SMILEDIRECTCLUB, LLC v. Tanja D. Battle

969 F.3d 1134

• Court: Court of Appeals for the Eleventh Circuit
• Decided: August 11, 2020
• Docket: 19-12227
• Status: Published

Opinion

Case: 19-12227 Date Filed: 08/11/2020 Page: 1 of 45

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 19-12227 ________________________

D.C. Docket No. 1:18-cv-02328-WMR

SMILEDIRECTCLUB, LLC,

Plaintiff–Appellee,

versus

TANJA D. BATTLE, in her official capacity as Executive Director of the Georgia Board of Dentistry, et al.,

Defendants–Appellants.

________________________

Appeal from the United States District Court for the Northern District of Georgia ________________________

(August 11, 2020)

Before JORDAN, TJOFLAT, and ANDERSON, Circuit Judges.

ANDERSON, Circuit Judge: Case: 19-12227 Date Filed: 08/11/2020 Page: 2 of 45

SmileDirectClub, LLC, brought the instant suit against the Georgia Board of

Dentistry, including the Board’s members in their individual capacities, alleging

inter alia, antitrust, Equal Protection, and Due Process violations. Pursuant to

Federal Rule of Civil Procedure 12(b)(6), the Board members moved to dismiss

SmileDirect’s complaint, which the district court granted in part and denied in part.

They now appeal the denial of their motion to dismiss the complaint with respect

to the alleged antitrust violations. After carefully reviewing the record, and with

the benefit of oral argument, we affirm. We conclude that, based on the facts

alleged in SmileDirect’s complaint, the Board members are not entitled to state-

action immunity under Parker v. Brown, 317 U.S. 341 (1943), at this point in the

litigation, and the district court properly denied their motion to dismiss.1

I. BACKGROUND

For the purposes of our review at this stage, we accept all of the factual

allegations in SmileDirect’s complaint as true.

A. SmileDirect and the Georgia Board of Dentistry

SmileDirect is a company that offers orthodontic treatments, like teeth

alignment, to its customers at a steep discount. It is able to afford that discount

because, unlike most other orthodontists, it does not do in-person treatment.

1 The Court notes the contributions of the United States Federal Trade Commission, which participated in this case as amicus curiae.

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Instead, its patients go to one of its locations—called “SmileShops”—located

around the country, which are staffed by SmileDirect technicians. At the

“SmileShop,” the technicians take digital scans of the patient’s teeth, which are

sent to SmileDirect’s lab to create a model for treatment.

If the SmileDirect patient is in Georgia, the lab sends the model to a

Georgia-licensed dentist or orthodontist for review. The doctor “then identifies

any periodontal disease, cavities, or any other oral conditions that require[] further

investigation or which would prevent the patient from being a candidate for”

SmileDirect’s treatment. Dist. Ct. Op. at 2. If there are no such problems, the

doctor creates a patient-specific plan, which culminates in a prescription for

SmileDirect’s “clear aligners.” The patient receives the aligners through the mail.

Enter the Georgia Board of Dentistry. The Board is organized under Title

43, Chapter 11, of the Code of Georgia. The Board is primarily made up of

licensed, practicing dentists—along with one dental hygienist and one non-dental

professional—who are appointed by the Governor. O.C.G.A. § 43-11-2. Thus,

nine of the eleven current members of the Board are practicing dentists. It has

broad power to regulate “those acts, services, procedures, and practices which may

be performed by dental hygienists, dental assistants, or other persons at the

direction of and under the supervision of a licensed dentist.” Id. § 43-11-9.

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On January 24, 2018, the Board voted to amend Rule 150-9-.02, which

related to the “Expanded Duties of Dental Assistants.” The proposed amendment

added conducting “[d]igital scans for fabrication [of] orthodontic appliances and

models” to the list of expanded duties of dental assistants, Ga. Bd. of Dentistry R.

150-9-.02(aa), which requires “direct supervision” by a dentist, see id. at 150-9-

.01, .02. “Direct supervision and control as it pertains to a dental assistant shall

mean that a dentist licensed in Georgia is in the dental office or treatment facility,

personally diagnoses the condition to be treated, personally authorizes the

procedures and remains in the dental office or treatment facility while the

procedures are being performed by the dental assistant and, before dismissal of the

patient, evaluates the performance of the dental assistant.” Id. 150-9-.01(2). The

practical effect of the proposed amendment would be to require that digital scans,

like the ones conducted by SmileDirect at their “SmileShops,” only take place

when a licensed dentist is physically in the building where the scans are taking

place, and to prohibit them otherwise.

The Board then sent the proposed amendment to Governor Nathan Deal,

who was tasked with approving, modifying, or vetoing it. See O.C.G.A. § 43-1C-

3. On April 30, 2018, he issued a “Certification of Active Supervision” to the

Board, which “approve[d] the amendment to [the rule] for the purposes of active

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supervision review required by § 43-1C-3.” Mot. to Dismiss, Ex. 2. The second

paragraph of the Certification states:

Georgia law grants the Board authority to promulgate rules and regulations related to dental assistant services. As such, the amendment adopted by the Board is within its authority as granted by clearly articulated state policy. Therefore, I hereby approve the amendment to [the dental regulations] for the purposes of active supervision review required by [state law].

Id. B. The Instant Lawsuit

In response to the amendment to Rule 150-9-.02, SmileDirect filed the

instant lawsuit against the Georgia Board of Dentistry and its members,

challenging the amended rule. It alleged, inter alia, that the Board’s actions in

amending the rule violated antitrust law, the Equal Protection Clause, and the Due

Process Clause; it also sought a declaratory judgment that taking digital scans did

not constitute the practice of dentistry such that the Board could lawfully regulate

it. In response, the Board moved to dismiss the complaint, pursuant to Rule

12(b)(6). The district court granted the motion and dismissed SmileDirect’s claims

against the Board in its official capacity because of sovereign immunity, as well as

the claims against the Board members for compensatory damages. The district

court also dismissed SmileDirect’s claim for declaratory judgment, holding that the

amended rule fell squarely within the practice of dentistry subject to the regulation

of the Board. However, the district court denied the motion with respect to the

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antitrust, Equal Protection, and Due Process claims against the Board members in

their individual capacities. The Board appeals only from the district court’s denial

of its motion to dismiss the antitrust claim. 2 Thus, SmileDirect’s Equal Protection

and Due Process claims against the Board members remain pending in the district

court, and the only issue before this Court on appeal involves SmileDirect’s

antitrust claim and the district court’s denial of the Board members’ motion to

dismiss it on the basis of state-action immunity under Parker v. Brown. The

district court held “that SmileDirect’s Sherman Act antitrust claim, as pleaded, is

sufficient to survive a Rule 12(b)(6) motion to dismiss on Parker immunity

grounds.” Dist. Ct. Op. at 13.

II. DISCUSSION

A. Jurisdiction

Before proceeding to the merits of this case, we have an “obligation to

satisfy ourselves that we have jurisdiction” over this appeal. See Boyd v. Homes of

Legend, Inc., 188 F.3d 1294, 1297 (11th Cir. 1999). SmileDirect argues that we do

not have jurisdiction to hear the Board’s appeal of the (partial) denial of its motion

to dismiss because it does not fit within the collateral-order doctrine.

2 The Board does not appeal from the district court’s denial of its motion to dismiss with respect to the Equal Protection and Due Process claims.

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It is, of course, generally the case that parties can only appeal final decisions

of district courts. See 28 U.S.C. § 1291. However, as the Supreme Court

recognized in Cohen v. Beneficial Industrial Loan Corporation, 3 “an otherwise

nonappealable interlocutory order is appealable if it (1) ‘conclusively determine[s]

[a] disputed question,’ (2) ‘resolve[s] an important issue completely separate from

the merits of the action,’ and (3) ‘[is] effectively unreviewable on appeal from a

final judgment.’” Freyre v. Chronister, 910 F.3d 1371, 1378 (11th Cir. 2018)

(quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 468 (1978)).

Pursuant to binding precedent in this Circuit, a district court’s denial of a

Rule 12(b)(6) motion to dismiss based on state-action immunity is immediately

appealable under the collateral order doctrine. Diverse Power, Inc. v. City of

LaGrange, 934 F.3d 1270, 1272 & n.1 (11th Cir. 2019); Commuter Transp. v.

