PREGERSON, Circuit Judge:
Appellants, twenty-five dentists licensed to practice in states other than Arizona, appeal from the dismissal of their lawsuit challenging features of the statutory system through which Arizona regulates the practice of dentistry. Their suit focused principally on the distinction the Arizona scheme draws between "licenses" to practice dentistry, which are granted only to those who pass the state's dentistry examination, and "restricted permits," for which that examination is not a prerequisite. Holders of restricted permits are allowed to practice dentistry, but only as unsalaried employees of charitable dental clinics. Appellants, who hold restricted permits, contend that this system violates federal and state antitrust laws, unconstitutionally burdens the right of interstate travel, and infringes their rights to due process and equal protection. For the reasons set out below, we conclude that the federal antitrust claims are barred by the state action antitrust exemption, and that appellants' constitutional claims are without merit. Accordingly, we affirm the judgment of the district court.
Arizona allows persons to practice dentistry if they secure either a license or a restricted permit. Obtaining a license requires passing an examination, administered by the appellee Board of Dental Examiners ["the Board"], which tests "both theory and clinical proficiency," as the legislature directed. A.R.S. § 32-1233(A). Even persons licensed to practice dentistry in other states (like appellants) must take this examination to get an Arizona license.
The examination is not required for a restricted permit. Anyone licensed to practice dentistry in another state (or in a territory or the District of Columbia) and who has a contract to do unsalaried dental work for a charitable clinic or organization is eligible for a restricted permit if he meets either of these two conditions: (1) he spent the immediately preceding three years engaged in active practice, residency, approved postgraduate work, or some combination of these; or (2) the Board "is otherwise satisfied of his competence and proficiency to practice dentistry." A.R.S. § 32-1237.
There is no restriction on what types of dental work holders of restricted permits may perform. They are, however, permitted to practice only as employees of charitable clinics or organizations and may not receive compensation for the dental work they perform. A.R.S. § 32-1239.
All twenty-five appellants hold licenses to practice dentistry from states other than Arizona, and all hold Arizona restricted permits. Some of the appellants live in Arizona and some in other states. They began this lawsuit in December 1979 with a complaint naming the Board and its individual members as defendants. Three counts were stated: violation of sections 1 and 2 of the Sherman Act; violations of Arizona's antitrust laws; and violation of the constitutional rights of due process, equal protection, and interstate travel.
The district court dismissed appellants' amended complaint in July 1980. Count One (Sherman Act violations) was dismissed for failure to state a claim; the court based this ruling on the "state action" antitrust immunity. Count Three (constitutional violations) was dismissed because plaintiffs lacked standing to assert the rights of third parties, and because on their own behalf they had not stated a claim for relief. With the federal counts — and pendent jurisdiction — gone, Count Two was then dismissed for lack of complete diversity.
THE ANTITRUST CLAIM AND THE STATE ACTION DOCTRINE
Count One of appellants' complaint alleged that since its inception in 1913, the Board has combined with Arizona dentists and dentists' organizations to restrain and monopolize the practice of dentistry in the state by restricting entry into the profession, limiting the number of dentists, and fixing prices. The district court dismissed this count on the basis of the "state action" antitrust doctrine.
Under that doctrine, "[g]ood-faith actions of state officials are immune from attack under the antitrust laws if those officials act within the scope of their authority in the furtherance of a declared governmental policy or legislative scheme." 7 J. von Kalinowski, Antitrust Laws and Trade Regulation § 46.01. The doctrine stems from Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), where
The Supreme Court recently examined the state action immunity in California Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980). There the Court reviewed the cases applying the doctrine and concluded: "These decisions establish two standards for antitrust immunity under Parker v. Brown. 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. at 105, 100 S.Ct. at 943 (quoting the plurality opinion in City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 410, 98 S.Ct. 1123, 1135, 55 L.Ed.2d 364 (1978).
