, had an impact on the

plaintiffs “‘of their own force.” Surety Title and Goldfarb are dis-

tinguishable for those additional reasons, and petitioners have

cited no pertinent authority removing this case from the Noerr

defense.

Furthermore, petitioners’ allegations of conspiracy (Petition,

p. 17) are insufficient to state an antitrust claim and add nothing

to their argument. There is no conspiracy exception to the Noerr

defense. See City of Columbia v. Omni Outdoor Advertising, Inc.,

499 U.S. 365, 399 (1991). In any event, the existence of a conspir-

acy could not change the fact that the ethics opinions have no

effect of their own force.’ Consequently, Noerr immunity applies.

c. The CBA’s Alleged Conduct Had No Anticompet-

itive Effect.

Independently, the dismissal of the complaint was correct be-

cause petitioners have failed to allege that the CBA’s conduct

restrained trade or had any anticompetitive effect. It has long

been the law that plaintiffs in antitrust actions must allege and

prove that the defendant’s conduct adversely affected competi-

tion. See, e.g., Bright v. Moss Ambulance Service, Inc., 824 F.2d

819 (10th Cir. 1987) (antitrust laws designed to protect competi-

tion, not competitors); Car Carriers, Inc. v. Ford Motor Co., 745

F.2d 1101, 1107 (7th Cir. 1984), cert. denied, 470 U.S. 1054

(1985) (plaintiff must allege not only injury to itself, but injury to

the market as well).

TMoreover, the allegations of conduct by the CBA do not amount to

a conspiracy. Petitioners label the CBA a “co-conspirator” based on

allegations that some of its members belong to the ABA. However, it is

beyond dispute that “[m]Jere membership in associations is not enough

to establish participation in a conspiracy with members of those associ-

ations, much less in a conspiracy between those associations and yet

another association.”’ Federal Prescription Service, Inc. v. American

Pharmaceutical Ass’n, 663 F.2d 253, 265 (D.C. Cir. 1981), cert. denied,

455 U.S. 928 (1982).

19

Petitioners have not shown how the opinions and model stan-

dards they challenge restrict competition in law practice. Peti-

tioners are only concerned about those rules and laws that pro-

hibit laypersons from possessing ownership interests in business

entities engaged in the practice of law. In essence, they are com-

plaining about restrictions on the organizational form in which

certain of the petitioners desire to practice law; they are not com-

plaining about any artificial restraints on the supply of lawyers,

the manner in which persons practice law or the manner in which

lawyers determine the fees they charge for their services. If peti-

tioners had their way, they would substitute one organizational

form of practice for another without affecting the availability of

persons who can render legal advice. Without allegations of in-

jury to a generalized market, allegations of the substitution of one

form of organization for another are insufficient to allege

anticompetitive effect. L.A. Draper & Son v. Wheeiabrator-Frye,

Inc., 735 F.2d 414 (11th Cir. 1984) (substituting one competitor

for another does not violate the antitrust laws, since there is no

injury to competition); Cf Car Carriers, Inc., 745 F.2d at 1107

(generalized injury to competition necessary to state antitrust

claim).

In short, none of petitioners’ arguments show how the CBA’s

ethics opinions could restrain trade of their own force, nor how

the Seventh Circuit’s decision is inconsistent with any ruling of

this Court. For these reasons, the Petition must be denied.

2. Independently, Petitioners’ Antitrust Claims Against

The CBA Are Time-Barred.

The statute of limitations for private claims brought under the

Clayton Act is four years. 15 U.S.C. Sec. 15(b). This case was

filed on August 19, 1988. The CBA ethics opinions about which

petitioners complain (Petition p. 19) were issued in 1971 and

1977, well outside the four-year limitations period. The claims

based on them are clearly time-barred.

Further, any alleged conspiracy designed to cause the adoption

of the Model Code necessarily ended in 1980, when the Illinois

20

Code was enacted. Although petitioners argue that the alleged

conspiracy against them is “ongoing and continuing” (Petition p.

