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California Dental Association v. Federal Trade Commission

United States Supreme Court
526 U.S. 756 (1999)


Facts

California Dental Association (CDA) (defendant) was a nonprofit association of local dentist societies to which about three-fourths of California's dentists belonged. CDA members agreed to abide by a code of ethics prohibiting, among other things, the engagement of false or misleading advertising. The CDA issued advisory opinions and guidelines to assist dentist-members in ensuring that they were not engaging in false advertising. The Federal Trade Commission (FTC) (plaintiff) brought a complaint against the CDA alleging that the application of the CDA's guidelines had restricted truthful, non-deceptive advertising related to prices, discounted fees, and the quality of dental services in violation of § 5 of the FTC Act. An administrative law judge (ALJ) found a § 5 violation. The FTC adopted the ALJ's factual findings and treated the CDA's advertising restrictions on discounted fees as illegal per se. The FTC alternatively found that the CDA's price and quality advertising restrictions violated the FTC Act and Sherman Act under an abbreviated "quick-look" rule-of-reason analysis. The United States Court of Appeals for the Ninth Circuit affirmed the FTC’s decision and concluded that a "quick-look" analysis was appropriate for all of the advertising restrictions because the restrictions were so anticompetitive on their face that a full rule-of-reason analysis of the industry was unnecessary. Specifically, the court found the discount-advertising regulations to be a naked restraint on price competition and held that the CDA's procompetitive justifications of increased disclosure and the prevention of misleading advertising were unavailing. The court also concluded that the non-price advertising restrictions constituted an output limitation that restricted the supply of information about the services provided by individual dentists. The CDA appealed, and the United States Supreme Court granted certiorari.

Rule of Law

Issue

Holding and Reasoning (Souter, J.)

Concurrence/Dissent (Breyer, J.)

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