Hillsborough Cty., 801 F.2d 1286, 1289–90 (11th Cir. 1986). Diverse Power held:

“[S]tate-action immunity is a form of immunity from suit, not merely from

liability. And denials of immunity from suit—like denials of sovereign and

qualified immunities—are immediately appealable under the collateral order

doctrine.” 934 F.3d at 1272 n.1 (citations omitted).4 Put another way, state-action

3 337 U.S. 541 (1949). 4 We cannot agree with our dissenting brother’s position that the first prong of Cohen is absent. Respectfully, we believe that the district court has conclusively determined a disputed question. The district court expressly held “that SmileDirect’s Sherman Act antitrust claim, as pleaded, is sufficient to survive a Rule 12(b)(6) motion to dismiss on Parker immunity grounds[.]”

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Dist. Ct. Op. at 13. And the district court’s dispositive order expressly denied the Board members’ motion to dismiss that claim. Id. at 16 (“Defendants’ Motion to Dismiss . . . is DENIED with respect to the claims in Counts II–IV [Count II being the antitrust claim] against the Board member defendants.”). Thus, the district court rejected the Board members’ legal arguments that they were entitled to state-action immunity as a matter of law. That the district court acknowledged the fact that the ultimate determination of the Board members’ entitlement to immunity would have to await “further factual developments” later in the litigation does not nullify the district court’s holding that SmileDirect’s claim, as pleaded, survives the immunity defense. See Commuter Transp., 801 F.2d at 1289 (holding that a summary judgment decision rejecting a claim of state- action immunity “is ‘conclusive’ even if it is based on the existence of potential fact issues”).

As noted in the text, binding precedent in Diverse Power and Commuter Transportation holds that state-action immunity is immunity from suit—not merely immunity from liability. There is established law detailing the significance of immunity from suit, as distinguished from immunity from liability. As the Supreme Court said in Behrens v. Pelletier:

Harlow and Mitchell make clear that the defense is meant to give government officials a right, not merely to avoid “standing trial,” but also to avoid the burdens of “such pretrial matters as discovery . . . , as ‘inquiries of this kind can be peculiarly disruptive of effective government.’” Mitchell, supra, at 526 (emphasis added) (quoting from Harlow, supra, at 817). Whether or not a later summary judgment motion is granted, denial of a motion to dismiss is conclusive as to this right. . . . [T]his right is important enough to support an immediate appeal.

516 U.S. 299, 308 (1996); see also Brown v. Crawford Cty., Ga., 960 F.2d 1002, 1011 (11th Cir. 1992) (noting the significance of immunity from suit, we held: “[t]o preserve its purpose, ‘entitlement to absolute immunity must be determined as early as possible’ and appropriately on a motion to dismiss or judgment on the pleadings”) (quoting from Marx v. Gumbinner, 855 F.2d 783, 788 (11th Cir. 1988)).

Thus, if the Board members’ legal arguments at this early stage had been sound, they would have been entitled to dismissal now, without having to engage in discovery and further litigation. After a litigant’s immunity defense is denied at an early stage, the caselaw recognizes that the facts may change after further factual development, and at a later stage in the litigation, the party may assert again its immunity defense. See Behrens, 516 U.S. at 309, 116 S. Ct. at 840 (“[R]esolution of the immunity question may require more than one judiciously timed appeal, because the legally relevant factors bearing upon the Harlow question will be different on summary judgment than on an earlier motion to dismiss.”) (internal quotation omitted).

We also disagree with the dissent’s suggestion that our decision is merely a hypothetical, advisory opinion. Although it is true that our decision does not resolve the issue of the Board members’ ultimate entitlement to state-action immunity, our decision does definitively resolve the legal issues the Board members have presented at this stage. Our decision does definitively reject two legal arguments asserted by the Board members: First, their argument that they are entitled to ipso facto immunity merely because the Governor approved the Board’s rule under Georgia’s

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immunity is “comparable to” qualified immunity for the purposes of applying the

Cohen doctrine. Commuter Transp., 801 F.2d at 1289. Accordingly, we conclude

that we have jurisdiction of the Board members’ appeal of the denial of its motion

to dismiss because it implicates immunity from suit under the state-action doctrine.

SmileDirect’s argument that private parties—and it asserts that the

individual members of the Board members are private parties—are not entitled to

immediately appeal under the collateral-order doctrine is at odds with our

precedent. See Praxair, Inc. v. Fla. Power & Light, 64 F.3d 609, 611 (11th Cir.

1995). In Praxair, we held that there was “collateral order appellate jurisdiction of

the appeals of Florida Power and Florida Power & Light” because the denial of

state-action immunity is immediately appealable. See id. Although Praxair also

involved an automatic appeal under 28 U.S.C. § 1292(b), we nonetheless conclude

that it held, as a binding alternative holding, that private parties are entitled to

appeal the denial of state-action immunity under the collateral-order doctrine.

statutory framework that vests in the Governor the power, authority, and duty to substantively review, approve, modify, or veto the rule, notwithstanding whether the Governor has actually exercised his powers and discharged his duties; and second, their argument that the “active supervision” prong (of the applicable analysis where the board is dominated by market participants) is satisfied because of the Governor’s approval of the rule in light of that statutory framework, again notwithstanding whether the Governor has actually exercised his statutory powers and discharged his duties.

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For the foregoing reasons, we conclude that we do have appellate

jurisdiction under the collateral order doctrine. Accordingly, we proceed to the

merits of this case.

B. State-Action Immunity

We review the district court’s ruling on a motion to dismiss de novo. Paez v.

Mulvey, 915 F.3d 1276, 1292 (11th Cir. 2019). A motion to dismiss is properly

denied if, taking the allegations in the plaintiff’s complaint as true, the plaintiff

makes out a claim “that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007).

The Sherman Antitrust Act of 1890 makes unlawful “[e]very contract,

combination in the form of trust or otherwise, or conspiracy, in restraint of trade or

[interstate] commerce.” 15 U.S.C. § 1. However, in Parker v. Brown, the

Supreme Court explained that the Sherman Act does not apply to state action—“it

must be taken to be a prohibition of individual and not state action.” 317 U.S. at

352. This exemption from antitrust liability does not extend to allowing states to

“give immunity to those who violate the Sherman Act by authorizing them to

violate it, or by declaring that their action is lawful[.]” Id. at 351.

Determining the existence of “state action”—that is, actors claiming that

they are acting as the state and thus are immune from suit—requires a context-

specific analysis. That a defendant in an antitrust case is technically a state board,

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agency, or commission is not dispositive of the ultimate question. “The

similarities between agencies controlled by active market participants and private

trade associations are not eliminated simply because the former are given a formal

designation by the State, vested with a measure of government power, and required

to follow some procedural rules. Parker immunity does not derive from

nomenclature alone.” N.C. State Bd. of Dental Exam’rs v. FTC, 574 U.S. 494, 511

(2014) (hereinafter Dental Examiners). Addressing a case involving the North

Carolina State Board of Dental Examiners—a state board charged with regulating

the practice of dentistry and composed of a majority of board members who are

engaged in the active practice of the profession it regulates, precisely like the

Georgia Board of Dentistry in this case—the Supreme Court in Dental Examiners

held:

When a State empowers a group of active market participants to decide who can participate in its market, and on what terms, the need for supervision is manifest. The Court holds today that a state board on which a controlling number of decisionmakers are active market participants in the occupation the board regulates must satisfy Midcal’s active supervision requirement in order to invoke state-action antitrust immunity.5

Id. at 511–12.

5 The parties in Dental Examiners and the Court assumed that the clear articulation requirement of Midcal was satisfied. 574 U.S. at 504.

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Accordingly, we turn to what is commonly known as the Midcal test—a

two-prong analysis synthesized by the Supreme Court in California Retail Liquor

Dealers Association v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980). In

Midcal, the Supreme Court explained that, under Parker v. Brown, there are “two

standards for antitrust immunity.” Id. “First, the challenged restraint must be ‘one

clearly articulated and affirmatively expressed as state policy’; second, the policy

must be ‘actively supervised’ by the State itself.” Id. (quoting City of Lafayette v.

La. Power & Light Co., 435 U.S. 389, 410 (1978)). As noted above, the Supreme

Court in Dental Examiners recently explained that “a state board on which a

controlling number of decisionmakers are active market participants in the

occupation the board regulates must satisfy Midcal’s active supervision

requirement in order to invoke state-action antitrust immunity.” Dental

Examiners, 574 U.S. at 511–12.

