Bar Associations

LegalZoom files $10.5M antitrust suit against North Carolina bar, cites SCOTUS dental case

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LegalZoom is citing a recent U.S. Supreme Court decision on teeth whitening in a $10.5 million antitrust suit against the North Carolina State Bar.

The suit (PDF), filed on June 3 in federal court in North Carolina, claims the bar is unreasonably barring LegalZoom from offering a prepaid legal services plan in the state, according to the Wall Street Journal Law Blog, the Los Angeles Business Journal and a press release.

According to the suit, the state legislature in 1991 removed the bar from a role in approving legal services plans but gave it the “ministerial task” of keeping a registration list of plans sold in the state.

Yet the bar adopted a restrictive definition of what constitutes a prepaid legal services plan and refused to accept for registration plans that did not meet the definition, the suit alleges. The bar says such plans must be paid for in advance of any immediate need and any legal services provided must be provided by lawyers licensed in the state, the suit says.

The suit cites the February U.S. Supreme Court decision North Carolina State Board of Dental Examiners v. Federal Trade Commission. It held that a dental regulatory board made up mostly of dentists doesn’t have state-action immunity in an antitrust action. The decision allowed a Federal Trade Commission challenge to the board’s clampdown on teeth whitening by nondentists.

When a state board is controlled by market participants in the occupation it regulates, the Supreme Court said, state-action antitrust immunity can’t be invoked unless the challenged restraint of trade is affirmatively expressed as state policy and the policy is actively supervised by the state.

Related articles:

ABA Journal: “Dental board ruling may drill into state bar associations’ immunity” “SCOTUS smiles on nondentist teeth whiteners, allows antitrust action against dentistry board”

ABA Journal: “Latest legal victory has LegalZoom poised for growth” “LegalZoom hits a legal hurdle in North Carolina”

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