19), they fail to allege any specific, overt act by the CBA in

furtherance of the alleged conspiracy within the limitations peri-

od. Consequently, they cannot satisfy the continuing violation

exception to the statutory time bar. See Zenith Radio Corp. vy.

Hazeltine Research, Inc., 401 U.S. 321, 338 (1971); Pennsylvania

Dental Ass’n v. Medical Service Ass’n of Pennsylvania, 815 F.2d

270, 278 (3d Cir. 1987), cert. denied, 484 U.S. 851 (1987); Pace

Indus., Inc. v. Three Phoenix Co., 813 F.2d 234, 237-238 (9th Cir.

1987); KFC Corp. v. Marion-Kay Co., 620 F. Supp. 1160, 1167

(S.D. Ind. 1985).

In Zenith Radio, this Court stated the continuing violation rule

as follows:

[E]ach time a plaintiff is injured by an act of the defendants

a cause of action accrues to him to recover the damages

caused by that act and that, as to those damages, the statute

of limitations runs from the commission of the act.

401 U.S. at 338 (emphasis added). Indeed, in each of the cases

cited by petitioners, the defendant had committed overt acts in

furtherance of the conspiracy within the limitations period. See

the cases cited above; 236] State Corp. v. Sealy, Inc., 263 F. Supp.

845, 850-51 (N.D. Ill. 1967) (defendant terminated plaintiff's con-

tract within four years of complaint filing); and Wilk, 671 F.

Supp. at 1474-77 (complaint was filed in 1976; defendant drafted

anticompetitive standard in 1973, sent out anti-chiropractic liter-

ature through the date of trial and issued an anti-chiropractic

Judicial Council Opinion after complaint was filed, convincing

the court that a boycott continued to exist as of that time).®

®Hanover Shoe, Inc. v. United Shoe Machinery Corp., (Petition, p. 19),

is irrelevant because it dealt with a monopoly, not a conspiracy. Further,

Hanover involved unusual circumstances, such as the application of

various tolling provisions contained in the Clayton Act and the Wartime

Tolling Act, as well as the defendant’s ongoing refusals to deal with the

(footnote continued on next page)

21

By contrast, no such overt act by the CBA has been alleged

within the limitations period. The most recent “overt act”’ alleged

of the CBA is the promulgation and dissemination in 1977 of the

position opposing the unauthorized practice of law. That date is

eleven years before this lawsuit was brought and seven years out-

side the limitations period. No alleged injury to ¢ *titioners could

have flowed from later statements of that position that did not

flow from the first. Where all damages necessarily result from pre-

limitations conduct, no new cause of action arises for any subse-

quent acts within the limitations period because those acts do not

injure the petitioners. Kaiser Aluminum & Chemical Sales, Inc.

v. Avondale Shipyards, Inc., 677 F.2d 1045, 1053 (5th Cir. 1982),

reh’g denied, 683 F.2d 1373 (Sth Cir. 1982), cert. denied, 459 U.S.

1105 (1983); Keystone Resources, Inc. v. American Telephone and

Telegraph Co., 646 F. Supp. 1355, 1361 (W.D. Pa. 1986), aff'd

without opinion, 826 F.2d 1056 (3rd Cir. 1987); Woodbridge Plas-

tics, Inc. v. Borden, Inc., 473 F. Supp. 218, 221 (S.D. N.Y. 1979),

aff'd without opinion, 614 F.2d 1293 (2nd Cir. 1979); Poster Ex-

change, Inc. v. National Screen Service Corp., 517 F.2d 117, 128

(5th Cir. 1975), cert. denied, 423 U.S. 1054 (1976) and 425 U.S.