However, the Midcal test is not applied in all instances in which state-action

immunity is invoked. The actions of a “state sovereign” are, ipso facto, “exempt

from the operation of the antitrust laws.” Hoover v. Ronwin, 466 U.S. 558, 568

(1984). In such a case, the Midcal test is not conducted and state-action immunity

applies automatically. See id. The Supreme Court has applied ipso facto state-

action immunity in only limited cases—to the actions of a “state legislature

adopt[ing] legislation” or “a decision of a state supreme court, acting legislatively

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rather than judicially[,]” id., and only where the conduct challenged “was in reality

that of” the sovereign itself, see id. at 573.

We first address whether, on the basis of the facts we assume in this Rule

12(b)(6) posture, the Board members have satisfied the Midcal test. Because we

conclude below that the Board members have failed to satisfy the “active

supervision” prong, and because satisfaction of both prongs is necessary, we

conclude that the Board members have failed to satisfy the Midcal test, and we

need not address the clear articulation prong. We then proceed to consider, and

ultimately reject, the Board’s argument that it is entitled to ipso facto immunity.

1. The Midcal Test

As explained previously, the Midcal test synthesized the Supreme Court’s

past state-action immunity caselaw into two discrete requirements. For state-action

immunity to apply (aside from ipso facto immunity where the sovereign itself has

acted), the challenged market restraint must be (1) “clearly articulated and

affirmatively expressed as state policy,” and (2) “actively supervised by the State

itself.” 445 U.S. at 105 (citations and quotations omitted).

a. Clear Articulation

Most litigation with respect to the satisfaction of the Midcal test concerns

the second prong—the presence of “active supervision.” The absence of “active

supervision” is dispositive, and courts need not consider the “clear articulation”

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prong where “active supervision” is absent. Patrick v. Burget, 486 U.S. 94, 100

(1988). Because we conclude below that the Board members have failed to satisfy

the “active supervision” prong, we decline to address the clear articulation prong.

b. Active Supervision

We turn to the second prong of the Midcal analysis, which asks whether the

amendment to Rule 150-9-.02 was “actively supervised by the State.” Midcal, 445

U.S. at 105. The “active supervision” prong

mandates that the State exercise ultimate control over the challenged anticompetitive conduct. The mere presence of some state involvement or monitoring does not suffice. The active supervision prong of the Midcal test requires that state officials have and exercise power to review particular anticompetitive acts of private parties and disapprove those that fail to accord with state policy. Absent such a program of supervision, there is no realistic assurance that a private party’s anticompetitive conduct promotes state policy, rather than merely the party’s individual interests.

Patrick, 486 U.S. at 101 (citations omitted). “[T]he purpose of the active

supervision is not to determine whether the State has met some normative standard,

such as efficiency, in its regulatory practices. Its purpose is to determine whether

the State has exercised sufficient independent judgment and control so that the

details of the rates or prices have been established as a product of deliberate state

intervention, not simply by agreement among private parties. . . . [T]he analysis

asks whether the State has played a substantial role in determining the specifics of

the economic policy. The question is not how well the regulation works, but

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whether the anticompetitive scheme is the State’s own.” FTC v. Ticor Title Ins.

Co., 504 U.S. 621, 634–35 (1992).

This is not an inquiry conducted in the abstract. The “Court has identified

only a few constant requirements of active supervision”:

The supervisor must review the substance of the anticompetitive decision, not merely the procedures followed to produce it, see Patrick, 486 U.S., at 102–03; the supervisor must have the power to veto or modify particular decisions to ensure they accord with state policy, see ibid.; and the “mere potential for state supervision is not an adequate substitute for a decision by the State,” Ticor, [504 U.S.] at 638. Further, the state supervisor may not itself be an active market participant. In general, however, the adequacy of supervision otherwise will depend on all the circumstances of a case.

Dental Examiners, 574 U.S. at 515.

The Supreme Court’s opinion in Ticor helps illustrate the application of

these principles. Ticor concerned the permissibility, under antitrust law, of the

defendant insurance companies’ setting of rates for title search and examination

services, which applied in multiple states. The Third Circuit concluded that the

State of Wisconsin’s Insurance Department had actively supervised the insurance

companies’ setting of these rates. Ticor Title Ins. Co. v. FTC, 922 F.2d 1122,

1139–40 (3d Cir. 1991). Specifically, the court determined that “Wisconsin had

the power to regulate Ticor’s collective filing of rates for title search and

examination services” and that it had exercised that power. Id. It based its

conclusion that Wisconsin had exercised its power on the fact that “Wisconsin’s

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program of supervision was in place during the relevant time and that it was staffed

and funded,” and that the Department “demonstrated some basic level of activity

directed towards seeing that Ticor carried out the state’s policy and not simply its

own policy.” Id. at 1140.

But the Supreme Court concluded that this was insufficient and reversed the

Third Circuit’s decision. “Where prices or rates are set as an initial matter by

private parties, subject only to a veto if the State chooses to exercise it, the party

claiming the immunity must show that state officials have undertaken the

necessary steps to determine the specifics of the price-fixing or ratesetting scheme.

The mere potential for state supervision is not an adequate substitute for a decision

by the State.” Ticor, 504 U.S. at 638 (emphasis added). The administrative law

judge in the case found that, in Wisconsin, “at most the rate filings were checked

for mathematical accuracy,” and some “were unchecked altogether.” Id. Despite

the state law requirement that the State Insurance Commissioner “examine the

rating bureau at regular intervals” and its “authoriz[ation] to reject rates through a

process of hearings,” it did neither. Id. at 630. And, the Court’s later decision in

Dental Examiners held that Ticor’s holding that the “mere potential for state

supervision is not an adequate substitute” also applied in the context of regulation

by a dentistry board the composition of which was substantially identical to the

Georgia Board of Dentistry in this case.

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We believe that similar dynamics are at play here. Though the Governor of

Georgia had the “authority and duty to actively supervise” and was clearly

empowered to “approve, remand, modify or reverse” proposed rules (or

amendments), O.C.G.A. § 43-1C-3, he did not exercise that power here. There is

no indication that the Governor engaged in a substantive review of the amended

rule to ensure that it accords with state policy. His comments regarding the

proposed amendment in the Certification of Active Supervision suggest that he

examined only the procedural question of whether the amended rule was within the

Board of Dentistry’s statutory power to propose the rule change. The Governor

did not comment—even in passing—on the merits or substance of the rule change.

Quite the contrary. The reasonable inferences from his Certification indicate that

he ascertained that the amendment was within the authority delegated to the Board

by the Georgia statute, and the Governor then concluded: “Therefore, I hereby

approve the amendment.” This is the exact sort of potential for active

supervision—without actual supervision—that the Supreme Court has repeatedly

held is insufficient to satisfy the active supervision requirement. See Dental

Examiners, 574 U.S. at 515 (“mere potential for state supervision is not an

adequate substitute” (quoting Ticor, 504 U.S. at 638)); Patrick, 486 U.S. at 101,

105 (“The active supervision prong of the Midcal test requires that state officials

have and exercise power to review particular anticompetitive acts of private parties

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and disapprove those that fail to accord with state policy,” and the mere assurance

that reasonable procedures were used without a “review [of] the merits of a

[challenged] decision to determine whether it accorded with state regulatory policy

. . . does not convert the action of a private party . . . into the action of the state for

purposes of the state-action doctrine.”).

Accordingly, accepting the reasonable inferences from the allegations of

SmileDirect’s complaint, and the Governor’s certification to which it refers, we

conclude that the Board has not satisfied the active supervision requirement for

entitlement to state-action immunity. 6

2. Ipso Facto Immunity

In addition to its argument that it complied with the Midcal test, the Board

members argue that they are exempt from that test altogether. They argue that they

are entitled to ipso facto immunity because the Board of Dentistry’s amendment to

Rule 150-9-.02 can be attributed to the Governor of Georgia. Specifically, they

argue that Georgia’s statutory framework for rulemaking grants the Governor both

the authority and power to substantively review any rule promulgated by a

6 Of course, upon the initiation of discovery, the Board members may be able to produce evidence of Governor Deal’s substantive consideration of the proposed amendment. Our comments on the Board’s compliance with the Midcal test only applies to the facts which we assume in this Rule 12(b)(6) posture.

