Certiorari Denied November 13, 1978. See 99 S.Ct. 454.
OPINION OF THE COURT
VAN DUSEN, Circuit Judge.
This appeal raises a number of issues concerning Opinion 290 of the Advisory Committee on Professional Ethics of the New Jersey Supreme Court, prohibiting members of the New Jersey Bar from paying the Princeton Community Phone Book, Inc. to list their names, addresses and telephone numbers in the classified section of its publication. Plaintiffs sued claiming that, by adoption of Opinion 290, the defendants injured them by (a) depriving them of their constitutional rights,
FACTS AND PROCEDURAL HISTORY
Plaintiffs, The Princeton Community Phone Book, Inc. and its principal owner, Joseph M. Boyd, annually publish a telephone directory and distribute it to homes and offices in the Princeton, New Jersey, area. The corporation derives its income from charging a fee for listings and advertisements in its classified yellow pages. The Princeton Community Phone Book is "not unlike the directory published and distributed by the New Jersey Bell Telephone Company." Opinion 290 at 17a.
The defendants are or were members of the Advisory Committee on Professional Ethics of the New Jersey Supreme Court (hereinafter referred to as the Committee). The Committee members are appointed by the New Jersey Supreme Court and the Committee may issue opinions answering any inquiry submitted by a member of the New Jersey bar or by a local bar association. The Committee's published opinions are binding on local ethics committees. Under its discretionary powers, the Committee may decline to answer an inquiry without stating reasons. N.J. Court Rules, 1:19.
In 1973 the Princeton Community Phone Book discontinued its prior policy of listing professionals without charge in its yellow pages and published paid listings of lawyers
Thus, the Committee interpreted "the telephone directory or directories" to mean the directories published by the telephone company.
On April 22, 1976, almost a year-and-a-half after the publication of Opinion 290, the Committee published a notice suspending the effect of the Opinion pending the possible revision of the Disciplinary Rules by the New Jersey Supreme Court. The notice stated that the Committee would reconsider the Opinion after any such revisions.
On June 1, 1976, the district court held a pretrial hearing on defendants' motion for summary judgment and plaintiffs' motion for partial summary judgment. The court reserved judgment on the motions pending discovery. Then, on May 31, 1977, after affidavits, answers to interrogatories, and depositions had been filed, the court granted defendants' motion for summary judgment.
INJUNCTIVE AND DECLARATORY RELIEF UNDER § 1983
The district court held that plaintiffs' claim for injunctive and declaratory relief was moot because Opinion 290 had been suspended and was not in effect at the time the district court's decision was rendered. We disagree. Correspondence between attorneys and the Princeton Community Phone Book, Inc., which was made part of the record, establishes that a number of lawyers who had paid for classified listings in the Princeton Community Phone Book cancelled their listings because of Opinion 290. 79-88a. An affidavit by an employee of the Princeton Community Phone Book states that, after the Opinion had been suspended, she contacted lawyers who had purchased listings before the Opinion was promulgated but was unable to convince them to resume purchasing listings.
B. The First Amendment
Turning to the merits of plaintiffs' claim that Opinion 290 violates their constitutional rights, we find Bates v. State Bar of Arizona, 433 U.S. 350, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977), controlling. Defendants in Bates, two lawyers, published a newspaper advertisement listing their firm name, address, telephone number and fees for a number of routine legal services. They contended that their advertisement, which they admitted violated the American Bar Association Code of Professional Responsibility Disciplinary Rule 2-101(B), incorporated in Rule 29(a) of the Supreme Court of Arizona,
Bates, supra at 384, 97 S.Ct. at 2709.
There are two possible grounds for distinguishing Bates from the present case. First, the listing here includes less information than the advertisements in Bates, as the latter included fee information. Since the potential for deceptive advertisement is thus not present in this case, the argument that the Princeton Community Phone Book listings constitute protected speech is even stronger than the defendants' argument in Bates. See Bates, supra at 388, 97 S.Ct. 2691 (Burger, C. J., concurring in part and dissenting in part), 392-402, 97 S.Ct. 2691 (Powell, J., concurring in part and dissenting in part).
The second distinction is that the advertisements in Bates were published in a newspaper and the listings here are published in a book or directory. We attach no significance to this distinction and conclude that a listing placed in a book or directory such as we are presented with here is entitled to the same protection as an advertisement
IMMUNITY TO DAMAGES UNDER § 1983
On plaintiffs' claim for damages under § 1983, the district court granted the defendants' motion for summary judgment on the ground that the individual members of the Committee, when performing Committee functions, enjoy absolute immunity from damage suits under § 1983.