971 (1976). There must be a new injury-causing act within the

limitations period, not merely continuing injury. See Keystone,

646 F. Supp. at 1361; Naxon Telesign Corp. v. Bunker Ramo

Corp., 517 F. Supp. 804, 810 (N.D. Ill. 1981), aff'd in part, 686

F.2d 1258, 1267 (7th Cir. 1982). The required overt act must be

new and independent (not merely a reaffirmation) and it must

inflict a new and accumulating injury. Pace, 813 F.2d at 238.

Petitioners allege nothing more than a continuing injury resulting

from a discrete, pre-limitations act.

Moreover, petitioners specifically fail to allege any overt,

anticompetitive act by the CBA within the four-year period before

plaintiff and its monthly collection of rentals within the statutory peri-

od, all of which distinguish it from this case. See Hanover Shoe, Inc. v.

United Shoe Machinery Corp., 245 F. Supp. 258, 294, n. 15 (M.D. Pa.

1965), vacated in part, 377 F.2d 776, 794 (3rd Cir. 1963), affd in part,

rev'd in part, 392 U.S. 481, 502, n. 15 (1968). "

22

petitioners filed their complaint. Petitioners complain of an al-

leged 1987 ABA ethics opinion and argue that none of the private

associations’ ethics opinions was ever rescinded (Petition p. 19).

But these assertions do not allege an overt act by the CBA within

the limitations period. See Ratino v. Medical Service of Dist. of

Columbia (Blue Shield), 718 F.2d 1260, 1272 (4th Cir. 1983)

(dismissing one defendant because the only actions by that defen-

dant were well before the four-year limitations period).

Further, although petitioners assert that the New (1990) Illi-

nois Code was drafted between 1983 and 1987 by a joint commit-

tee which included the CBA as’ .SBA (Petition p. 20), the pro-

visions of the old Code relating to the unauthorized practice of

law are substantively identical in all relevant respects to those

contained in the new Illinois Rules of Professional Conduct (Pe-

tition pp. 44(b), 45(b)).? Consequently, the drafting and proposal

of the new rules could not themselves have been a new source of

any anticompetitive injury to petitioners.

Finally, because the only source of the restraints on petitioners’

conduct is the Illinois Code, the Northern District Rules and

their enforcement by the government, and not any alleged con-

duct of the CBA, none of the CBA’s acts could have caused any

injury to petitioners after 1982, when the Northern District

adopted General Rule 3.54. Therefore, the complaint is time-

barred regardless of any ongoing conspiracy. Accordingly, the

District Court’s holding that petitioners’ antitrust allegations

were time-barred (which the Seventh Circuit implicitly, though

not expressly, affirmed) is not inconsistent with any decision of

this Court and serves as an independent basis to deny the Peti-

tion.

9Petitioners’ statement that services such as Lawline “were not pro-

hibited by the Illinois Code of 1980” or the District Court rules adopted

in 1982 is wrong (Petition p. 19). There is no discernible difference in

the old and new provisions.

23

D. The Seventh Circuit’s Holding That Petitioners’ Constitu-

tional Claims Against The CBA Were Properly Dismissed

Because Petitioners Have Failed To Allege State Action

Under §1983 Was Correct Under This Court’s Decisions.

Relying on this Court’s decision in National Collegiate Athletic

Ass’n v. Tarkanian, 488 U.S. 179, 194 (1988), the Seventh Circuit

properly affirmed the dismissal of petitionets’ claims against the

CBA under Section 1983 of the Civil Rights Act of 1871 on the

grounds that petitioners had not established that the CBA acted

under color of state law. The Court of Appeals rested its decision

on the conclusion that:

[T]he power to prescribe rules governing attorney conduct

and to discipline attorneys for violating those rules, rests

solely in [the Illinois Supreme Court].

Petition p. 35a (brackets in original) (citation omitted).

Petitioners’ constitutional claims against the CBA allege only —

that the CBA: (1) participated in promulgating the ABA Model

Code and Model Rules; (2) issued ethics opinions interpreting the

Illinois Code; (3) investigated petitioners’ suspected unauthorized

practice of law; and (4) considered and commented on the Illinois

Code. The glaring deficiency in plaintiffs’ Section 1983 allegations

is that they fail to allege that the CBA carried a “badge of au-

thority of the state” and represented the state in some capacity.