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professional board, like the Board of Dentistry, and indeed imposes upon him the

duty to do so.

The Board members argue that, in this case, then-Governor Nathan Deal,

who issued a Certification of Active Supervision approving the amendment to Rule

150-9-.02, reviewed the amendment and approved it. They argue that the

challenged conduct—the amended rule—is attributed to him, and not the Board

itself. We read the Board members’ argument as one essentially arguing that,

without regard to whether the Governor actually exercised his power to

substantively review a rule, the mere power, authority, and duty to do so is

sufficient to invoke state-action immunity ipso facto. Stated more concisely, the

Board’s position is that the mere potential for such action by the Governor is

sufficient without regard to whether the Governor actually reviews the rule

substantively and makes it his own action. We reject that argument; we believe it is

inconsistent with Supreme Court case law.

We will assume, arguendo, but expressly do not decide, that the executive

action of a governor could qualify for ipso facto state-action immunity.7 We also

assume, arguendo, that the Georgia General Assembly actually granted the

7 Neither the Supreme Court, Ronwin, 466 U.S. at 568 n.17, nor the Eleventh Circuit has decided whether the executive action of a governor could qualify for state action immunity under appropriate factual circumstances. We need not address that issue today.

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Governor the kind of power, authority, and duty to substantively review proposed

rules such that they are attributable to him.8 Nonetheless, even making these

assumptions, the Board members’ argument is ultimately without merit.

In evaluating ipso facto immunity, we review the Supreme Court’s limited

jurisprudence on the subject. The cases in which the Supreme Court has employed

ipso facto state-action immunity involve situations as in Hoover v. Ronwin, supra.

There, Ronwin was an unsuccessful candidate for admission to the Bar of Arizona.

The Arizona Constitution vested authority in the Arizona Supreme Court to

determine admissions to the Bar. Arizona Supreme Court rules delegated to a

committee the tasks of designing a grading or scoring system, submitting same to

the Court before the examination, grading the exams and submitting to the Court

its recommendations with respect to admission to the Bar. Only the Court had

authority to admit or deny, and any applicant was entitled to individualized review

by filing a petition directly with the Court. Ronwin did petition the Court

challenging, inter alia, the grading or scoring formula. The Court denied his

petition. Ronwin later sued the members of the Committee in federal district court,

challenging that same grading or scoring formula, which he claimed is an

8 SmileDirect makes a forceful argument that the Georgia legislation delegates the rule- making authority to the Board, and intended only to give the Governor sufficient authority to satisfy Midcal’s active supervision prong. In light of our decision today, we need not decide the scope of the authority actually delegated to the Governor.

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anticompetitive action to reduce the number of competing attorneys. The Ninth

Circuit construed the district court as having dismissed Ronwin’s complaint

pursuant to Rule 12(b)(6) on the basis of state-action immunity. The Ninth Circuit

reversed, holding that the mere fact the members of the Committee were appointed

by the Arizona Supreme Court was insufficient to confer state-action immunity.

The Supreme Court granted certiorari. In its opinion, the Court noted that

“[c]loser analysis is required when the activity at issue is not directly that of the

legislature or supreme court, but is carried out by others pursuant to state

authorization.” Ronwin, 466 U.S. at 568. The Court also noted the Midcal line of

cases, and noted that its two-step analysis—clear articulation of state policy and

active supervision—is applicable when the challenged anticompetitive conduct is

that of a non-sovereign state actor. Id. at 568–69. However, the Court held that

where the challenged anticompetitive conduct is that of the sovereign itself, it is

not necessary to address the issues of “clear articulation” and “active supervision.”

Id. at 569. Thus, the issue was whether the challenged conduct was in reality that

of the Arizona Supreme Court. Id. The Court emphasized the fact that Ronwin

had taken full advantage of the rules and petitioned for individualized review in the

Arizona Supreme Court, challenging the grading formula, id. at 564 & n.11, 573 &

n.23; and the fact that the state supreme court heard and denied his petition,

including his claim that the grading formula violated the Sherman Act, id. at 564 &

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n.11, 573 & n.23. The Court held that the Arizona Supreme Court had the “sole

authority to determine who should be admitted,” and had “itself approved the

particular grading formula,” id. at 573, which was the conduct challenged by

Ronwin. Thus, the Court concluded that “the conduct that Ronwin challenges was

in reality that of the Arizona Supreme Court.” Id.

The Court’s decision in Bates v. State Bar of Arizona, 433 U.S. 350 (1977),

also applied ipso facto state-action immunity on facts virtually indistinguishable

from those in Ronwin. There, Bates challenged as anticompetitive his suspension

from the practice of law imposed because of his violation of a disciplinary rule of

the Supreme Court of Arizona restricting advertising by lawyers. Although the

disciplinary complaint was initially heard by the Bar committee, Bates sought

review in the Arizona Supreme Court, challenging the rule as a violation of the

Sherman Act. The Arizona Supreme Court heard his challenge and rejected it. Id.

at 356. Bates appealed to the United States Supreme Court. Again emphasizing

that the Arizona Supreme Court adopted the challenged rule and was the “ultimate

trier of fact and law in the enforcement process,” id. at 361, the Court held that

state-action immunity was available.

The Ronwin Court’s holding—“the conduct that Ronwin challenges was in

reality that of the Arizona Supreme Court”—was expressly based on the Bates

decision. Ronwin, 466 U.S. at 573. The Bates opinion illustrates that ipso facto

22 Case: 19-12227 Date Filed: 08/11/2020 Page: 23 of 45

state-action immunity is available only if the anticompetitive conduct challenged is

“in reality” the action of the sovereign itself. In distinguishing its previous

decision in Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975), the Court in Bates

This Court concluded that the action was not protected, emphasizing that “we need not inquire further into the state-action question because it cannot fairly be said that the State of Virginia through its Supreme Court Rules required the anticompetitive activities of either respondent.” In the instant case, by contrast, the challenged restraint is the affirmative command of the Arizona Supreme Court.

Bates, 433 U.S. at 359–60 (emphasis added).

The argument of the Board members—that the power, authority and duty

vested in the Governor to adopt and make his own the challenged anticompetitive

action of the Board is sufficient for ipso facto state-action immunity, without

regard to whether or not the Governor actually exercises that authority—is

inconsistent with Ronwin, Bates and Goldfarb. Even assuming arguendo such

power and duty vested in the Governor, we cannot conclude that one could fairly

say that the anticompetitive conduct challenged here (i.e., the amended rule) was

“in reality” the act of Governor Nathan Deal.

Whatever the Governor’s power and duty with respect to the amended rule,

if he does not exercise same and does not actually make the amended rule his own

“affirmative command,” his actions fall short of the actions of the Arizona

Supreme Court in Ronwin and Bates where the challenged anticompetitive conduct

23 Case: 19-12227 Date Filed: 08/11/2020 Page: 24 of 45

was actually the conduct of the sovereign actor—i.e., approving and enforcing the

challenged grading formula (in Ronwin), or promulgating the challenged rule and

enforcing the violation thereof (in Bates), in both cases after an individualized

hearing on the challenge by the Arizona Supreme Court. See Dental Examiners,

574 U.S. at 504 (suggesting that ipso facto state-action immunity is available only

when the challenged conduct is “an undoubted exercise of state sovereign

authority”).

The argument of the Board members is also inconsistent with the Court’s

decisions in Dental Examiners and Ticor. Even in the context of describing the

kind of sovereign action necessary to satisfy the “active supervision” prong of

Midcal, both Dental Examiners and Ticor held that the “mere potential for state

supervision is not an adequate substitute for a decision by the State.” Dental

Examiners, 574 U.S. at 515 (quoting Ticor, 504 U.S. at 638); see also Patrick, 486

U.S. at 101 (“The active supervision prong of the Midcal test requires that state

officials have and exercise power to review particular anticompetitive acts of

private parties and disapprove those that fail to accord with state policy.”)

(emphasis added). It would make no sense to suppose, as the Board members do,

that the mere power and duty on the part of the Governor would suffice for ipso

facto immunity, when clearly established Supreme Court case law makes it clear

that mere potential supervision is not even sufficient to satisfy the “active

24 Case: 19-12227 Date Filed: 08/11/2020 Page: 25 of 45

supervision” prong of Midcal. In other words, given that ipso facto immunity

serves to entirely immunize an actor from antitrust litigation without the rigorous,

fact-sensitive scrutiny articulated in the Midcal test, it would make no sense to

apply a lower standard with respect to ipso facto immunity than is required to

satisfy the Midcal test.

