No. 16-50017 In the United States Court of Appeals for the ...static.politico.com/4a/f0/2c468f1c45e3abc3f7c027c5e846/...Jeffrey C. Mateer First Assistant Attorney General Office of

No. 16-50017

In the United States Court of Appeals for the Fifth Circuit Teladoc, Incorporated; Teladoc Physicians, Physician

Assistant; Kyon Hood; Emmette A. Clark, Plaintiffs-Appellees,

v. Texas Medical Board; Michael Arambula, M.D., Pharm. D., in his

official capacity; Manuel G. Guajardo, M.D., in his official capacity; John R. Guerra, D.O., M.B.A., in his official capacity; J. Scott

Holliday, D.O., M.B.A., in his official capacity; Margaret McNeese, M.D., in her official capacity; Allan N. Shulkin, M.D., in his official capacity; Robert B. Simonson, D.O., in his official capacity; Wynne M. Snoots, M.D., in his official capacity; Karl Swann, M.D., in his official capacity; Surendra K. Varma, M.D., in his official capacity;

Stanley Wang, M.D., J.D., MPH, in his official capacity; George Willeford, III, M.D., in his official capacity; Julie K. Attebury, M.B.A.,

in her official capacity; Paulette Barker Southard, in her official capacity, Defendants-Appellants.

On Appeal from the United States District Court for the Western District of Texas, Austin Division

BRIEF FOR APPELLANTS

Ken Paxton Attorney General of Texas Jeffrey C. Mateer First Assistant Attorney General Office of the Attorney General P.O. Box 12548 (MC 059) Austin, Texas 78711-2548 Tel.: (512) 936-1700 Fax: (512) 474-2697

Scott A. Keller Solicitor General J. Campbell Barker Deputy Solicitor General [email protected]

Counsel for Defendants-Appellants

Case: 16-50017 Document: 00513553389 Page: 1 Date Filed: 06/17/2016

i

Certificate of Interested Persons

No. 16-50017

Teladoc, Incorporated; Teladoc Physicians, Physician Assistant; Kyon Hood; Emmette A. Clark,

Plaintiffs-Appellees, v.

Texas Medical Board; Michael Arambula, M.D., Pharm. D., in his official capacity; Manuel G. Guajardo, M.D., in his official capacity;

John R. Guerra, D.O., M.B.A., in his official capacity; J. Scott Holliday, D.O., M.B.A., in his official capacity; Margaret McNeese, M.D., in her official capacity; Allan N. Shulkin, M.D., in his official capacity; Robert B. Simonson, D.O., in his official capacity; Wynne M. Snoots, M.D., in his official capacity; Karl Swann, M.D., in his official capacity; Surendra K. Varma, M.D., in his official capacity;

Stanley Wang, M.D., J.D., MPH, in his official capacity; George Willeford, III, M.D., in his official capacity; Julie K. Attebury, M.B.A.,

in her official capacity; Paulette Barker Southard, in her official capacity, Defendants-Appellants.

The undersigned counsel of record certifies that the following listed persons and

entities as described in the fourth sentence of Rule 28.2.1 have an interest in the out-

come of this case. These representations are made in order that the judges of this

Court may evaluate possible disqualification or recusal.

Defendants: Texas Medical Board; Michael Arambula, M.D., Pharm. D., in his official capacity; Manuel G. Guajardo, M.D., in his official capacity; John R. Guerra, D.O., M.B.A., in his official capacity; J. Scott Holliday, D.O., M.B.A., in his official capacity; Margaret McNeese, M.D., in her official capacity; Allan N. Shulkin, M.D., in his official capacity; Robert B. Simonson, D.O., in his official capacity; Wynne M. Snoots, M.D., in his official capacity; Karl Swann, M.D., in his official capacity;


ii

Surendra K. Varma, M.D., in his official capacity; Stanley Wang, M.D., J.D., MPH, in his official capacity; George Willeford, III, M.D., in his official capacity; Julie K. Attebury, M.B.A., in her official capacity; Paulette Barker Southard, in her official capacity Counsel for Defendants: Ken Paxton Jeffrey C. Mateer Scott A. Keller J. Campbell Barker James Carlton Todd Sean P. Flammer Office of the Attorney General

Plaintiffs: Teladoc, Incorporated; Teladoc Physicians, Physician Assistant; Kyon Hood; Emmette A. Clark Counsel for Plaintiffs: Leah O. Brannon George S. Cary Drew Anthony Navikas Cleary Gottlieb Steen & Hamilton, L.L.P. James Matthew Dow Sean Daniel Jordan Dudley D. McCalla Joshua Abraham Romero Jackson Walker, L.L.P.

/s/ J. Campbell Barker J. CAMPBELL BARKER Counsel of Record for Defendants-Appellants


iii

Statement Regarding Oral Argument

Appellants believe that oral argument will assist the Court in resolution of this

appeal, which raises an issue likely to have a significant effect on the ability of state

medical boards and other occupational-licensing agencies to carry out their duly as-

signed governmental functions without facing the burdens and uncertainties of fed-

eral antitrust litigation.


iv

Table of Contents Page

Certificate of interested persons ..............................................................................i

Statement regarding oral argument ........................................................................ iii Table of authorities ................................................................................................ vi Introduction ............................................................................................................ 1

Statement of jurisdiction ......................................................................................... 2

Statement of the issue ............................................................................................. 3

Statement of the case .............................................................................................. 3

I. Texas regulation of the practice of medicine .............................................. 3

II. The Texas Medical Board’s licensing and disciplinary authority ............... 6

III. The Texas Medical Board’s rulemaking authority ..................................... 8

IV. The challenged telemedicine rules ........................................................... 12

A. Statutory background ........................................................................ 12

B. The rules at issue .............................................................................. 13

1. “New Rule 174” ......................................................................... 13

2. “New Rule 190.8” ..................................................................... 16

V. Procedural history ................................................................................... 18

Summary of the argument ..................................................................................... 19

Standard of review ................................................................................................ 21

Argument.............................................................................................................. 22

I. State-action antitrust immunity applies to all regulations that are the State’s own. ....................................................................................... 22

A. The Supreme Court recognized state-action immunity because federal antitrust laws were never intended to interfere with the States’ actions as sovereign regulators. ................. 22

B. The clear-articulation and active-supervision requirements ensure that state-action immunity applies to regulations and policies that are the State’s own. ....................................................... 24

1. Clear articulation ........................................................................ 25

2. Active supervision ...................................................................... 27

a. Private nonsovereign actors ................................................. 27

b. Governmental nonsovereign actors ...................................... 30

i. Municipalities ............................................................... 30

ii. Regulatory agencies ....................................................... 30


v

II. The clear-articulation requirement is met here. ....................................... 33

III. The active-supervision requirement is met here. ..................................... 35

A. Features of the Board’s membership minimize the risk that it will forego its mandate and act with only a private purpose. .............. 38

B. Texas’s good-government laws and reporting requirements further reduce the risk that the Board will shirk its official duties and pursue only private interests. ........................................... 41

C. State-court judicial review provides sufficient active supervision of the Board’s rulemaking. ............................................. 45