The Supreme Court has extended absolute immunity to judges, legislators, and prosecutors when they are performing their respective judicial, legislative, and prosecutorial functions.
The Supreme Court recently reaffirmed this test in Procunier v. Navarette, 434 U.S. 555, 560-562, 98 S.Ct. 855, 55 L.Ed.2d 24 (1978). Neither the Supreme Court nor this circuit has been confronted with the issue of whether the doctrine of absolute immunity should be extended to members of a committee such as this one, appointed by a state supreme court, when exercising their discretionary power to issue advisory opinions. We find it unnecessary to decide this issue in this case. Assuming, without deciding, that defendants are entitled to only qualified immunity,
The defendants had no reason to believe Opinion 290 violated the First Amendment. Opinion 290 was issued prior to the Supreme Court's decision in Bates reversing the Arizona Supreme Court, and the dissenting opinion in Bates, joined in by four Justices, demonstrates that defendants could have reasonably believed that Opinion 290 was not violative of the First Amendment.
Plaintiffs contend that Opinion 290 violates the Equal Protection Clause of the Fourteenth Amendment in that it unreasonably discriminates between the Princeton Community Phone Book and telephone directories published by New Jersey Bell. Having found Opinion 290 unconstitutional on First Amendment grounds, we briefly mention the equal protection issue only to demonstrate that the defendants could have reasonably believed that Opinion 290 did not violate plaintiffs' right to equal protection. The defendants could have reasoned that the distinction between a telephone directory published by a public utility or state-regulated monopoly as an adjunct to telephone service and a publication listing telephone numbers and advertising published by a corporation not subject to state regulation and which derives its income solely from the sale of advertising
Having found that defendants could not have known that Opinion 290 was unconstitutional, we turn to the issue of whether the Opinion was adopted in good faith or whether it was adopted "with the malicious intention to cause . . . injury." Wood v. Strickland, supra 420 U.S. at 322, 95 S.Ct. at 1001. In their Amendment to Answer, Eighteenth Defense, defendants asserted that they "acted reasonably, in light of all circumstances, and without malice, but in good faith, within the scope of authority of R.1:19 of the New Jersey Court Rules." 205a. At the hearing on the motions for summary judgment, before any discovery, the district court made clear that good faith or lack thereof would be an important issue in the case. 160a. In response to the court's observation that a good faith defense appeared appropriate, 160-61a, counsel for plaintiffs stated: "On that point we would simply have to reserve whatever evidence we could muster. I might point out that any evidence of lack of good faith, I think we would have reason to expect to get through answers to our interrogatories and through depositions. . ."
Each of the 12 defendants who participated in the adoption of Opinion 290
The only relevant facts established by plaintiffs' attempt to find countervailing evidence of bad faith are that of the 12 members of the Committee who participated in the decision, three (Feinberg, King
We do not think these facts are sufficient to sustain a finding of bad faith or even to raise a genuine issue of material fact in that regard. AT&T was not a party to which the advisory opinion was directed, and therefore Opinion 290 had no direct effect on AT&T. Furthermore, the Opinion could not have had any significant indirect impact on AT&T or the value of AT&T stock. Allowing lawyers to purchase listings in a directory of limited circulation
Accordingly, in the face of uncontradicted depositions and affidavits that the Committee members acted in good faith, we conclude that the answers to the interrogatories do not raise a material issue of genuine fact on the good faith question. We therefore affirm the district court's order entering summary judgment in favor of the defendants on the damage claim under § 1983.
THE SHERMAN ACT
Count Two of the complaint alleges that the defendants, acting in concert, restrained trade in violation of § 1 of the Sherman Act in that Opinion 290 prevented the Princeton Community Phone Book from competing, in listing lawyers, with the directories published by the New Jersey Bell system. The district court granted the defendants' motion for summary judgment on this count on the ground that the nexus between defendants' conduct and interstate commerce was insufficient to confer jurisdiction on the court under the Sherman Act. In this court briefing focused on the issue of whether the Sherman Act claim was barred under the doctrine of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), because the adoption of Opinion 290 constituted state action. We hold that the antitrust claim is barred under Parker.
In Parker the Supreme Court held that the Sherman Act was inapplicable to certain state action.