For the foregoing reasons, we reject the Board members’ argument that ipso

facto state-action immunity is available merely because of the Governor’s power

and duty, and without regard to his actual exercise thereof. We held above—in our

discussion of the “active supervision” prong—that, on the basis of the facts we

must assume in this Rule 12(b)(6) posture, the Board members have established no

more than the mere potential for active supervision on the part of the Governor.

Accordingly, it follows that the Board members have fallen far short of

establishing that the amended rule was “in reality” the action of the Governor. We

hold that the Board members are not entitled to ipso facto state-action immunity at

this stage of the litigation.

III. CONCLUSION

25 Case: 19-12227 Date Filed: 08/11/2020 Page: 26 of 45

For the foregoing reasons, we conclude that the district court properly

denied the Board members’ motion to dismiss with respect to SmileDirect’s

antitrust claims. 9

AFFIRMED.

9 We decline to address other arguments of the parties not addressed in this opinion, the resolution of which is not necessary for us to conclude at this stage of the litigation that the district court correctly denied the Board members’ motion to dismiss.

26 Case: 19-12227 Date Filed: 08/11/2020 Page: 27 of 45

JORDAN, Circuit Judge, concurring:

Our cases hold that the denial of state-action antitrust immunity is

immediately appealable under the collateral order doctrine, not only by the state but

by private parties as well. See, e.g., Commuter Transportation Systems, Inc. v.

Hillsborough County Aviation Authority, 801 F.2d 1286 (11th Cir. 1986); Praxair,

Inc. v. Florida Power & Light Co., 64 F.3d 609, 611 (11th Cir. 1995). In my view,

our precedent on this issue is mistaken and should be re-examined in an appropriate

case by the full court.

The Supreme Court first recognized what is frequently referred to as state-

action immunity in Parker v. Brown, 317 U.S. 341, 350–52 (1943), holding that the

Sherman Act does not reach anticompetitive conduct by the state or its officers or

agents. Over time, the Supreme Court extended Parker protection, in appropriate

circumstances, to municipalities and private parties. See Town of Hallie v. City of

Eau Claire, 471 U.S. 34, 38–39 (1985) (municipalities); Cal. Retail Liquor Dealers

Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97, 104–06 (1980) (private parties).

Parker held only that the Sherman Act does not reach state action, not that it

cannot do so. See Parker, 317 U.S. at 350–51 (“We find nothing in the language of

the Sherman Act or in its history which suggests that its purpose was to restrain a

state or its officers or agents from activities directed by its legislature. In a dual

system of government in which, under the Constitution, the states are sovereign, save

27 Case: 19-12227 Date Filed: 08/11/2020 Page: 28 of 45

only as Congress may constitutionally subtract from their authority, an unexpressed

purpose to nullify a state’s control over its officers and agents is not lightly to be

attributed to Congress.”). State-action antitrust “immunity” therefore arose from an

interpretation of the Sherman Act’s scope, not from a constitutional (or common-

law) right to avoid trial, and not out of concern about special harms that might result

from litigation. See S.C. St. Bd. of Dentistry v. FTC, 455 F.3d 436, 444–45 (4th Cir.

2006). As a number of our sister circuits have explained, Parker “immunity” is more

like a defense to a cause of action than an entitlement to avoid suit completely. See

id.; Acoustic Sys., Inc. v. Wenger Corp., 207 F.3d 287, 292 n.3, 294 (5th Cir. 2000).

The denial of state-action immunity, therefore, is not “effectively unreviewable” on

appeal, and a party made to postpone its arguments until final judgment may still

invoke the protections of Parker. See, e.g., SolarCity Corp. v. Salt River Project

Agricultural & Power District, 859 F.3d 720, 726–27 (9th Cir. 2017); S.C. St. Bd. of

Dentistry, 455 F.3d at 444–45; Huron Valley Hosp. v. City of Pontiac, 792 F.2d 563,

567 (6th Cir. 1986). Contra Martin v. Memorial Hospital at Gulfport, 86 F.3d 1391,

1394 (5th Cir. 1996); 1A Phillip Areeda & Herbert Hovenkamp, Antitrust Law

¶ 222b (4th ed. 2013).

Even if we assume that a state is able to immediately appeal the denial of

Parker immunity, an interlocutory appeal should not be available to private parties

like the members of the Georgia Board of Dentistry, whose status does not implicate

28 Case: 19-12227 Date Filed: 08/11/2020 Page: 29 of 45

sovereignty concerns. See Auraria Student Hous. v. Campus Village, 703 F.3d 1147,

1151 (10th Cir. 2013); Acoustic Sys., 207 F.3d at 293–94; Jason Kornmehl, State

Action on Appeal: Parker Immunity and the Collateral Order Doctrine in Antitrust

Litigation, 39 Seattle U. L. Rev. 1, 32 (2015). As the Fifth Circuit concluded in

Acoustic Systems, the concerns that might animate the need for an immediate appeal

by a state—for example, sparing the state the burdens and uncertainties of

litigation—are “not raised by a suit against a private party.” 207 F.3d at 294. Indeed,

insofar as private parties are concerned, Parker “provides only a defense to liability.”

Id.

Our decision in Praxair, Inc., 64 F.3d at 611, which allowed a private party

to take an immediate appeal from the denial of Parker immunity, contains no

analysis whatsoever. It is therefore not surprising that we stand alone among the

circuits in holding that a private party may take an interlocutory appeal of the denial

of Parker immunity. See Auraria Student Hous., 703 F.3d at 1151 (describing the

lopsided circuit split).

There is, moreover, another reason why private parties should not be able to

immediately appeal the denial of Parker imunity. The collateral order doctrine “is

a practical construction” of the general rule that parties may only appeal final

decisions of a district court. See Dig. Equip. Corp. v. Desktop Direct, Inc., 511 U.S.

863, 867 (1994) (quoting Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546

29 Case: 19-12227 Date Filed: 08/11/2020 Page: 30 of 45

(1940)). To come within the “small class” of interlocutory orders that are

immediately appealable under Cohen, an order must (1) conclusively determine the

disputed question, (2) be effectively unreviewable on appeal after trial, and

(3) resolve an important issue completely separate from the merits of the action. See

Cohen, 337 U.S. at 545–46. The Supreme Court has repeatedly stressed that very

few interlocutory orders will meet these three stringent conditions. See Will v.

Hallock, 546 U.S. 345, 958 (2006) (“[W]e have not mentioned applying the

collateral order doctrine recently without emphasizing its modest scope.”).

Where, as here, private parties are concerned, the matter of Parker immunity

is not completely separate from the merits. That is because the Supreme Court

requires private parties to satisfy the “clear articulation” and “active supervision”

requirements, as set out in Cal. Retail Liquor Dealers Ass’n v. Midcal Aluminum,

Inc., 445 U.S. 97, 105 (1980), and its progeny. See Christopher J. Reid,

Appealability of State Action Immunity: Navigating Federal Courts Past the

Crossroads Where Parker Immunity Meets the Collateral Order Doctrine, 52

Suffolk L. Rev. 157, 180–82, 184–85 (2019). Given these requirements, it is

difficult, if not impossible, to separate the Parker immunity of a private party from

the merits.

With these thoughts, I join the majority opinion in full.

30 Case: 19-12227 Date Filed: 08/11/2020 Page: 31 of 45

TJOFLAT, Circuit Judge, dissenting:

The majority concludes that we have jurisdiction to hear this interlocutory

appeal of the District Court’s order, which denied the Georgia Board of Dentistry

members’ Rule 12(b)(6) motion to dismiss, because it implicates the Board

members’ entitlement to immunity from suit under the state-action doctrine

established by the Supreme Court in Parker v. Brown, 317 U.S. 341, 63 S. Ct. 307

(1943). See ante at 7–9. That would be right if the District Court held that the

Board members weren’t entitled to immunity and denied their motion to dismiss on

that ground. But the District Court rendered no decision on the Board members’

entitlement to state-action immunity. Instead, it reserved that question for

consideration at the summary-judgment stage, after much-needed development of

the factual record through discovery. As such, any decision by this Court on the

Board members’ entitlement to state-action immunity at this stage of the litigation

would be merely provisional—or, in the words of the District Court, “premature.”