D. Legislative oversight contributes to active supervision. ..................... 50

E. Finding a lack of active supervision would intrude on the State’s sovereignty and alter the balance of cooperative federalism. ........................................................................................ 52

Conclusion ............................................................................................................ 54

Certificate of service ............................................................................................. 56

Certificate of compliance ...................................................................................... 56


vi

Table of Authorities

Page(s) Cases: 342 Liquor Corp. v. Duffy,

479 U.S. 335 (1987) ........................................................................................ 28 Acoustic Sys., Inc. v. Wenger Corp.,

207 F.3d 287 (5th Cir. 2000) ............................................................................ 2 Acker v. Tex. Water Comm’n,

709 S.W.2d 299 (Tex. 1990) ........................................................................... 42 Bellegie v. Tex. Bd. of Nurse Exam’rs,

685 S.W.2d 431 (Tex. App.—Austin 1985, writ ref’d n.r.e.) ........................... 49 Cal. Dental Ass’n v. FTC,

526 U.S. 756 (1999) ........................................................................................ 52 Cal. State Bd. of Optometry v. FTC,

910 F.2d 976 (D.C. Cir. 1990)......................................................................... 52 California v. Thompson,

313 U.S. 113 (1941) ......................................................................................... 24 Cal. Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc.,

445 U.S. 97 (1980) ....................................................................27, 28, 31, 32, 34 City of Columbia v. Omni Outdoor Advert.,

499 U.S. 365 (1991) ........................................................................................ 41 City of Lafayette v. La. Power & Light Co.,

435 U.S. 389 (1978) ........................................................................................ 30 Cmty. Commc’ns Co. v. City of Boulder,

455 U.S. 40 (1982) .......................................................................................... 26 Dent v. West Virginia,

129 U.S. 114 (1889) ........................................................................................... 3 Earles v. State Bd. of Certified Pub. Accountants of La.,

139 F.3d 1033 (5th Cir. 1998) .............................................................. 20, 33, 34 E.R.R. Presidents Conf. v. Noerr Motor Freight, Inc.,

365 U.S. 127, 141 (1961) .................................................................................. 54 Exxon Corp. v. Gov. of Md.,

437 U.S. 117 (1978) ........................................................................................... 1 Filarsky v. Delia,

132 S. Ct. 1657 (2012) ..................................................................................... 53


vii

FTC v. Phoebe Putney Health Sys., Inc., 133 S. Ct. 1003 (2013). .................................................................................... 26

FTC v. Ticor Title Ins. Co., 504 U.S. 621 (1992) ............................................................ 21, 29, 32-33, 40, 50

Fuchs v. Rural Elec. Convenience Co-op, Inc., 858 F.2d 1210 (7th Cir. 1988) ......................................................................... 45

Goldfarb v. Va. State Bar, 421 U.S. 773 (1975) ......................................................................................... 26

Granek v. Tex. State Bd. of Med. Exam’rs, 172 S.W.3d 761 (Tex. App.—Austin 2005, no pet.) ........................................ 42

Gregory v. Ashcroft, 501 U.S. 452 (1991) ........................................................................................ 52

Gulf Coast Coal. of Cities v. PUC, 161 S.W.3d 706 (Tex. App.—Austin 2005, no pet.) ........................................ 46

Hoover v. Ronwin, 466 U.S. 558 (1984) ............................................................................. 19, 24, 41

Howell v. Mauzy, 899 S.W.2d 690 (Tex. App.—Austin 1994, writ denied) .................................. 9

Liberty Mut. Ins. Co. v. Griesing, 150 S.W.3d 640 (Tex. App.—Austin 2004, pet. dism’d) ................................ 11

Lambright v. Tex. Parks & Wildlife Dep’t, 157 S.W.3d 499 (Tex. App.—Austin 2005, no pet.) .................................. 11, 12

Martin v. Mem’l Hosp. at Gulfport, 86 F.3d 1391 (5th Cir. 1996) ...................................................................2, 21, 34

N.C. State Bd. of Dental Exam’rs v. FTC, 135 S. Ct. 1101 (2015) ............................................................................... passim

Nat’l Ass’n of Indep. Insurers v. Tex. Dep’t of Ins., 925 S.W.2d 667 (Tex. 1996) ........................................................................... 10

Nixon v. Mo. Mun. League, 541 U.S. 125 (2004) ........................................................................................ 54

Parker v. Brown, 317 U.S. 341 (1943) ................................................................................... passim

Patrick v. Burget, 486 U.S. 94 (1988) ....................................................... 19, 28, 29, 32, 45, 48, 49

Patel v. Tex. Dep’t of Licensing & Regulation, 469 S.W.3d 69 (Tex. 2015) ............................................................................. 11


viii

Puerto Rico Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139 (1993) .......................................................................................... 2

R. Ernest Cohn, D.C., D.A.B.C.O. v. Bond, 953 F.2d 154 (4th Cir. 1991) ............................................................................ 37

R.R. Comm’n v. Tex. Citizens for a Safe Future, 336 S.W.3d 619 (Tex. 2011) ....................................................................... 11, 12

Rivera-Nazario v. Corporacion del Fondo del Seguro del Estado, No. 14-cv-1533, 2015 WL 9484490 (D.P.R. Dec. 29, 2015) ....................... 40, 43

Saenz v. Univ. Interscholastic League, 487 F.2d 1026 (5th Cir. 1973) ......................................................................... 39

S. Motor Carriers Rate Conf., Inc. v. United States, 471 U.S. 48 (1985) ............................................................................... 27, 37, 52

Teladoc, Inc. v. Tex. Med. Bd., 453 S.W.3d 606 (Tex. App.—Austin 2014, pet. denied) ............................. 8, 17

TEC Cogeneration Inc. v. Fla. Power & Light Co., 76 F.3d 1560 (11th Cir. 1996) ................................................................... 48, 49

Tex. Bd. of Chiropractic Exam’rs v. Tex. Med. Ass’n, 375 S.W.3d 464 (Tex. App.—Austin 2012, pet. denied) ...................... 10, 11, 47 Tex. Med. Ass’n v. Tex. Workers Comp. Comm’n,

137 S.W.3d 342 (Tex. App.—Austin 2004, no pet.) ....................................... 46 Tex. Orthopaedic Ass’n v. Tex. State Bd. of Podiatric Med. Exam’rs,

254 S.W.3d 714 (Tex. App.—Austin 2008, pet. denied) ...................... 10, 11, 47 Town of Hallie v. City of Eau Claire,

471 U.S. 34 (1985) ......................................................................... 25, 30, 35, 42 Constitutional Provisions and Statutes: Tex. Const. art. XV, § 9(a) ..................................................................................... 4 Tex. Const. art. XVI, § 1(a)-(b) ............................................................................... 4 15 U.S.C. § 1 ......................................................................................................... 18 28 U.S.C. § 1331 ..................................................................................................... 2 28 U.S.C. § 1337 ..................................................................................................... 2 1939 Cal. Stat. ch. 894, § 15, p. 2494 ..................................................................... 23 Tex. Gov’t Code: § 301.104(a).................................................................................................... 50 § 301.104(c) ................................................................................................... 51


ix

§ 301.028(b) ................................................................................................... 51 § 318.001(1) ...................................................................................................... 3 § 318.002(3) ..................................................................................................... 5

