California Dental Association v. Federal Trade Commission - Oral Argument - January 13, 1999

California Dental Association v. Federal Trade Commission

Media for California Dental Association v. Federal Trade Commission

Audio Transcription for Opinion Announcement - May 24, 1999 in California Dental Association v. Federal Trade Commission

Audio Transcription for Oral Argument - January 13, 1999 in California Dental Association v. Federal Trade Commission

William H. Rehnquist:

We'll hear argument next in No. 97-1625, California Dental Association v. Federal Trade Commission.

Mr. Sfikas.

Peter M. Sfikas:

Mr. Chief Justice, and may it please the Court:

There are two issues in this case.

The first is the question of whether or not the FTC Act has jurisdiction over a nonprofit professional association, and the second issue is whether or not the Commission and the Ninth Circuit appropriately applied a quick look rule of reason analysis to the facts in this case.

The jurisdictional dispute in this case is over the interpretation of... of the phrase in section 4 of the FTC Act, which reads in its relevant part... and this may be found in the petitioner's brief at pages 1 and 2... a company, trust, or association without shares of capital or capital stock which is organized to carry on business for its own profit or that of its members.

There is no disagreement on the record before Your Honors that the CDA is a bona fide, not-for-profit organized under California law, with a 501(c)(6) Federal tax exemption.

There are two major cases that discuss this jurisdictional.

The first is the Community Blood Bank case and the second is the AMA case.

In the Blood Bank case, both of the respondents were not-for-profit associations.

After a full trial, the FTC and the hearing officer found that they had violated the antitrust laws by hindering the development of two commercial blood banks.

On the jurisdictional issue, the hearing officer who heard the case and the commission made specific findings that there were benefits to members in these cases, and that's how they rested their jurisdiction.

Ruth Bader Ginsburg:

Would you just remind me, counsel?

Was the organization in the Blood Bank case... was that a 501(c)(3) or (c)(6)?

Peter M. Sfikas:

If the Court please, I've searched the record and I come to the conclusion that the Kansas City Area Hospital Association was not a 501(c)(3).

Ruth Bader Ginsburg:

Do you recognize that there might be some 501(c)(6) organizations that would fit the definition of carries on business for the profit of its members?

Peter M. Sfikas:

Oh, yes, Your Honor.

Yes.

Ruth Bader Ginsburg:

So, you're distinguishing among 501(c)... you're not saying all nonprofits are out.

Peter M. Sfikas:

That is correct, Your Honor.

I am not.

Ruth Bader Ginsburg:

And so, now you're going to tell us why, say, the Dental Association is different from the Real Estate Board.

Peter M. Sfikas:

Yes.

If you... well, I don't know that I'm going to tell you that difference because I'm not sure I know that much about the Real Estate Board, Your Honor.

But in connection with the California Dental Association, its primary purpose is for the public interest.

It's to promote the art and science of dentistry.

I think the critical language in the statute requires, however, that there be a profit, and profit was defined in the Community Blood Bank case to be the excess of revenue over expenses, with a contemplation that it is to be paid to the members.

That was not done in the California Dental Association, and that's clear in this record.

So, if... I don't know the Real Estate Board well enough to--

Ruth Bader Ginsburg:

Well, how about a trade organization that's there to promote, say, eggs?