Because we lack both statutory and constitutional jurisdiction to issue hypothetical

decisions on appeal, I respectfully dissent.

31 Case: 19-12227 Date Filed: 08/11/2020 Page: 32 of 45

I.

The Courts of Appeals generally have jurisdiction to hear appeals only of a

district court’s final decision. 28 U.S.C. § 1291. 1 But in Cohen v. Beneficial

Industrial Loan Corp., 337 U.S. 541, 546, 69 S. Ct. 1221, 1225–26 (1949), the

Supreme Court carved out as a narrow exception to this general rule a small class

of orders “which finally determine claims of right separable from, and collateral to,

rights asserted in the action, too important to be denied review and too independent

of the cause itself to require that appellate consideration be deferred until the whole

case is adjudicated.” Accordingly, under Cohen, we have jurisdiction to review an

otherwise nonappealable interlocutory order only if it “(1) conclusively determines

a disputed question, (2) resolves an important issue completely separate from the

merits of the action, and (3) is effectively unreviewable on appeal from a final

judgment.” Freyre v. Chronister, 910 F.3d 1371, 1378 (11th Cir. 2018)

(alterations adopted) (quotations omitted). The Supreme Court has repeatedly

stressed that each prong of the Cohen test is stringent, and that the collateral-order

doctrine must “never be allowed to swallow the general rule that a party is entitled

to a single appeal, to be deferred until final judgment has been entered.” Mohawk

1 We also have jurisdiction over certain interlocutory orders that the district court has specifically certified for appeal, where “such order involves a controlling question of law as to which there is substantial ground for difference of opinion and . . . an immediate appeal from the order may materially advance the ultimate termination of the litigation.” 28 U.S.C. § 1292(b). Tellingly, the District Court here denied the Board members’ request to certify its order for interlocutory appeal under § 1292(b).

32 Case: 19-12227 Date Filed: 08/11/2020 Page: 33 of 45

Indus., Inc. v. Carpenter, 558 U.S. 100, 106, 130 S. Ct. 599, 605 (2009) (quoting

Dig. Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863, 868, 114 S. Ct. 1992,

1996 (1994)); Will v. Hallock, 546 U.S. 345, 349–50, 126 S. Ct. 952, 957–58

(2006).

This appeal fails the first prong of Cohen’s collateral-order doctrine because

the District Court never conclusively determined that the Board members could not

avail themselves of Parker state-action immunity. To understand why, it is

necessary to lay out the District Court’s entire analysis of the Parker immunity issue.

The District Court first held that SmileDirect’s complaint sufficiently alleged that

the Board members engaged in concerted action to unreasonably restrain trade, and

thus that the complaint adequately stated a federal antitrust claim under the Sherman

Act so as to survive a motion to dismiss under Rule 12(b)(6). Dist. Ct. Op. at 10–

11. Then, turning to the defense of state-action immunity, the District Court held:

[T]he Complaint reveals a well-pleaded factual dispute that is not resolved by the Certification of Active Supervision. Only discovery will determine whether the Board provided all relevant information to the Governor, whether the proposed amendment was subjected to any meaningful review by the Governor, or whether the Certification of Active Supervision was merely “rubberstamped” as a matter of course. See Patrick v. Burget, 486 U.S. 94, 101 (1988) (“[t]he mere presence of some state involvement or monitoring does not suffice” to meet the active supervision requirement). Accordingly, the Court finds that a definitive ruling on Parker immunity would be premature at this stage, that SmileDirect’s Sherman Act antitrust claim, as pleaded, is sufficient to survive a Rule 12(b)(6) motion to dismiss on Parker immunity grounds, and that further factual development is required to determine whether the Board members are

33 Case: 19-12227 Date Filed: 08/11/2020 Page: 34 of 45

entitled to Parker immunity. The Board members may therefore raise the Parker immunity defense at a later stage in this litigation, such as in a motion for summary judgment, if appropriate. Id. at 13 (footnote omitted) (emphases added).

The majority’s cursory reference to the District Court’s opinion treats the

District Court as having denied the Board members’ Rule 12(b)(6) motion to

dismiss based on a determination that the Board members are not entitled to state-

action immunity. See ante at 6. But as the full text of the District Court’s opinion

reveals, the Court explicitly reserved ruling on the Board members’ motion to

dismiss based on the state-action-immunity defense.2 It found merely that the

Board members’ entitlement to state-action immunity was not apparent on the face

of the complaint, which included only a single paragraph (out of 113) that could

support immunity at this stage: that the Georgia Governor had signed a

Certification of Active Supervision. 3 Finding simply that SmileDirect had not pled

2 The majority points to the last page of the District Court’s opinion, which states “Defendants’ Motion to Dismiss . . . is DENIED” with respect to the antitrust claim in Count II. See id. at 7–8 n.4 (quoting Dist. Ct. Op. at 16). But, based on the District Court’s analysis, it is clear that that order refers to the District Court’s conclusion that, as an initial matter, SmileDirect adequately stated an antitrust claim—i.e., that the complaint sufficiently alleged concerted action to unreasonably restrain trade. See Dist. Ct. Op. at 10–11. Its denial of the Board members’ motion to dismiss has nothing to do with the Board members’ affirmative defense, which is a separate question. That the District Court’s denial of the Board members’ motion to dismiss relates only to whether SmileDirect stated an antitrust claim—as opposed to the sufficiency of the Board members’ affirmative defense—makes sense, since the sole purpose of Rule 12(b)(6) is to assess whether the complaint has sufficiently stated a claim for relief. 3 I can’t understand why SmileDirect chose to include this allegation in its complaint. It certainly wasn’t necessary to state an antitrust claim under the Sherman Act, 15 U.S.C. § 1. See, e.g., Quality Auto Painting Ctr. of Roselle, Inc. v. State Farm Indem. Co., 917 F.3d 1249, 1260 (11th Cir. 2019) (en banc) (“[Section] 1 prohibits (1) conspiracies that (2) unreasonably (3) restrain interstate or foreign trade.”). As the District Court observed, SmileDirect’s complaint

34 Case: 19-12227 Date Filed: 08/11/2020 Page: 35 of 45

itself out of court, the District Court decided that it would take up the Parker issue

at a later stage of the litigation, after the Board members answered the complaint

and the parties had the opportunity to conduct discovery on SmileDirect’s claims

and, importantly, the Board members’ defenses. Thus, there simply is no “fully

consummated decision” regarding the Board members’ entitlement to state-action

immunity—no “complete, formal, and . . . final rejection” of the immunity

defense—which we can review at this stage of the litigation. See Abney v. United

States, 431 U.S. 651, 659, 97 S. Ct. 2034, 2040 (1977).

This is not to say that this Court could never have collateral-order

jurisdiction to review a district court’s denial of state-action immunity at the

motion-to-dismiss stage when the district court in fact makes such a conclusive

determination. Indeed, we held in Diverse Power, Inc. v. City of LaGrange that

this Court does have jurisdiction under the collateral-order doctrine to review a

sufficiently alleged that the Board members engaged in concerted action to unreasonably restrain trade as required to state an antitrust claim, without regard to the Certification of Active Supervision. See Dist. Ct. Op. at 10–11. The only apparent purpose of this paragraph is to preemptively negate the Board members’ anticipated defense of Parker immunity. But it is of course black-letter law that a plaintiff need not negate defenses in its complaint in order to survive a Rule 12(b)(6) motion to dismiss. See, e.g., Isaiah v. JPMorgan Chase Bank, 960 F.3d 1296, 1304 (11th Cir. 2020) (“A complaint need not anticipate and negate affirmative defenses and should not ordinarily be dismissed based on an affirmative defense unless the defense is apparent on the face of the complaint.” (citing Bingham v. Thomas, 654 F.3d 1171, 1175 (11th Cir. 2011))). In fact, by including a reference to the Certification in its complaint, SmileDirect handed the Board members the very allegation to support their argument that the defense of state-action immunity was apparent on the face of the complaint.

35 Case: 19-12227 Date Filed: 08/11/2020 Page: 36 of 45

district court’s denial of a Rule 12(b)(6) motion to dismiss based on state-action

immunity. 934 F.3d 1270, 1272 & n.1 (11th Cir. 2019).