§ 325.007(a)(1) ................................................................................................. 5 § 325.008 ....................................................................................................... 51 § 325.010 ........................................................................................................ 51 § 325.011 ........................................................................................................ 43 § 325.011(5) ................................................................................................ 5, 51 § 325.012 ........................................................................................................ 51 § 325.015 ........................................................................................................ 51

§ 325.015(a) ...................................................................................................... 5 § 531.001(7) .................................................................................................... 13 § 531.001(8) .............................................................................................. 13, 14

§ 531.0216(a) .................................................................................................. 12 § 531.0216(f) .................................................................................................. 44

§ 531.0217(i) ............................................................................... 7, 19-20, 35, 44 § 531.0217(i)(1) .............................................................................................. 12 ch. 551 ........................................................................................................... 4-5 § 551.001(3)(A) .............................................................................................. 42 ch. 552 .............................................................................................................. 5 § 552.003(1)(A)(i) .......................................................................................... 42 ch. 572 ........................................................................................................ 5, 42 § 2001.030 ....................................................................................................... 9

§ 2001.032(a) ....................................................................................... 9, 44, 50 § 2001.032(c) ................................................................................................... 9 § 2001.033(a)(1) ............................................................................................... 9 § 2001.033(a)(1)(B) .......................................................................................... 9 § 2001.033(a)(2) ............................................................................................... 9 § 2001.038(a) ................................................................................................. 10

§ 2001.058(e) ................................................................................................... 7 § 2001.171 ........................................................................................................ 8 § 2001.174 ........................................................................................................ 8 § 2001.901(a) ................................................................................................... 8 § 2003.041(c) ................................................................................................... 7


x

§ 2006.002(c)(1) ............................................................................................ 10 § 2051 ............................................................................................................. 42 § 2101 ............................................................................................................. 42 Tex. Health & Safety Code § 62.1571(a) ............................................................... 12 Tex. Occ. Code:

§ 111.004(1) ......................................................................................... 13, 20, 35 § 151.002(13) ............................................................................................. 13, 14

§ 151.004 .......................................................................................................... 5 § 152.001(a)...................................................................................................... 4 § 152.002(a) ..................................................................................................... 4

§ 152.003(d) ..................................................................................................... 4 § 152.004(a) ..................................................................................................... 4

§ 152.004(c) ............................................................................................... 4, 42 § 152.010(b)(7)-(8) ........................................................................................... 5

§ 152.055 ....................................................................................................... 42 § 153.001 ...................................................................................................... 4, 8 § 153.001(3) ...................................................................................................... 6

§ 153.002(a) ..................................................................................................... 6 § 153.004 ......................................................................................... 7, 12, 20, 35 § 153.008 .......................................................................................................... 5

§ 153.010 .......................................................................................................... 6 § 153.013 .......................................................................................................... 8 § 154.051 .......................................................................................................... 6

§ 155.001 ...................................................................................................... 1, 6 § 155.002(a) ..................................................................................................... 6 § 164.001 .......................................................................................................... 1 § 164.001(a) ..................................................................................................... 6 § 164.003 .......................................................................................................... 7 § 164.007 .......................................................................................................... 7 § 164.007(a) ..................................................................................................... 7 § 164.007(a-1) .............................................................................................. 7, 8 § 164.009.......................................................................................................... 8 § 164.051 .......................................................................................................... 1 § 164.051(a)(6) ............................................................................ 6, 13-14, 19, 35


xi

§ 204.102(b) ..................................................................................................... 4 § 204.151 .......................................................................................................... 6 § 205.101(b) ..................................................................................................... 4 § 206.101 .......................................................................................................... 4 § 206.201 ......................................................................................................... 6 § 601.0522 ........................................................................................................ 4 § 602.151(a) ...................................................................................................... 4 § 602.201 ......................................................................................................... 6 § 603.152 .......................................................................................................... 4 § 603.251 .......................................................................................................... 6 Tex. Civ. Prac. & Rem. Code § 104.004(a) ............................................................. 5 Tex. Ins. Code § 1455.002-.003 ............................................................................ 13 Tex. Ins. Code § 1455.004(a) ................................................................................ 13 Regulations: 22 Tex. Admin. Code: §§ 174.1-174.12 ............................................................................................... 15 § 174.2(2) ....................................................................................................... 15

§ 174.2(3)-(4) ............................................................................................ 16, 18 § 174.6 ............................................................................................................ 15

§ 174.7 ........................................................................................................... 16 § 174.8(a)(2) ................................................................................................... 15 § 175.8(a)(2) ................................................................................................... 16 § 178.7(b) ......................................................................................................... 7 §§ 190.1-190.16 .............................................................................................. 16 § 190.8 ........................................................................................................... 16 § 190.8(1)(L) ............................................................................................. 17, 18 § 190.8(1)(L)(i)(II) ......................................................................................... 18 § 190.8(1)(L)(i)(III) ........................................................................................ 18

Miscellaneous: 29 Tex. Reg. 3909 (Apr. 23, 2004) ........................................................................ 16 29 Tex. Reg. 6092 (July 4, 2004)........................................................................... 17 35 Tex. Reg. 3390-93 (Apr. 30, 2010) .................................................................... 14


xii

35 Tex. Reg. 6175-77 (July 16, 2010) ...................................................................... 14 35 Tex. Reg. 9085-91 (Oct. 8, 2010) ...................................................................... 15 35 Tex. Reg. 9090 (Oct. 8, 2010)........................................................................... 15 40 Tex. Reg. 1018-19 (Mar. 6, 2015)...................................................................... 17 40 Tex. Reg. 3159 (May 29, 2015) ......................................................................... 17 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law (2013) ............................ 41 Frank H. Easterbrook, Antitrust and the Economics of Federalism,

26 J. Law & Econ. 23 (1983) .......................................................................... 26 Final Commission Opinion and Order, In re N.C. Bd. of Dental Exam’rs,

152 F.T.C. 640, 2011 WL 11798463 (Dec. 2, 2011) ......................................... 31 Merrick B. Garland, Antitrust and State Action, 96 Yale L.J. 486 (1987) ................ 37 Herbert Hovenkamp & John A. MacKerron, Municipal Regulation and

Federal Antitrust Policy, 32 U.C.L.A. L. Rev. 719 (1985) .................................. 22 David A. Johnson & Humayun J. Chaudhry, Medical Licensing and

Discipline in America (2012) .............................................................................. 3 Earl W. Kintner, Federal Antitrust Law (1994) ...................................................... 36 Richard Squire, Antitrust and the Supremacy Clause,

59 Stan. L. Rev. 77 (2006) .............................................................................. 22 Texas Medical Board, Healthcare Provider Search,

https://public.tmb.state.tx.us/HCP_Search/searchinput.aspx ......................40 Texas Medical Board, Self-Evaluation Report (Aug. 2015),

https://www.sunset.texas.gov/public/uploads/files/reports/Medical%20Board%20SER%20Sept%201%202015.pdf%20-%20Adobe%20Acrobat%20Pro_0.pdf .............................................................. 44

Lawrence H. Tribe, American Constitutional Law (2d ed. 1988) ............................ 54


Introduction

The States’ sovereign regulation of their economies has never been sub-

ject to scrutiny under federal antitrust law. Instead, the States are free to pur-

sue their own policy goals. Exxon Corp. v. Gov. of Md., 437 U.S. 117, 133 (1978).

