[Sasha Volokh] Fighting occupational licensing boards with antitrust

On Friday, I wrote about an amicus brief, for me and 54 other antitrust and competition policy scholars, that I wrote in Teladoc v. Texas Medical Board, a Fifth Circuit case involving the antitrust state-action immunity doctrine.

For a summary of the argument, see that post, but here’s an even shorter background: the Texas Medical Board wants to regulate telehealth providers; one such provider, Teladoc, sued the Board under federal antitrust law, arguing that the rule the Board promulgated was anticompetitive; and the Board claimed that it was immune from federal antitrust law as a state agency. Agencies composed of market participants need to be actively supervised by the state if they want to get immunity; so the question here is whether state-court administrative-law judicial review counts as “active supervision” within the meaning of the doctrine.

On Monday, I reproduced Part I of the brief, on “The Problem of Occupational Boards Dominated by Market Participants”. On Tuesday, I reproduced Part II, on why “Texas Administrative-Law Judicial Review Is Not Active Supervision”. Today, I’ll wrap it up, with the two last sections of the brief: “The Features of Texas Law That Supposedly Control Self-Dealing Are Irrelevant to Whether There Is Active Supervision” and “State Sovereignty and Cooperative Federalism Concerns Should Not Affect the Resolution of This Case”.

III. The Features of Texas Law That Supposedly Control Self-Dealing Are Irrelevant to Whether There Is Active Supervision

A. The Board Does Not Argue That These Features Constitute Active Supervision, Merely That They Should Lead to a Weaker Analysis

Despite its view that judicial review is “sufficient” supervision, the Board spends many pages talking about other features of Texas law. For instance, the fact that Board members are appointed by, and may be removed by, the Governor and Senate, and the fact that Board members are specialists from different fields, are supposedly “[f]eatures of the Board’s membership [that] minimize the risk that [the Board] will forego its mandate and act with only a private purpose.” Appellants’ Br. at 38–41. Good-government laws and reporting requirements “further reduce the risk that the Board will shirk its official duties and pursue only private interests.” Id. at 41–45. Later, the Board points to features of legislative oversight that “reinforce[]” or “buttress[]” active supervision, id. at 50–52.

The Board does not argue that these features themselves constitute active supervision. And wisely so: Such an argument would directly contravene the rule of Patrick, 486 U.S. at 102, Ticor, 504 U.S. at 633, and N.C. Dental, 135 S. Ct. at 1112, that active supervision must extend to the specific challenged actions. See id. (“The second Midcal requirement . . . seeks to avoid [the] harm [of private self-dealing] by requiring the State to review and approve interstitial policies made by the entity claiming immunity.”); id. at 1116 (“The supervisor must review the substance of the anticompetitive decision, not merely the procedures followed to produce it; the supervisor must have the power to veto or modify particular decisions to ensure they accord with state policy; and the ‘mere potential for state supervision is not an adequate substitute for a decision by the State.’” (citations omitted) (quoting Ticor, 504 U.S. at 638)); see also 1A Areeda & Hovenkamp, supra, ¶ 226c1, at 185–87 (“Of course, the active supervision must extend to the anticompetitive aspects of challenged conduct.”).

Rather, the Board argues that these features, because they control self-dealing and increase political accountability, should lead this Court to apply the active-supervision requirement less strictly than it otherwise would. See Appellants’ Br. at 41 (arguing that “the necessary degree of active supervision” depends on the “risk that [the Board’s] rulemaking does not pursue state policy,” which is mitigated by “its political accountability and structure”).

The argument of Part II, supra, implies that state judicial review is not active supervision