In Diverse Power, the plaintiff corporation brought federal antitrust claims

against the City of LaGrange, Georgia, alleging that a City ordinance created an

unlawful tying arrangement by conditioning the sale of the City’s water utility

services on the installation of natural gas appliances in all new construction (the

plaintiff corporation was in the business of providing electrical services that

competed with the City’s natural gas utility service). See id. at 1271–72. The City

moved to dismiss the federal antitrust claims against it on state-action immunity

grounds, arguing that certain Georgia statutes evinced a “clearly articulated and

affirmatively expressed” state policy to displace competition. Id. at 1272–73.

Specifically, section 36-65-2 of the Georgia Code “provide[d] that ‘in the exercise

of such powers [i.e., the “powers specifically granted to them by law,” O.C.G.A.

§ 36-65-1], . . . local governing authorities shall be immune from antitrust liability

to the same degree and extent as enjoyed by the State of Georgia.’” Diverse

Power, 934 F.3d at 1277 (second alteration in original) (quoting O.C.G.A. § 36-65-

2). The City claimed that because O.C.G.A. § 36-34-5(a)(3) granted the City the

authority and power to operate water or sewage systems, it also (by virtue of § 36-

65-2) authorized the City to engage in the anticompetitive actions alleged in the

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complaint, since those actions were related to the exercise of the City’s granted

authority to provide water utility services. Id.

The District Court thus identified the question at the motion-to-dismiss stage

as “whether, as a matter of law, the conditioning of water utility service on natural

gas installation is a foreseeable result of the anticompetitive conduct authorized by

the State of Georgia.” Diverse Power, Inc. v. City of LaGrange, Georgia, No.

3:17-CV-3-TCB, 2018 WL 9651475, at *4 (N.D. Ga. Feb. 21, 2018), aff’d, 934

F.3d 1270 (11th Cir. 2019). If so, then the City acted pursuant to a “clearly

articulated and affirmatively expressed” state policy to displace competition and

was entitled to Parker state-action immunity. The only question before the District

Court, then, was whether the Georgia statute contemplated the type of

anticompetitive conduct raised in the complaint—a purely legal question of

statutory interpretation. The District Court needed no additional facts to interpret

the statute at the motion-to-dismiss stage, and so the Court proceeded to decide the

issue. It found that the City’s alleged coercion in the natural gas market, a

completely different market, “is not, as a matter of law, the sort of activity

contemplated by the legislature in authorizing the operation of water and sewage

systems” in § 36-34-5, and therefore denied the City’s motion to dismiss on state-

action-immunity grounds. Id. at *5.

37 Case: 19-12227 Date Filed: 08/11/2020 Page: 38 of 45

On the City’s interlocutory appeal, we determined that we had collateral-

order jurisdiction under Cohen to review that conclusive determination by the

District Court. 934 F.3d at 1272 & n.1. Specifically, we said that “state-action

immunity is a form of immunity from suit, not merely from liability. And denials

of immunity from suit—like denials of sovereign and qualified immunities—are

immediately appealable under the collateral order doctrine.”4 Id. at 1272 n.1. But

importantly, we only had collateral-order jurisdiction because the District Court

made a definitive ruling on the scope of the Georgia statute, and thus conclusively

determined that the City was not entitled to state-action immunity.

4 In support of our finding that we had collateral-order jurisdiction, we cited Commuter Transportation Systems, Inc. v. Hillsborough County Aviation Authority, 801 F.2d 1286 (11th Cir. 1986). In Commuter Transportation Systems, we determined that we had collateral-order jurisdiction to review the District Court’s denial of summary judgment based on state-action immunity, because such immunity is an immunity from suit rather than a mere defense to liability. Id. at 1289–90. In so doing, we concluded that the District Court’s denial of summary judgment “finally and conclusively determined” the disputed question—“the defendant’s claim of right not to stand trial on the plaintiff’s allegations”—because “[t]here are simply no further steps that can be taken in the district court to avoid the trial the defendant maintains is barred.” Id. at 1289 (quoting Mitchell v. Forsyth, 472 U.S. 511, 527, 105 S. Ct. 2806, 2816 (1985)). We also noted that the District Court’s denial came “[a]fter four years and nine months of discovery, including extensive interrogatories, production of thousands of pages of [the defendant’s] records, and seventeen depositions.” Id. at 1288. Of course, that is not the case here. As explained in Part II, there is nothing preventing the District Court from deciding on summary judgment, after the close of discovery on the relevant Parker-immunity facts, that the Board members are entitled to state-action immunity. At that stage, the District Court could render a conclusive determination on state-action immunity by construing the relevant facts in the light most favorable to SmileDirect—thereby eliminating any fact issue—and deciding whether, as a matter of law, the Board members are entitled to the immunity defense. Unlike in Commuter Transportation Systems, then, the Board members here have one more opportunity to convince the District Court at this next step of the litigation that they are entitled to immunity from suit and should not have to stand trial on SmileDirect’s Sherman Act claims. Thus, their entitlement to state-action immunity—and their right not to stand trial—have not yet been conclusively determined.

38 Case: 19-12227 Date Filed: 08/11/2020 Page: 39 of 45

The same cannot be said of this appeal. Unlike Diverse Power, this is not a

case in which the entitlement to immunity rests on a purely legal question, or some

other question that is resolvable solely on the allegations in the complaint. Rather,

it depends here on additional facts that are not in the complaint (and are not

required to be included in the complaint). The District Court, recognizing this,

deferred a definitive ruling on the state-action-immunity issue until those relevant

additional facts could be discovered. At least at this juncture, it left the immunity

question open, and we lack jurisdiction to review an issue that the District Court

did not actually resolve below. See Royalty Network, Inc. v. Harris, 756 F.3d

1351, 1355 (11th Cir. 2014) (finding that the district court’s order satisfied the first

Cohen prong where “[t]he court’s order finally settled the question and did not

leave anything open, unfinished, or inconclusive”).

II.

What’s more, by entertaining and deciding this appeal despite the lack of a

final decision below, the majority renders an advisory opinion that defies one of

our most fundamental constitutional principles. “[T]he oldest and most consistent

thread in the federal law of justiciability is that the federal courts will not give

advisory opinions.” Flast v. Cohen, 392 U.S. 83, 96, 88 S. Ct. 1942, 1950 (1968)

(quotation marks and citation omitted). This ironclad rule derives from Article

III’s case or controversy requirement: “no justiciable controversy is

39 Case: 19-12227 Date Filed: 08/11/2020 Page: 40 of 45

presented . . . when the parties are asking for an advisory opinion.” Miller v.

F.C.C., 66 F.3d 1140, 1146 (11th Cir. 1995) (quoting Flast, 392 U.S. at 95, 88 S.

Ct. at 1950). We therefore have insisted that “[w]e are not in the business of

issuing advisory opinions that do not ‘affect the rights of litigants in the case

before’ us or that merely opine on ‘what the law would be upon a hypothetical

state of facts.’” Gagliardi v. TJCV Land Tr., 889 F.3d 728, 733 (11th Cir. 2018)

(quoting Chafin v. Chafin, 568 U.S. 165, 172, 133 S. Ct. 1017, 1023 (2013)).

Today, the majority decides a case that presents no justiciable controversy on

appeal—because the relevant issue was never actually resolved by the District

Court below, we have nothing to review. And it issues an opinion that cannot have

any effect on the pending litigation—at least with respect to the Parker immunity

issue—except to affirm that the suit may continue on its natural course. Article III

prohibits just these types of hypothetical rulings.