Thus, when a State uses an expert agency to carry out its regulatory policies,

the State’s antitrust immunity applies to its agency’s conduct so long as it “re-

sult[s] from procedures that suffice to make it the State’s own.” N.C. State

Bd. of Dental Exam’rs v. FTC, 135 S. Ct. 1101, 1111 (2015). In this context, that

requires that the State has clearly articulated a policy allowing professional

regulation and provides for active supervision giving realistic assurance that

the regulations accord with state policy. Id. at 1112.

The Texas Medical Practice Act regulates the practice of medicine in

Texas by requiring that physicians maintain licenses that can be terminated or

curtailed for practices inconsistent with public health and welfare. Tex. Occ.

Code §§ 155.001, 164.001, 164.051. Texas created the Texas Medical Board

as the state agency to administer that Act, and Texas authorized judicial re-

view of the Board’s regulations and disciplinary actions.

Here, the Board issued rules concerning standards of care in telemedicine.

Plaintiffs disagree with those standards. But they did not bring a rule challenge

in state court. Instead, they alleged that the physician officers on the Board

violated federal antitrust law by voting, in their official capacity, to issue the

rules. This claim should not be allowed to proceed because the State’s anti-

trust immunity applies to the Board’s official rulemaking.


2

Statement of Jurisdiction

Defendants are sued in their official capacity as officers of the Texas Med-

ical Board, an agency of the State of Texas. ROA.2372. They appeal from a

district-court order denying their motion to dismiss a federal antitrust claim

as barred by the doctrine of state-action immunity. ROA.2372-93; see Parker v.

Brown, 317 U.S. 341 (1943) (articulating doctrine).

Appellate jurisdiction exists under the collateral-order doctrine. See Mar-

tin v. Memorial Hosp., 86 F.3d 1391, 1395, 1394-97 (5th Cir. 1996) (a denial of

state-action immunity is appealable under the collateral-order doctrine be-

cause “Parker v. Brown state action immunity shares the essential element of

absolute, qualified and Eleventh Amendment immunities—an entitlement not

to stand trial under certain circumstances”) (quotation marks omitted); see

also Acoustic Sys., Inc. v. Wenger Corp., 207 F.3d 287, 293 (5th Cir. 2000) (“the

reasoning that underlies the immediate appealability of an order denying ab-

solute, qualified or Eleventh Amendment immunity indicates that the denial

of state action immunity to a state, its officers, or its agents should be similarly

appealable”).

The district court’s jurisdiction over plaintiffs’ antitrust claim rested on

28 U.S.C. §§ 1331 and 1337 and the Ex parte Young exception to defendants’

Eleventh Amendment sovereign immunity. See Puerto Rico Aqueduct & Sewer

Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 144-46 (1993). The district court

denied defendants’ motion to dismiss on December 14, 2015. ROA.2372-93.

Defendants timely noticed an appeal on January 8, 2016. ROA.2394.


3

Statement of the Issue

The question presented is whether state-action immunity applies because

Texas law (1) clearly articulates a policy allowing the Board to regulate stand-

ards of medical practice and (2) provides for adequate supervision to ensure

that the Board has not departed from its mandate to pursue state policy.

Statement of the Case

I. Texas regulation of the practice of medicine

Texas has long regulated the practice of medicine within its borders. Alt-

hough licensure goes back to the colonies, the modern system traces to the

second half of the nineteenth century. See David A. Johnson & Humayun J.

Chaudhry, Medical Licensing and Discipline in America 3-4, 23 (2012). Recog-

nizing the value of a licensing system to promote reliable care and public wel-

fare, Texas adopted its medical licensing authority in 1873, later moving from

county boards of medical examiners to a state board of examiners. Id. at 23.

Many other States followed suit before the turn of the century. Id.; see, e.g.,

Dent v. West Virginia, 129 U.S. 114 (1889) (rejecting due-process challenge to

medical licensing law).

Today, the Texas Legislature has continued to find that “the interests of

the residents of the state are served by the regulation of certain professions

and other occupations.” Tex. Gov’t Code § 318.001(1). Accordingly, Texas

regulates the practice of medical professionals including physicians, physician

assistants, surgical assistants, acupuncturists, medical radiological physicists,


4

and perfusionists. Tex. Occ. Code chs. 151-165, 204-206, 601-603. Rulemak-

ing authority for all of those occupations is vested in the Texas Medical Board

(“the Board”). Id. §§ 153.001, 204.102(b), 205.101(b), 206.101, 601.0522,

602.151(a), 603.152.

The Board is “an agency of the executive branch of state government,”

id. § 152.001(a), consisting of nineteen members appointed by the Governor

of Texas and confirmed by the Texas Senate, id. § 152.002(a). With the Sen-

ate’s approval, the Governor may also remove any board member he appoints.

Tex. Const. art. XV, § 9(a).

Of the nineteen Board members, nine must be alleopathic physicians,

three must be osteopathic physicians, and the remaining seven must come

from public life. Tex. Occ. Code § 152.002(a). Each physician member must

have been practicing for the prior five years, with at least three years as a med-

ical peer reviewer. Id. § 152.003(d). No Board member may be an officer or

employee of any “association of business or professional competitors in this

state designed to assist its members and its industry or profession” in promot-

ing their common interests. Id. § 152.004(a), (c).

As state officers, Board members must take the oath required by the Texas

Constitution, solemnly swearing to faithfully execute the duties of office and

swearing that they had not given money or anything of value in exchange for

the office. Tex. Const. art. XVI, § 1(a)-(b). Each member must also follow

Texas’s open-government and ethics laws, including its open-meetings law,

open-records law, and conflict-of-interest and financial-disclosure laws. Tex.


5

Gov’t Code chs. 551, 552, 572; Tex. Occ. Code § 153.008. Indeed, members

must receive training regarding those laws before they can vote on the Board.

Tex. Occ. Code § 152.010(b)(7)-(8). As public servants, Board members are

entitled to representation by the Attorney General of Texas. Tex. Civ. Prac.

& Rem. Code § 104.004(a).

In evaluating whether to regulate “a profession or occupation,” the Leg-

islature has required consideration of least-restrictive-means factors, such as

“whether the regulation would have the effect of directly or indirectly increas-

ing the costs of any goods or services and, if so, whether the increase would be

more harmful to the public than the harm that might result from the absence

of regulation.” Tex. Gov’t Code § 318.002(3). Not only must state actors con-

sider those factors in evaluating professional regulation, but the Legislature

has created a process to reevaluate the need for regulatory agencies to exist.

