421 U.S. 773, 788
In 1971 petitioners, husband and wife, contracted to buy a home in Fairfax County, Virginia.1 The financing agency required them to secure title insurance, which in turn required a title examination that only a member of the Virginia State Bar could legally perform.2
Petitioners contacted a lawyer who quoted them the precise fee suggested in a minimum-fee schedule published by respondent Fairfax County Bar Association, amounting to one percent of the value of the property.3 They then sent letters to thirty-six other Fairfax County lawyers requesting their fees for the title examination. Nineteen replied, and none indicated that he would charge less than the rate fixed by the schedule.4
The fee schedule is a list of recommended minimum prices for common legal services.5 The County Bar is a purely voluntary association of attorneys with no formal power to enforce the schedule.6 Respondent Virginia State Bar is the administrative agency through which the Virginia Supreme Court regulates the practice of law, and membership is required to practice in the state.7 The State Bar published reports condoning fee schedules. It issued ethical opinions indicating that evidence an attorney habitually charges less than the suggested minimum fee schedule adopted by his local bar association raises a presumption that such lawyer is guilty of misconduct.8
Because petitioners could not find a lawyer willing to charge a fee lower than the schedule dictated, they had their title examined by the lawyer they had first contacted.9 They then brought this class action against the State Bar and the County Bar alleging that the operation of the minimum-fee schedule as applied to fees for legal services relating to residential real estate transactions constitutes price fixing in violation of section 1 of the Sherman Act.10 After a trial solely on the issue of liability the district court held that the minimum-fee schedule violated the Sherman Act as to the County Bar but exempted the State Bar.11 The court of appeals reversed as to liability.12 The Supreme Court granted certiorari.13
Whether respondents engaged in price fixing?14
Section 1 of the Sherman Act prohibits contracts, combinations, or conspiracies that fix prices, including minimum fee schedules that create a rigid price floor enforced through professional discipline.15
Yes. In 1971 petitioners contracted to buy a home in Fairfax County, Virginia.16 The financing agency required title insurance, which required a title examination that only Virginia State Bar members could perform.17 Petitioners contacted a lawyer who quoted the exact one-percent fee from the minimum-fee schedule published by the Fairfax County Bar Association.18
They then sent letters to thirty-six other Fairfax County lawyers. Nineteen replied and none offered a lower fee.19 The Virginia State Bar issued ethical opinions creating a presumption of misconduct for lawyers who habitually charged less than the local schedule.20 The County Bar published the schedule.21
These facts produced a fixed, rigid price floor to which every responding lawyer adhered, constituting a naked price-fixing agreement.22
Respondents engaged in price fixing that violated section 1 of the Sherman Act.23
Whether respondents' activities are in interstate commerce or affect interstate commerce?24
The Sherman Act reaches restraints that affect interstate commerce when legal services are an integral part of interstate real estate transactions involving out-of-state financing or federal guarantees.25
Yes. A significant portion of funds for purchasing homes in Fairfax County came from outside Virginia, and significant loans were guaranteed by federal agencies headquartered in the District of Columbia.26 Title examinations are necessary to assure valid title as a condition of making such loans.27 Because the legal service is inseparable from these interstate transactions in time and continuity, the fee schedule's restraint substantially affects interstate commerce.28
Respondents' activities affected interstate commerce within the meaning of the Sherman Act.29
Whether respondents' activities are exempt from the Sherman Act because they involve a learned profession?30
The nature of an occupation, standing alone, does not provide sanctuary from the Sherman Act, nor is the public-service aspect of professional practice controlling in determining whether § 1 includes professions.
No. The examination of land titles is a service exchanged for money and therefore commerce.3132 No statutory language or legislative history creates a sweeping exclusion for professions, and the public-service aspect of law practice does not control the question of statutory coverage.33 The fee schedule's business aspect brings it within the Act's prohibition on price fixing.34
Respondents' activities are not exempt from the Sherman Act on the ground that they involve a learned profession.35
Whether respondents' activities are state action within the meaning of Parker v. Brown and therefore exempt from the Sherman Act?36
Anticompetitive conduct is exempt as state action only when it is compelled by the state acting as sovereign; mere prompting or voluntary participation by a state agency does not suffice.37
Respondents' activities are not exempt from the Sherman Act as state action under Parker v. Brown.42