To illustrate why the majority’s decision on appeal is merely hypothetical,

consider what follows today’s decision. After this Court affirms the District

Court’s “denial” (scare quotes intended) of the Board members’ motion to dismiss

on state-action immunity grounds, the case then returns to the District Court and

the Board members must file their answer. In that answer, the Board members will

assert a variety of defenses, including that they are entitled to state-action

immunity. And they will include in their pleading the additional facts—not

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included in the complaint—supporting their entitlement to immunity that were not

before the District Court (or this Court) at the motion-to-dismiss stage.5

Discovery ensues on the claims and defenses. At the close of discovery, the

Board members move for summary judgment on the same theory presented here,

but this time armed with the additional favorable facts not previously available for

consideration by the District Court. The District Court, presented with virtually

the same arguments it was presented with at the motion-to-dismiss stage, must

decide whether the Board members are now entitled to state-action immunity under

Parker. It must decide whether, in light of these new facts, the Board members

have now met their burden to show that the defense applies.6 As the majority

5 It’s worth noting that, had SmileDirect not included the allegation regarding the Certification of Active Supervision in its complaint, this is precisely what would have happened. The Board members, lacking any argument that the allegations in the complaint show that they are entitled to state-action immunity, would have been forced to file an answer including that argument—and the facts supporting that argument—as a defense. 6 If the District Court denied immunity at this stage of the litigation, we could have collateral-order jurisdiction. That’s because, after discovery has closed and all of the relevant Parker-immunity facts have been made available to the District Court, the District Court, in ruling on summary judgment, will construe all of the relevant facts in the light most favorable to SmileDirect, the non-movant. By thus eliminating any fact issue, the District Court will render a final legal determination on whether the Board members are entitled, as a matter of law, to state- action immunity. We would have collateral-order jurisdiction to review that final legal determination on appeal. Theoretically, the District Court could have gone through this exercise at the motion-to- dismiss stage. It could have construed all of the facts alleged at this stage in the light most favorable to the plaintiff, SmileDirect, and decided whether, accepting the facts as alleged by SmileDirect, the Board members are nonetheless entitled to state-action immunity. Only then, after having eliminated any fact issue, could the District Court have rendered a final legal determination on state-action immunity that would be reviewable on appeal under Cohen. Of course, the District Court here did not do this. Rather, it noted that the fact issues were not resolvable at the motion-to-dismiss stage, and so it deferred any final determination of the

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admits, nothing it says here would prevent the District Court from reaching the

opposite conclusion—that the Board members are entitled to state-action immunity

and thus entitled to avoid trial on SmileDirect’s federal antitrust claims—if the

facts revealed in discovery turned out to support that conclusion. See ante at 18

n.6.

Finally, when the losing party inevitably appeals the District Court’s

decision on summary judgment to this Court, we would again have to consider on

appeal (1) whether, if the District Court denied the motion for summary judgment

based on state-action immunity, we have collateral-order jurisdiction to review the

denial of immunity; and (2) whether, if the District Court granted the motion or if

we determine that we do have collateral-order jurisdiction to review the denial of

immunity issue for resolution at the summary-judgment stage. (Truthfully, the Board members should be thankful that the District Court did not definitively rule on the state-action-immunity defense based only on the facts in the complaint. If it did, and conclusively determined that the Board members were not entitled to state-action immunity, that would be the end of the matter. The Board members could not re-raise the issue at the summary judgment stage.)

Of course, even at the summary-judgment stage, we will not necessarily have collateral- order jurisdiction to review the District Court’s decision. For example, if the District Court does not eliminate the fact issues by leaning the facts one way or the other, and instead finds that genuine factual issues preclude granting summary judgment to the Board members, we would not have collateral-order jurisdiction on appeal. Cf. Johnson v. Jones, 515 U.S. 304, 313, 115 S. Ct. 2151, 2156 (1995) (holding that the District Court’s determination that the summary judgment record raised a genuine issue of fact—i.e., of “evidence sufficiency”—concerning the defendants’ entitlement to qualified immunity was not a “final decision” that was immediately appealable); cf. also Plumhoff v. Rickard, 572 U.S. 765, 773, 134 S. Ct. 2012, 2019 (2014) (distinguishing Johnson on the ground that the defendant-petitioners in Plumhoff “raise[d] legal issues; these issues are quite different from any purely factual issues that the trial court might confront if the case were tried”).

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immunity, the Board members are entitled to state-action immunity. In other

words, we would have to reconsider the same questions that the majority proceeds

to decide today, this time based on the new facts found in discovery. Again,

nothing the majority says here would prevent a future panel from reaching a

different conclusion on state-action immunity at this later stage of the litigation.

So, what exactly does today’s decision do? It informs the parties and the

District Court of the legal standards that will govern the Board members’ defense

of state-action immunity. It tells the Board members that the Certification of

Active Supervision will not be enough, alone, to satisfy that standard. And it

advises the Board members of the types of facts they must allege in their answer

and offer as evidence at the summary-judgment stage to establish their entitlement

to state-action immunity. Article III does not permit us to engage in this

hypothetical exercise or to issue such guidance.

* * *

Cohen is clear: we may review an otherwise nonappealable interlocutory

order only if the district court has, among other things, conclusively determined the

disputed question. Freyre, 910 F.3d at 1371. “So long as the matter remains open,

unfinished or inconclusive, there may be no intrusion by appeal.” Cohen, 337 U.S.

at 546, 69 S. Ct. at 1225. Here, the District Court explicitly did not decide whether

the Board members were entitled to state-action immunity, instead finding that a

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definitive ruling on that issue would be “premature” and leaving the question open

for resolution at the summary-judgment stage of the litigation. Because there has

been no conclusive determination regarding the Board members’ entitlement to

state-action immunity, we lack jurisdiction to consider the issue on appeal.

Moreover, that lack of finality means that today’s decision amounts to

nothing more than an advisory opinion explaining to the Board members the

relevant facts they must unearth in discovery in order to be entitled to summary

judgment based on state-action immunity. Nothing about this decision “affects the

rights of the litigants before us”—they will get another chance in the District Court

to litigate whether the Board members are entitled to immunity. To make matters

worse, the majority’s opinion—despite having no tangible effect on the instant

litigation—creates binding precedent for future litigants seeking the benefit of

state-action immunity. Article III prohibits us from rendering such a decision.

Because this appeal amounts to nothing more than a dry run of the Board

members’ argument that they are entitled to state-action immunity under Parker, I

would dismiss the appeal for lack of jurisdiction, and wait to reach the merits of

the immunity issue when this case inevitably comes before us again after discovery

of the relevant Parker-immunity facts.7 I therefore respectfully dissent.

7 In its decision on the merits, the majority, like the District Court, cites Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955 (2007), for the standard governing our analysis of the Board members’ motion to

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dismiss. See ante at 10. But it then jumps straight into an analysis of state-action immunity. Id. In doing so, the majority’s opinion would seem to require that a plaintiff, in order to adequately plead an antitrust violation under the Sherman Act, allege facts showing the absence of state action. See id. at 10–11. But a plaintiff need not plead the absence of state action as part of the cause of action to state a federal antitrust claim; state-action immunity is a defense that must be pleaded and proved by the defendant seeking its protection. So, the real question in this case is whether the defendant Board members have met their burden to show that they are entitled to this defense at the motion-to-dismiss stage. Cf. id. at 13 (finding that “the Board members have failed to satisfy the Midcal test” for state-action immunity); id. at 18 (“[T]he Board has not satisfied the active supervision requirement for entitlement to state-action immunity.”); id. at 25 (“[T]he Board members have fallen far short of establishing that the amended rule was ‘in reality’ the action of the Governor”). It’s an odd question to answer, because the only pleading we have so far is the plaintiff’s complaint. That’s why when we are faced with a motion to dismiss a complaint based on a defense, we ask whether the defense appears on the face of the plaintiff’s complaint. E.g., Bingham, 654 F.3d at 1175 (citing Jones v. Bock, 549 U.S. 199, 215, 127 S. Ct. 910, 921 (2007)). In other words, we must ask whether the plaintiff’s allegations adequately support the defendant’s claims.

In my view, the best way to conceptualize this awkward exercise is to treat the defendant’s motion as if it were an answer under Rule 8, which asserts the affirmative defense of state-action immunity and includes the relevant facts from the plaintiff’s complaint (and no more). The motion to dismiss would then be treated as a motion for judgment on the pleadings under Rule 12(c). Based on the defendant’s “answer,” we would ask whether, viewing all the alleged facts in the light most favorable to the non-movant (the plaintiff), the defendant has sufficiently shown its entitlement to an affirmative defense, and thus dismissal of the complaint. So, in this case, we would imagine that the Board members had filed an answer asserting the affirmative defense of state-action immunity, which included only a single factual allegation along the lines of paragraph 45 of SmileDirect’s complaint—i.e., the Certification of Active Supervision. The issue to be resolved, then, is whether the Board members have shown—based only on the facts alleged in their hypothetical answer—that they are entitled to the affirmative defense. Working through the analysis in this way ensures that we do not place the burden on the wrong party.