Under this “sunset review” process, agencies cease to exist after a specified

period of time unless the Legislature affirmatively continues the agency. See

id. § 325.015(a). The Texas Medical Board is subject to sunset review, which

will next occur in 2017. Tex. Occ. Code § 151.004. As part of that process, an

agency must report on listed criteria, Tex. Gov’t Code § 325.007(a)(1), in-

cluding “whether less restrictive or alternative methods of performing any

function that the agency performs could adequately protect or provide service

to the public,” id. § 325.011(5). This reporting requirement reinforces the

Legislature’s mandate that state actors consider potential costs in considering

occupational regulation.


6

II. The Texas Medical Board’s licensing and disciplinary authority

For professions regulated by the Board, the Legislature has displaced the

model of unrestrained competition with a system of regulation. For example,

the Texas Medical Practice Act directs: “A person may not practice medicine

in this state unless the person holds a license issued under this subtitle.” Tex.

Occ. Code § 155.001; accord, e.g., id. §§ 204.151, 206.201, 602.201, 603.251

(similar licensing requirements to practice as a physician assistant, surgical as-

sistant, medical radiologist physicist, and perfusionst).

The Legislature thus empowered the Board to issue licenses to practice

medicine, id. § 155.002(a), and to “regulate the practice of medicine in this

state,” id. § 153.001(3). The Legislature then cabined that power to accom-

modate certain avenues of competition. For example, the Legislature prohib-

ited “rules restricting advertising or competitive bidding by a person regulated

by the board” and prohibited “a fee schedule for medical services.” Id.

§§ 153.002(a), 153.010.

The Legislature also assigned the Board duties regarding complaints

against physicians. Either a private person or the Board itself may file a com-

plaint charging a physician with grounds for discipline, see id. § 154.051, such

as “a violation of [the Medical Practice Act] or a board rule,” id. § 164.001(a).

The Medical Practice Act authorizes disciplinary action for various miscon-

duct, including failing “to practice medicine in an acceptable professional

manner consistent with public health and welfare.” Id. § 164.051(a)(6). The

Board is authorized to “ensure that appropriate care, including quality of care,


7

is provided to patients who receive telemedicine medical services.” Tex.

Gov’t Code § 531.0217(i); accord Tex. Occ. Code § 153.004.

The Board investigates each complaint filed and, if it pursues the com-

plaint, first conducts an internal “informal proceeding” to seek resolution. See

Tex. Occ. Code § 164.003; 22 Tex. Admin. Code § 178.7(b). If that does not

settle the complaint, a formal hearing is held by “an administrative law judge

employed by the State Office of Administrative Hearings” (SOAH), which is

an independent state agency. Tex. Occ. Code § 164.007(a). That agency’s ad-

ministrative law judges are “not responsible to or subject to the supervision,

direction, or indirect influence” of anyone outside SOAH. Tex. Gov’t Code

§ 2003.041(c). At the formal hearing, the administrative law judge takes evi-

dence and determines whether the statute or rule at issue was violated. Tex.

Occ. Code § 164.007.

Most state agencies in Texas have authority to modify or vacate on policy

grounds a SOAH administrative law judge’s findings and conclusions. Tex.

Gov’t Code § 2001.058(e). But the Texas Medical Board does not. That au-

thority is specifically withheld. Tex. Occ. Code § 164.007(a) (“the board shall

dispose of the contested case by issuing a final order based on the administra-

tive law judge’s findings of fact and conclusions of law”), (a-1) (“the board

may not change a finding of fact or conclusion of law or vacate or modify an

order of the administrative law judge”). The Board’s discretion extends only

to determining the appropriate sanction for any violation found by the admin-

istrative law judge. Id. § 164.007(a-1).


8

If the Board disagrees with the SOAH administrative law judge’s findings

or conclusions, the Board’s recourse is judicial review in a state district court.

Id. (“The board may obtain judicial review of any finding of fact or conclusion

of law issued by the administrative law judge ....”); see id. § 153.013 (“The

board shall be represented in court proceedings by the attorney general.”). In

that review, the court will review the administrative law judge’s findings of

fact deferentially and legal conclusions de novo. See Tex. Gov’t Code

§ 2001.174. The district court’s decision can then be appealed, as with civil

actions generally. Id. § 2001.901(a).

If the SOAH administrative law judge concludes that the physician vio-

lated a statute or rule, the physician “is entitled to judicial review” in state

district court. Id. § 2001.171; accord Tex. Occ. Code § 164.009. Again, the dis-

trict court reviews the independent administrative law judge’s findings of fact

deferentially and conclusions of law de novo, see Tex. Gov’t Code § 2001.174,

with further judicial review available by appeal, id. § 2001.901(a).

III. The Texas Medical Board’s rulemaking authority

The Board has authority to adopt rules in order to perform its duties un-

der the Medical Practice Act and regulate the practice of medicine. Tex. Occ.

Code § 153.001. Under the Texas Administrative Procedure Act, a number of

requirements attend the Board’s rulemaking. First, unlike the federal system,

Texas law generally requires that even interpretive rules be issued through

notice-and-comment procedure. Teladoc, Inc. v. Tex. Med. Bd., 453 S.W.3d

606, 616 n.48 (Tex. App.—Austin 2014, pet. denied) (“the Texas APA differs


9

from its federal counterpart in making ‘rules’ that ‘interpret’ law or policy—

the so-called ‘interpretive rules’—subject to notice-and-comment rulemaking

requirements”); see Howell v. Mauzy, 899 S.W.2d 690, 705 n.33 (Tex. App.—

Austin 1994, writ denied) (“Interpretive rules are those that interpret and ap-

ply the provisions of the statute under which an agency operates. No sanction

attaches to the violation of an interpretive rule as such; the sanction attaches

to the violation of the statute, which the rule merely interprets.”) (quotation

marks and citation omitted).

Second, “before the rule is adopted,” it must be referred for review “to

the appropriate standing committee” of the Legislature. Tex. Gov’t Code

§ 2001.032(a). The committee “may send to a state agency a statement sup-

porting or opposing adoption of a proposed rule.” Id. § 2001.032(c). If the

agency proceeds, the agency must state on request its “reasons for overruling

the considerations urged against adoption,” allowing the Legislature to eval-

uate whether to overturn the rule. Id. § 2001.030. And in all cases the agency

must give a “reasoned justification for the rule.” Id. § 2001.033(a)(1). That

requires a statement of “the particular statutory provisions under which the

rule is adopted and of how the agency interprets the provisions as authorizing

or requiring the rule,” as well as establishing “a rational connection between

the factual basis for the rule and the rule as adopted.” Id. § 2001.033(a)(1)(B),

(a)(2). If a rule would have an adverse economic effect on a small business, the

agency must also prepare an “economic impact statement” that describes the

agency’s consideration of “alternative methods of achieving the purpose of


10

the proposed rule.” Id. § 2006.002(c)(1). Together, these procedural require-

ments “promote public accountability and facilitate judicial review” of a

rule’s substance. Nat’l Ass’n of Indep. Insurers v. Tex. Dep’t of Ins., 925 S.W.2d

667, 669 (Tex. 1996) (adherence to rulemaking procedure “allows interested

parties to better formulate ‘specific, concrete challenges’ to a rule”).