Plaintiffs rely on Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975), in which the Court held that the State Bar, in requiring lawyers to adhere to minimum fee schedules, was not exempt from the Sherman Act. We think that Goldfarb is distinguishable and does not compel a similar result in this case.
In Goldfarb the Court focused upon the first two interrelated factors: the status of the defendant, primarily the relationship between the defendant and the state, and the activities of the defendant, primarily the extent to which the activity complained of was controlled by state law. The status of the defendants differ in Goldfarb and in the present case. The defendant in Goldfarb was the Virginia State Bar, an independent association consisting of all lawyers admitted to practice in Virginia. The Virginia Supreme Court made the State Bar an agency of the state for the limited purpose of regulating the practice of law in that state. The members of the State Bar were not appointed by the Virginia Supreme Court justices, or by any other state officials, as agents of the state. In contrast, in the present case, the Committee was created by the New Jersey Supreme Court and its raison d'etre is to serve the state judiciary. All members of the Committee are appointed by the justices of the New Jersey Supreme Court, and the Committee's functions and jurisdiction are clearly defined by New Jersey Court Rule 1:19. Thus, while for "some limited purposes" the Virginia State Bar was a state agency, Goldfarb, supra at 791, 95 S.Ct. 2004, the Committee's sole purpose is to act as an agent of the state. Therefore, the Virginia State Bar's status as a state agency is tenuous compared with the Committee's status.
The second focal point of Goldfarb also demonstrates its inapplicability here. In Goldfarb the State Bar enforced minimum fee schedules despite the fact that there was no Virginia statute or Supreme Court rule authorizing the State Bar to maintain minimum fees. Quite to the contrary, the clear purpose of the fee provisions of the ABA Code of Professional Responsibility adopted by Virginia is to insure that fees are not excessive, not to place an artificial floor under fees.
In Duke & Co. v. Foerster, 521 F.2d 1277, 1280 (3d Cir. 1975), we stated:
In this case there is state authority demonstrating an intent to restrain competition in the area of lawyer's advertising or publicity. This intent "may be inferred from the nature of the powers and duties given to" the Committee. Id. Similarly, in Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 415, 98 S.Ct. 1123, 1138, 55 L.Ed.2d 364 (1978), the Supreme Court stated: "[A]n adequate state mandate for anti-competitive activities of . . . governmental units exists when it is found `from the authority given a governmental entity to operate in a particular area, that the legislature contemplated the kind of action complained of' [5 Cir.] 532 F.2d  at 434" (footnote omitted). In other words, the state need not have contemplated the precise action complained of as long as it contemplated the kind of action to which objection was made.
Cantor v. Detroit Edison Co., 428 U.S. 579, 96 S.Ct. 3110, 49 L.Ed.2d 1141 (1976), is distinguishable on the same analysis as Goldfarb. In Cantor, defendant Detroit Edison gave its customers light bulbs as part of their electric service, thus, according to plaintiff, restraining trade in the sale of light bulbs. The Supreme Court held that Detroit Edison was not exempt from the Sherman Act under the State action doctrine. Focusing on the status of the defendant, the plurality attached great significance to the fact that the defendant was a private party, not a state agency or official. Cantor, supra at 591, 96 S.Ct. 3110. Cantor is clearly distinguishable from the present case in this regard. Turning to the second
There is a third and crucial distinction between this case and Cantor. In Cantor the Court found that the state had no regulatory interest in distributing light bulbs. Id. at 584-85, 96 S.Ct. 3110; 604-05, 96 S.Ct. 3110 (Burger, C. J., concurring); 612-14, 96 S.Ct. 3110 (Blackmun, J., concurring). In contrast, the Supreme Court has recognized that "the regulation of the activities of the bar is at the core of the state's power to protect the public." Bates, supra, 433 U.S. at 361, 97 S.Ct. at 2697. In Goldfarb, supra 421 U.S. at 792, 95 S.Ct. at 2016, the Supreme Court stated:
See also In re Primus, 436 U.S. 412, 421, 98 S.Ct. 1893, 56 L.Ed.2d 417 (1978); Ohralik v. Ohio State Bar Assn., 436 U.S. 447, 456-462, 98 S.Ct. 1912, 56 L.Ed.2d 444 (1978). Consequently, with regard to all three factors which we have identified as controlling the applicability of the state action exemption, Cantor is distinguishable from the present case.