Tarkanian, 488 US. at 191; see also Rendell-Baker v. Kohn, 457

U.S. 830 (1982).

Petitioners have not alleged and cannot in good faith allege

that the CBA carried any such badge of authority or otherwise

represented the state by its limited involvement in the process

which led the Illinois Supreme Court to adopt the model stan-

dards. Nor have petitioners alleged that the CBA wore a badge

of state authority when it issued ethics opinions. Instead, petition-

ers argue that the CBA engaged in joint action with state officials

24

in allegedly drafting the “New Illinois Code” (Petition p. 21)

(presumably referring to the 1990 Illinois Rules of Professional

Conduct included at Petition, p. 44(b)).

Petitioners’ argument ignores the point made in Bates v. State

Bar of Arizona, 433 U.S. 350 (1977), reh. denied, 434 U.S. 881

(1977), and reiterated in Tarkanian, that a private organization

does not act under color of state law when it promulgates stan-

dards that are subsequently adopted by the state. In Tarkanian,

the court considered whether the N.C.A.A. acted under color of

state law when, with threats of sanctions, it prompted the Uni-

versity of Nevada to remove Jerry Tarkanian from UNLV’s bas-

ketball program. As a member of the N.C.A.A., UNLV had

agreed to abide by its rules and regulations, causing Tarkanian to

argue that the school had thereby delegated its functions to the

N.C.A.A. and clothed it with state authority. Tarkanian, 488

U.S. at 192. The Court disagreed, finding no state action by the

N.C.A.A., because it was the State, not the N.C.A.A., that had

suspended Tarkanian. Jd. at 193-195.

Here, as in Tarkanian, the final act which allegedly harmed

petitioners was committed by the state actor alone. It was the

Illinois Supreme Court’s decision to adopt as law the Illinois

Code of Professional Responsibility that allegedly affected the

petitioners’ rights. As the Tarkanian Court noted in construing

Bates y. State Bar of Arizona, 433 U.S. 350 (1977), which also

involved adoption and enforcement of the ABA code, “i]t does

not follow, however, that the ABA’s formulation of those disci-

plinary rules was state action. The state supreme court retained

plenary power to reexamine those standards and, if necessary, to

reject them and promulgate its own.” Tarkanian, 488 U.S. at 194.

Thus the Illinois Supreme Court’s decision to adopt the model

standards does not support the conclusion that the defendant bar

associations, and particularly the CBA, were acting under color

of law when they lobbied for adoption of those standards. See

Tarkanian, 488 U.S. at 195; Bates, 433 U.S. at 361-62.

ee

25

Similarly, any alleged “joint activity” between the Illinois Su-

preme Court’s Committee on Professional Responsibility and the

CBA in drafting the 1990 Illinois Rules “prior to [their] submis-

sion to the Illinois Supreme Court” (Petition p. 21) is insufficient

to constitute state action, for the same reason. The Illinois Su-

preme Court had the ultimate and sole authority to accept or

reject the draft presented by the alleged “joint actors.”’!

Petitioners attempt to avoid the clear application of Tarkanian

by arguing that the Illinois Supreme Court established a “proce-

dural scheme” for drafting the proposed 1990 Illinois Rules

which “provided no safeguards against misuse by private parties”

and which the private associations “misused” to intrude on peti-

tioners’ rights, thus creating state action (petition at 21-22). This

argument is an untenable effort to distract from the central focus

in Tarkanian. The issue is not whether the CBA participated in

the process, but who made the decision that affected petitioners.

Here, that decision was the Illinois Supreme Court’s adoption of

the Illinois Code.!!