Third, an interested party can bring a declaratory judgment action in state

court to invalidate a rule. Tex. Gov’t Code § 2001.038(a). Judicial review is

available as to both procedure and substance. Some cases involve only a pro-

cedural challenge. In that event, the reviewing court asks whether the agency

substantially complied with the required rulemaking procedure. E.g., Nat’l

Ass’n of Indep. Insurers, 925 S.W.2d at 669.

Other challenges involve the substance of a rule. In substantive-challenge

cases, Texas courts ask whether the rule was authorized and “in harmony with

the general objectives of the various statutes involved.” Tex. Orthopaedic Ass’n

v. Tex. State Bd. of Podiatric Med. Exam’rs, 254 S.W.3d 714, 722 (Tex. App.—

Austin 2008, pet. denied) (holding licensing board’s rule substantively inva-

lid); accord Tex. Bd. of Chiropractic Exam’rs v. Tex. Med. Ass’n, 375 S.W.3d 464,

475-88 (Tex. App.—Austin 2012, pet. denied) (after reviewing expert testi-

mony introduced in district court, holding licensing board’s regulation sub-

stantively invalid).

Reviewing courts look to the duties “expressly conferred” on an agency,

as well as powers “reasonably necessary to fulfill its express functions or du-


11

ties.” Tex. Orthopaedic Ass’n, 254 S.W.3d at 719. When statutes confer author-

ity in broader terms, reviewing courts do not ask whether a rule’s substance

accords with the court’s own policy preferences; instead, courts require har-

mony with the objectives set by the Legislature. Lambright v. Tex. Parks &

Wildlife Dep’t, 157 S.W.3d 499, 510 (Tex. App.—Austin 2005, no pet.).

Not only must an agency’s rules fall within the Legislature’s design, but

its “rules and regulations must be consistent with the constitution ... of this

state.” Liberty Mut. Ins. Co. v. Griesing, 150 S.W.3d 640, 648 (Tex. App.—

Austin 2004, pet. dism’d). That includes the Texas Constitution’s due-

course-of-law provisions, which “protect[] individual rights that the United

States Supreme Court determined were not protected by the federal Consti-

tution” under the Fourteenth Amendment’s Due Process Clause. Patel v. Tex.

Dep’t of Licensing & Regulation, 469 S.W.3d 69, 87 (Tex. 2015) (invalidating

professional-licensing statutes and regulations under Texas Constitution).

Finally, the Texas judiciary has “never expressly adopted the Chevron or

Skidmore doctrines for our consideration of a state agency’s construction of a

statute.” R.R. Comm’n v. Tex. Citizens for a Safe Future, 336 S.W.3d 619, 625

(Tex. 2011). The analysis can be similar: “in certain circumstances courts may

be required to defer to an administrative agency’s construction of its own stat-

utory authority.” Tex. Med. Ass’n, 375 S.W.3d at 474-75 (citing Tex. Citizens,

336 S.W.3d at 624-25). But those deference principles “apply only where the

statute in question is ambiguous and only to the extent that the agency’s in-

terpretation is one of those reasonable interpretations,” and “may be subject


12

to further qualifications where the subject matter is not within any specialized

expertise of the agency and where ‘a nontechnical question of law’ is in-

volved.” Id. at 475 (citing Tex. Citizens, 336 S.W.3d at 630). The “determin-

ing factor” in a substantive challenge to rules “is whether the rules are in har-

mony with the general objectives of the legislation involved,” and that “is a

question of law” that Texas courts decide de novo. Lambright, 157 S.W.3d at

510 (quotation marks omitted).

Plaintiffs did not pursue either a procedural or substantive challenge to

the Board rules at issue here.

IV. The challenged telemedicine rules

A. Statutory background

The Texas Legislature has specifically directed the Texas Medical Board

to ensure that appropriate medical care is delivered to telemedicine patients.

First, the Legislature expanded the Texas Medicaid program to include

reimbursement for “telemedicine medical services.” Tex. Gov’t Code

§ 531.0216(a); see also Tex. Health & Safety Code § 62.1571(a) (similar law for

state-funded children’s health insurance program). The Legislature directed

that the Texas Medical Board, in consultation with the state health agency,

adopt rules as necessary to “ensure that appropriate care, including quality of

care, is provided to patients who receive telemedicine medical services.” Tex.

Gov’t Code § 531.0217(i)(1); accord Tex. Occ. Code § 153.004.


13

Second, the Legislature directed that certain health plans regulated by the

Department of Insurance, see Tex. Ins. Code § 1455.002-.003, may not ex-

clude medical services due to their telemedicine nature, id. § 1455.004(a). The

Legislature directed that the Texas Medical Board, in consultation with the

insurance commissioner, adopt rules as necessary to “ensure that patients us-

ing telemedicine medical services receive appropriate, quality care.” Tex.

Occ. Code § 111.004(1).

As a matter of statutory terminology, “‘Telemedicine medical service’

means a health care service that is initiated by a physician ... , that is provided

for [patient assessment, diagnosis, consultation, treatment, or medical-data

transfer], and that requires the use of advanced telecommunications technol-

ogy, other than telephone or facsimile.” Tex. Gov’t Code § 531.001(8).

“‘Telehealth service’ means a health service, other than a telemedicine med-

ical service,” delivered in the same remote manner. Id. § 531.001(7). Thus,

“telemedicine” generally corresponds to the practice of medicine, see Tex.

Occ. Code § 151.002(13) (defining “practicing medicine”), while “tele-

health” corresponds to other health-related services.

B. The rules at issue

Plaintiffs challenge two Board rules, one adopted in October 2010 and one

adopted in April 2015. ROA.2374-75.

1. “New Rule 174”

By statute, physicians must “practice medicine in an acceptable profes-

sional manner, consistent with public health and welfare.” Tex. Occ. Code


14

§ 164.051(a)(6). Thus, if the professional standard of care for a given medical

service does not require examining the patient, that service can be rendered

remotely over the telephone. Conversely, if the standard of care requires ex-

amining a patient as part of a given medical service, then the physician can

perform that service on a remote patient only using technology that allows an

effective examination, tantamount to what the patient would receive in per-

son. See Tex. Gov’t Code § 531.001(8) (“telemedicine medical service” is a

medical service “that requires the use of advanced telecommunications tech-

nology, other than telephone or facsimile”). For example, the Board has long

enforced the professional standard that physicians prescribing medication

must examine a patient and not just review information self-reported by the

patient. E.g., ROA.1170 (discipline for prescribing antibiotics over Internet

without examining patients); accord ROA.1055-82, 1153-77 (similar discipli-

nary orders in the five years before the Legislature’s last sunset-review con-

tinuance of the Board, in 2005).

In 2010, the Board proposed rule revisions to define with more particular-

ity what remote equipment and staffing is needed to perform medical services

for which the standard of care requires that a remote patient be examined, thus

requiring “advanced” telecommunications allowing real-time audio-visual

communication. 35 Tex. Reg. 6175, 6175-77 (July 16, 2010) (proposed rules);

35 Tex. Reg. 3390, 3390-93 (Apr. 30, 2010) (proposed rules). The Board ad-


15

dressed comments and adopted the final rules codified in Texas Administra-

tive Code title 22, chapter 174. See 35 Tex. Reg. 9085, 9085-91 (Oct. 8, 2010)

(adopting rules).