Defendants rely on Bates, the third case in the recent state action tetralogy. In Bates, the facts of which are discussed in part II-B of this opinion, the Supreme Court unanimously held that the State Bar of Arizona, which enforced a prohibition of lawyers' advertising, was exempt from the Sherman Act. Although the defendant in Bates appears to have had a status similar to the defendant in Goldfarb, the Court did not sharply distinguish between status and activity, demonstrating that, although these factors are distinguishable analytically, they may be interconnected in fact. Regarding its activity, the defendant in Bates was enforcing a clear command of the state pursuant to the Arizona Supreme Court rules prohibiting advertising. Regarding the defendant's activity and status taken together, the Court stated:
Bates, supra 433 U.S. at 361, 97 S.Ct. at 2697. Thus, in Bates the crucial point was that the defendant was enforcing a clear command of the state under direct supervision of the state.
Although Bates supports the position of the defendants in this case, it differs from this case in a notable respect. Defendants here were not enforcing a clear command of the New Jersey Supreme Court, but were interpreting an unclear command and enforcing their interpretation. However, in contrast to Bates and Goldfarb, defendants here were acting as part of an agency created by the New Jersey Supreme Court for the sole purpose of serving the state. Thus, while the relationship between the Committee's activity and the command of the state is not as close as that relationship in Bates, the relationship
Id., at 144.
Applying this analysis in the present case, we reiterate that the relationship between the state and the defendant is close, the defendant having been created to act solely as a state agent by the supreme judicial body of the state, and that, although the defendants' action is not as clearly commanded as was the defendants' action in Bates, the state, acting as sovereign, did command the kind of action the defendants took.
Plaintiffs rely on Louisiana Power & Light Co., supra, the most recent state action decision, and our analysis will not be complete without a brief discussion of that case. In Louisiana Power & Light, the Supreme Court held that cities operating power companies were not exempt from the Sherman Act despite their status as governmental entities. We think plaintiffs' reliance on Louisiana Power & Light is misplaced. Louisiana Power & Light supports the approach adopted above which focuses on the dual relationship between the state and the defendant and the command of the state and the act of the defendant. The Court stated that the petitioners' status as cities did not automatically afford them the state action exemption, but acknowledged that the cities may be exempt if they are acting "pursuant to state policy to displace competition with regulation or monopoly public service." Id. 435 U.S. at 413, 98 S.Ct. at 1137. In the present case, the Committee bears a closer relationship to the state
The plurality opinion in Louisiana Power & Light also requires a defendant to demonstrate that the state policy pursuant to which it acts is sufficiently weighty to override the presumption against implied exclusion from the antitrust laws and the national policies embodied in those laws. Bates establishes that the policy of regulating publicity by lawyers carries such weight. Id. 433 U.S. at 361-62, 97 S.Ct. 2691.
For the foregoing reasons, we hold that, on the facts of this case, the actions of defendants constitute state actions exempt from § 1 of the Sherman Act.
The judgment of the district court will be affirmed in part and reversed in part and the case remanded for action consistent with this opinion as summarized in the last sentence of the first paragraph of this opinion.
This rule has since been amended. See note 11 infra.
This case is readily distinguishable from Ohralik v. Ohio State Bar Association, 436 U.S. 447, 98 S.Ct. 1912, 56 L.Ed.2d 444 (1978), in which the Supreme Court held that a state "constitutionally may discipline a lawyer for soliciting clients in person, for pecuniary gain, under circumstances likely to pose dangers that the state has a right to prevent." Id. at 449, 98 S.Ct. at 1915. Ohralik "provide[s] classic examples of `ambulance chasing,' fraught with obvious potential for misrepresentation and overreaching." Id. at 469, 98 S.Ct. at 1925 (Marshall, J., concurring) In distinguishing Bates, the court in Ohralik reaffirmed its validity. Id. at 447, 98 S.Ct. 1912.
Id. at 773 n.25, 96 S.Ct. at 1831. Bigelow was also narrowly limited to its facts, advertisements conveying information concerning the availability of legal abortions in New York. The Court stated: "We need not decide in this case the precise extent to which the First Amendment permits regulation of advertising that is related to activities the State may legitimately regulate or even prohibit." Id. 421 U.S. at 825, 95 S.Ct. at 2234. (footnote omitted). Therefore, it would appear that the defendants could not have known that commercial speech was protected in the circumstances of this case until the Bates decision.