Sulitzer v. Tippins, No. 20-55735 (9th Cir. 2022)
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The SmileDirect parties developed an online service model for patients to access certain orthodontic services; they allege the defendants (members and employees of the California Dental Board) conspired to harass them with unfounded investigations and an intimidation campaign, to drive them out of the market. The district court dismissed the suit.
The Ninth Circuit reversed with respect to certain Sherman Act antitrust claims. The SmileDirect parties sufficiently pled Article III standing; they alleged an injury in fact that was fairly traceable to defendants’ challenged conduct and was judicially redressable. They sufficiently alleged anticompetitive concerted action, or an agreement to restrain trade. The court rejected an argument that regulatory board members and employees cannot form an anticompetitive conspiracy when acting within their regulatory authority.
The court affirmed the dismissal of a claim under the Dormant Commerce Clause, which prohibits states from discriminating against interstate commerce, and of a "disparate treatment" Equal Protection Clause claim. To plead a class-of-one equal protection claim, plaintiffs must allege that they have been intentionally treated differently from others similarly situated and that there is no rational basis for the difference in treatment. A class-of-one plaintiff must be similarly situated to the proposed comparator in all material respects. Rather than claiming that they stood on the same footing as others, the SmileDirect parties argued their uniqueness.
Court Description: Antitrust. The panel affirmed in part and reversed in part the district court’s dismissal of an action brought under antitrust and constitutional law by a dentist, his professional corporation, and the teledentistry company SmileDirectClub, LLC, against members and employees of the Dental Board of California. The SmileDirect parties alleged that after they developed on online service model for patients to access certain orthodontic services, namely clear teeth aligners, defendants conspired to harass them with unfounded investigations and an intimidation campaign, with hopes of driving them out of the market. The panel held that the SmileDirect parties sufficiently pled Article III standing because they alleged an injury in fact that was fairly traceable to defendants’ challenged conduct and was judicially redressable. The panel concluded that the SmileDirect parties sufficiently alleged anticompetitive concerted action, or an agreement to restrain trade, to meet the pleading standards of Federal Rule of Civil Procedure 12(b)(6). The panel therefore partially reversed the district court’s dismissal of the SmileDirect parties’ antitrust claim under § 1 of the Sherman Act. The panel rejected the broad proposition that regulatory board members and employees cannot form an SMILEDIRECTCLUB, LLC V. TIPPINS 5 anticompetitive conspiracy when acting within their regulatory authority. As to certain other defendants, the panel affirmed dismissal because the SmileDirect parties failed to plead facts sufficient to tie them to the alleged conspiracy. The panel affirmed the district court’s dismissal of the SmileDirect parties’ claim under the Dormant Commerce Clause, which prohibits states from discriminating against interstate commerce. The panel affirmed the district court’s dismissal of the SmileDirect parties’ claim that defendants subjected them to disparate treatment in violation of the Equal Protection Clause. The panel held that to plead a class-of-one equal protection claim, plaintiffs must allege facts showing that they have been intentionally treated differently from others similarly situated and that there is no rational basis for the difference in treatment. Joining other circuits, the panel held that a class-of-one plaintiff must be similarly situated to the proposed comparator in all material respects. The SmileDirect parties fell short of this showing because, rather than claiming that they stood on the same footing as others, they instead touted their uniqueness.
The court issued a subsequent related opinion or order on April 21, 2022.
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