Plaintiffs label those 2010 revised rules as “New Rule 174” and allege that

the rules violate federal antitrust law. ROA.1910, 1922. Those rules have been

slightly revised since 2010, see 22 Tex. Admin. Code §§ 174.1-174.12, and the

current rules are cited here because plaintiffs seek only injunctive relief.

Under those rules, if the standard of care requires examining a remote pa-

tient contemporaneously with the medical service, that examination is permit-

ted to occur at any “established medical site,” meaning any location where

there is diagnostic equipment and space for a site presenter (a health profes-

sional such as a nurse) to assist with the treating physician’s remote examina-

tion of the patient. 22 Tex. Admin. Code §§ 174.2(2), 174.6. When a patient

examination required by the standard of care occurs at a such a distant site,

the rules require that the physician still “establish[] a diagnosis through the

use of acceptable medical practices, including documenting and performing

patient history, mental status examination, and physical examination.” 22

Tex. Admin. Code § 174.8(a)(2) (definition of current term “defined physi-

cian-patient relationship”); see 35 Tex. Reg. at 9,090 (definition in 2010 rule

version of “proper physician-patient relationship”).

Hence, a contemporaneous patient examination required by the standard

of care can be performed either at the same location as the doctor (“in-per-


16

son”) or at a remote site where the patient is located with diagnostic equip-

ment and a health professional to assist the treating doctor and is connected

with the treating doctor by real-time communication (“face-to-face”). 22

Tex. Admin. Code §§ 174.2(3)-(4), 175.8(a)(2). The rules also allow for tele-

medicine services that involve a patient examination in certain other ways. Id.

§ 174.7.

Teladoc alleges that “New Rule 174” caused it to eliminate the use of

“video consultations” in Texas and offer a more limited set of services.

ROA.1910. This allegation appears to reflect Teladoc’s understanding that its

physicians were performing services for which the professional standard of

care required actually examining the patient and not just talking by videocon-

ference. It is unclear why such substandard practices would comply with the

Medical Practice Act before New Rule 174, and Teladoc did not seek a pre-

liminary injunction of New Rule 174. ROA.167.

2. “New Rule 190.8”

Apart from the Board’s telemedicine-specific rules, the Board has prom-

ulgated general disciplinary guidelines. See 22 Tex. Admin. Code §§ 190.1-

190.16. As relevant here, Rule 190.8 provides guidance on what practices the

Board considers to be “violations of the [Medical Practice] Act.” Id. § 190.8.

As of 2011, that rule memorialized the Board’s view that the Medical Practice

Act is violated by “prescription of any dangerous drug or controlled substance

without first establishing a proper professional relationship with the patient.”

29 Tex. Reg. 3908, 3909 (Apr. 23, 2004) (proposed Rule 190.8(1)(L)), adopted


17

by 29 Tex. Reg. 6092, 6092 (July 4, 2004). The disciplinary guidelines stated:

“[A] proper relationship, at a minimum requires ... establishing a diagnosis

through the use of acceptable medical practices such as patient history, mental

status examination, physical examination, and appropriate diagnostic and la-

boratory testing. An online or telephonic evaluation by questionnaire is inad-

equate.” Id.

In 2011, the Board wrote a letter to Teladoc stating that its physicians

would be subject to discipline if they prescribed medication without first con-

ducting an examination of the patient face-to-face, i.e., either at the same lo-

cation or using telemedicine. ROA.172-74. The letter stated that a telephone

conversation is not an examination that satisfies the standard of care for pre-

scribing medication. ROA.173.

Teladoc challenged the letter as itself a “rule” under the Texas Adminis-

trative Procedure Act. A state court agreed and held that the letter’s guidance

had to go through notice-and-comment procedure. Teladoc, 453 S.W.3d at

619-20.

The Board ultimately engaged in notice-and-comment rulemaking to is-

sue a revised Rule 190.8(1)(L). See 40 Tex. Reg. 1018, 1018-19 (Mar. 6, 2015),

adopted by 40 Tex. Reg. 3159, 3159 (May 29, 2015). This “New Rule 190.8”

makes clear the Board’s interpretation that the Medical Practice Act subjects

physicians to discipline for the unprofessional practice of prescribing medica-

tion without performing a patient history, mental-status examination, and


18

physical examination. 22 Tex. Admin. Code § 190.8(1)(L)(i)(II). The exami-

nation can either be in person, or the patient can be present at a remote loca-

tion that has diagnostic equipment and a health professional to allow an equiv-

alent examination. Id. (cross-referencing 22 Tex. Admin. Code § 174.2(3)-

(4)). The revised rule makes clear the Board’s view that an online question-

naire or telephone conversation is not an examination adequate to satisfy the

standard of care for prescribing medication. Id. § 190.8(1)(L)(i)(III).

V. Procedural history

Teladoc did not seek review in state court of either of those rules. Instead,

Teladoc filed a federal lawsuit against the Texas Medical Board and its mem-

bers who voted for the rules. Teladoc alleged that defendants conspired to un-

reasonably restrain trade or commerce among the States, in violation of the

Sherman Antitrust Act, 15 U.S.C. § 1, and also violated the dormant Com-

merce Clause. ROA.1921-22. Teladoc later dismissed as defendants the Board

itself and the Board members in their individual capacities, ROA.1942, leaving

as defendants the Board members in their official capacities. This brief de-

scribes defendants collectively as the Board because they assume its identity.

E.g., ROA.1774.

Teladoc seeks only injunctive relief. It moved for and received a prelimi-

nary injunction of Rule 190.8. ROA.1774-93. The Board then moved to dismiss

the antitrust claim under the doctrine of state-action immunity. ROA.1956-84.

The district court denied dismissal. ROA.2372-93. It reasoned that the State’s

processes did not show supervision sufficient to provide reasonable assurance


19

that the Board’s regulatory actions promote state policy. ROA.2383-88. The

The Board defendants now appeal.

Summary of the Argument

1. The Sherman Antitrust Act was never meant to affect the States’ abil-

ities to regulate their economies. Hence, to express considerations of federal-

ism and sovereignty, the Supreme Court has recognized state-action immun-

ity from federal antitrust law. Under that doctrine, a state legislature’s direct

actions are ipso facto immune from federal antitrust review. Hoover v. Ronwin,

466 U.S. 558, 567-68 (1984). For other actors, state-action immunity requires

examining whether their conduct “should be deemed state action and thus

shielded from the antitrust laws.” Patrick v. Burget, 486 U.S. 94, 100 (1988).

That test requires, first, that the challenged conduct is “pursuant to a clearly

articulated and affirmatively expressed state policy to replace competition

with regulation.” Hoover, 466 U.S. at 569. Second, that test requires an inquiry

into whether the State actively supervises the conduct with “procedures that

suffice to make it the State’s own.” Dental Exam’rs, 135 S. Ct. at 1111-12.