Arizona's regulation of dentistry satisfies both of the Court's criteria. First, the system is laid out in state statutes — title 32, chapter 11 of the Arizona Revised Statutes. In particular, these statutes establish the Board, A.R.S. § 32-1203, confer upon it the power to regulate the practice of dentistry and control admission thereto, § 32-1207, command it to administer examinations "on both theory and clinical proficiency" as a prerequisite for a dental license, § 32-1233, and establish the system of restricted permits, §§ 32-1237 to -1239. Thus the challenged system is "`clearly articulated and affirmatively expressed as state policy.'"
Appellants seek to avoid application of the state action immunity by arguing that it applies only when the authority that the legislature conferred on the government entity involved indicates that the legislature contemplated the anticompetitive action at issue. They assert that their complaint — whose allegations must be taken as true on this appeal
Appellants are mistaken. Paragraph 18(a) of the amended complaint alleges that the Board has failed to adopt reciprocity legislation "as mandated by the Arizona Legislature" — but the relevant statute, A.R.S. § 32-1235, merely permits the Board, "in its discretion," to adopt such regulations. Paragraph 18(b) points to the Board's "imposition ... of a practical exam not required by statute," yet A.R.S. § 32-1233(A) specifically requires that the exam cover "clinical proficiency" as well as theory. Paragraph 18(c) alleges that the Board has imposed unreasonable requirements on examinees, such as that they must provide their own patients for the practical exam, and ¶ 18(c) attacks the Board for testing applicants on procedures appellants deem "archaic." But A.R.S. § 32-1233(A) authorizes the Board to determine both the manner in which the exam will be given and the subjects to be covered.
Thus appellants have not alleged specific facts to show that the Board exceeded its authority. Hence the Board, since it satisfies the criteria laid down by the Supreme Court in Midcal, supra, is entitled to the state action antitrust immunity, and Count One of appellants' complaint was properly dismissed.
APPELLANTS' CONSTITUTIONAL CLAIMS
Appellants contend that Arizona's regulation of dentistry violates the right of interstate travel and the Equal Protection Clause of the Fourteenth Amendment.
The right to travel:
Appellants alleged in their complaint that Arizona's "arbitrary" licensing requirements "unreasonably restrict dentists from
In contemporary decisions, the right to travel has typically been invoked in connection with the Equal Protection Clause: a conclusion that a challenged legislative classification penalizes the exercise of the right to travel subjects that classification to "strict scrutiny" under the Equal Protection Clause — which inevitably results in invalidating the statute.
Appellants alleged in their complaint that the Arizona statutory scheme violated their equal protection rights by "creating two classes of dentists who are similarly situated with no rational basis for the disparity in treatment between the two." The two classes are the licensed dentists and those holding restricted permits. The gist of appellants' equal protection claim is that Arizona has officially found members of both these classes qualified to practice dentistry, but allows only the licensed dentists to be paid for doing so. This disparate treatment, appellants argue, cannot be justified as professional licensing requirements are generally justified — i.e., as necessary to protect the public from incompetents — since members of both classes are permitted to do all types of dental work. Consequently, they conclude, the disparate treatment has no rational basis and violates equal protection.
The persons allegedly disadvantaged by the Arizona scheme — those who hold restricted permits — do not constitute a "suspect classification,"
Consequently appellants' equal protection challenge to the Arizona scheme, like their right-to-travel attack, must fail. The district court correctly dismissed Count Three of appellants' complaint. Since we have already held that Count One, the only other federal count, was properly dismissed, the district court was also correct in dismissing the state claim, Count Two, for lack of diversity.
The judgment of the district court is AFFIRMED.
On appeal, appellants have abandoned their attempt to obtain relief on behalf of third parties. They argue only that Judge Muecke misread their complaint when he concluded that if appellants lacked third-party standing they must lack standing altogether. Appellants contend that they have standing in their own right because their own ability "to earn a living and practice their chosen profession" is at stake. Thus, third-party standing is not an issue on appeal.
The right of federal citizenship as reflected in the "right to travel" ... is not to be construed to mean that a citizen carries with him from state to state an absolute right of comity to practice, not a "common occupation", but a profession, which is properly subject to state regulation, in any state to which he travels.