Moreover, although petitioners argue here that the CBA “mis-

used” the Illinois Supreme Court’s “procedural scheme,’ the

complaint contains no factual allegations supporting that argu-

ment. Further, they have cited no authority that supports the

application of “procedural scheme” analysis here. U.S. v. Classic,

10Moreover, the proposed new Illinois Rules could not have caused

petitioners harm in any event because they were not adopted unti! 1990,

after the occurrence of the events alleged in the Complaint. Further,

they are substantively indistinguishable in all relevant respects from the

1980 Illinois Code (see Petition pp. 44b, 44c).

''\Again, any alleged activity relating to the drafting and adoption of

the 1990 rules is irrelevant because the unauthorized practice of law

provisions in the proposed 1990 Illinois Rules are substantively identical

in all relevant respects to those contained in the old Illinois Code which

was already in effect (see Petition pp. 44b, 44c). Consequently, the 1990

Rules and the CBA’s alleged participation in drafting them cannot have

caused whatever injury petitioners suffered (see previous footnote).

26

313 U.S. 299 (1941) (petition p. 22) involved the indictment of

state election commissioners who were given authority by state

statute to count ballots. Their willful alteration and miscounting

of the ballots was found to be a misuse of the power given them

by the state. Heré, by contrast, petitioners have alleged no facts

showing that the state conferred any similar authority on the

CBA or that the CBA engaged in any such misconduct.

In Lugar vy. Edmondson Oil Co., 457 U.S. 922, 941 (1982)

(petition p. 22), a state statute that gave creditors the right to

attach a debtor’s property through the court without due process

was found to create state action when the creditor on his own put

the state process in motion. Here, petitioners have failed to allege

the existence of any such law. Thus, neither Lugar nor Classic

supports petitioners’ theory of state action.

The allegations contained in the First Amended Complaint, by

which petitioners are bound, are insufficient to allege the essential

and threshold element of state action needed to make the CBA

liable for petitioners’ alleged deprivations of constitutional rights.

Furthermore, none of petitioners’ cases support the theory that

lobbying alone can be state action or that the CBA engaged in

joint activity or a “procedural scheme” that could convert their

activities into state action. The Seventh Circuit’s finding of no

State action was entirely consistent with this Court’s ruling in

Tarkanian.

CONCLUSION

The Petition should be denied on both procedural and substan-

tive grounds. Procedurally, petitioners failed to comply with Rule

33.7, making the Petition untimely. Further, the case is moot

because petitioners suffered no actual injury and the respondents

have stipulated they have no intention of prosecuting any disci-

plinary charges against petitioners in the future.

27

7

Substantively, the Seventh Circuit correctly discerned the crit-

ical omissions in petitioners’ complaint. Petitioners’ antitrust

claims ‘stated no cause of action against the CBA because the

CBA’s actions are immune under Noerr. Independently, petition-

ers’ complaint alleges no injury to competition, and petitioners’

antitrust claims are also time-barred. Petitioners have failed to

demonstrate how the Seventh Circuit’s ruling on petitioners’ an-

titrust claims conflicts with any decision of this Court.

The Seventh Circuit was also correct under this Court’s deci-

sion in Tarkanian when it affirmed the District Court’s dismissal

of petitioners’ constitutional claim for lack of state action. The

state was free to adopt or reject the Model Code and Model Rules

as it saw fit. Because the state’s choice to enact into law and

enforce those standards was the final act that allegedly harmed

petitioners, the CBA’s activities were not state action.

The Petition establishes no grounds meriting further review by

this Court. The courts below did not misapprehend any control-

ling legal standard. For these reasons, the Petition for a Writ of

Certiorari should be denied.

Respectfully submitted,

RENE A. TORRADO, JR.

RICHARD H. SCHNADIG*

JANET M. HEDRICK

VEDDER, PRICE, KAUFMAN &

KAMMHOLZ

222 North LaSalle Street

Suite 2600

Chicago, Illinois 60601

(312) 609-7500

Attorneys for Respondent

The Chicago Bar Association

*Counsel of Record

Dated: October 29, 1993