2. The clear-articulation requirement is met here. Texas law directs the

Texas Medical Board to license physicians and take disciplinary action when

they fail to comply with professional standards. See Tex. Occ. Code

§ 164.051(a)(6). Indeed, Texas law specifically directs the Board to ensure

that patients using telemedicine receive quality care. Tex. Gov’t Code


20

§ 531.0217(i); Tex. Occ. Code §§ 111.004(1), 153.004. Binding circuit prece-

dent on a comparable statute confirms that the Texas Medical Practice Act is

a clear articulation of a policy to displace unbridled competition with a system

of regulation and enforcement of professional standards of care. Earles v. State

Bd. of Certified Pub. Accountants of La., 139 F.3d 1033, 1042-43 (5th Cir. 1998).

3. The active-supervision requirement is met here. That “flexible and

context-dependent” standard requires assessing the “risk that active market

participants will pursue private interests” instead of faithfully implementing

state policy. Dental Exam’rs, 135 S. Ct. at 1114. The degree of that risk in a

given context informs what sort of procedures create a “realistic assurance”

that agency regulations promote state policy and thus “suffice to make [the

agency action] the State’s own.” Id. at 1112, 1116. One degree of supervision

might be sufficient for a government official acting through official channels,

while a greater degree of supervision might be required to show that a private

agreement between two firms somehow implements state policy.

Determining the necessary degree of supervision requires first determin-

ing the degree of the risk at issue, and that risk is low here. Three features of

the Board’s membership minimize the risk that it will forego its official man-

date and act with only a private purpose: (1) the Governor’s appointment of

Board members, as opposed to their election by physicians; (2) the Gover-

nor’s concomitant power to remove Board members; and (3) the breadth of

the Board’s regulatory mission and the diverse practice types of the Board’s

physician members. Three other aspects of Texas law further reduce the risk


21

that shapes the active-supervision requirement: (1) Texas’s sunshine and eth-

ics laws; (2) Board members’ oaths to the State; and (3) the Legislature’s re-

porting requirements for sunset review and other purposes.

Given those considerations, state-court judicial review constitutes active

supervision of the Board’s formal rulemaking for purposes of state-action im-

munity. The reviewing state-court judges are disinterested officials. Judicial

review is not theoretical, but available as of right. Texas courts review the sub-

stance of a rule for harmony with the policy objectives expressed by the Leg-

islature. And Texas courts enjoin as invalid rules not in harmony with those

policy objectives. Moreover, legislative oversight reinforces the supervision

provided by judicial review. Finding a lack of active supervision in this context

would not only intrude on the State’s sovereignty and alter the balance of co-

operative federalism, but lead to several other negative consequences.

Standard of Review

The Board’s entitlement to state-action immunity presents a question of

law reviewed de novo. Martin v. Mem’l Hosp. at Gulfport, 86 F.3d 1391, 1397

(5th Cir. 1996) (holding that the clear-articulation prong of the immunity test

“is a question of law”); see FTC v. Ticor Title Ins. Co., 504 U.S. 621, 639-40

(1992) (deciding without deference whether state-agency oversight consti-

tuted “active supervision” for immunity purposes).


22

Argument

I. State-action antitrust immunity applies to all regulations that are the State’s own.

A. The Supreme Court recognized state-action immunity be-cause federal antitrust laws were never intended to interfere with the States’ actions as sovereign regulators.

As originally enacted, the Sherman Antitrust Act of 1890 did not even ar-

guably implicate the States’ traditional sovereign functions of regulating pro-

fessions operating within their borders. See Herbert Hovenkamp & John A.

MacKerron, Municipal Regulation and Federal Antitrust Policy, 32 U.C.L.A. L.

Rev. 719, 725 (1985) (“[To] any constitutional lawyer in 1890, ... if the state

regulation was constitutional, it was beyond the reach of Congressional power

under the Sherman Act ....”). The expansion of the Supreme Court’s Com-

merce Clause jurisprudence after the turn of the century, however, raised the

question whether the Sherman Act could permissibly reach broad swaths of

traditional intrastate regulation, including state regulation that “restrain[ed]”

the manner in which occupations could be practiced within a State’s borders.

See Richard Squire, Antitrust and the Supremacy Clause, 59 Stan. L. Rev. 77, 98

(2006).

The Supreme Court answered that question in Parker v. Brown, 317 U.S.

341 (1943), holding that the Sherman Act does not “restrain state action.” Id.

at 351. In Parker, a raisin producer sued to enjoin the California director of

agriculture from enforcing a program, adopted under California’s Agricultural

Prorate Act, that ordered raisin producers to hold raisins off the market. Id. at


23

346-51. Establishing such a marketing program under California’s law first re-

quired the petition of at least 10 producers of a particular crop. Id. at 346. If

the State’s Agricultural Prorate Commission agreed that a marketing program

was warranted, the Commission was then “required to select a program com-

mittee from among nominees chosen by the” interested producers, to which

two processors could be added. Id. That committee of market participants

would then formulate a program of price-enhancing marketing restrictions,

which the Commission had to approve if “‘reasonably calculated to carry out

the objectives of this act.’” Id. at 347 (quoting 1939 Cal. Stat. ch. 894, § 15, p.

2494). The marketing program would then automatically become effective

upon a favorable referendum of the interested producers. Id.

The Supreme Court held that the raisin prorate program did not violate

the Sherman Act for reasons of statutory history and language and based on

federalism concerns. The Court first found that “nothing in the language of

the Sherman Act or in its history which suggests that its purpose was to re-

strain a state or its officers or agents from activities directed by its legislature.”

Id. at 350-51. The Court noted that it “abundantly appears” from the Sherman

Act’s legislative history that “its purpose was to suppress combinations to re-

strain competition and attempts to monopolize by individuals and corpora-

tions,” not “state action or official action directed by a state.” Id. at 351.

The Court also deemed its holding necessary on federalism grounds. The

Court noted that the States have authority to regulate their economies “in the

interest of the safety, health, and well-being” of their residents, id. at 362, and


24

may pursue any “legitimate state end,” id. at 367 (citing California v. Thomp-

son, 313 U.S. 113, 115 (1941) (upholding state licensing requirement for trans-

portation brokers)). The Court thus found its view of the Sherman Act neces-

sary to protect the States’ coordinate role in government: “In a dual system

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

only as Congress may constitutionally subtract from their authority, an unex-

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

lightly to be attributed to Congress.” Id. at 351.

B. The clear-articulation and active-supervision requirements ensure that state-action immunity applies to regulations and policies that are the State’s own.

Parker state-action immunity requires “determining whether anticompet-

itive policies and conduct are indeed the action of a State in its sovereign ca-

pacity.” Dental Exam’rs, 135 S. Ct. at 1112. When “a state legislature adopts

legislation, its actions constitute those of the State and ipso facto are exempt

from the operation of the antitrust laws.” Hoover v. Ronwin, 466 U.S. 558, 567-

68 (1984) (citation omitted). The same is true for “a decision of a state su-

preme court, acting legislatively,” a realm in which it is the ultimate policy-

maker. Id. at 568.

“Closer analysis is required when the activity at issue is not directly that

of the legislature or supreme court,” for it “becomes important to ensure that

the anticompetitive conduct of the State’s representative was contemplated

by the State.” Id. Hence, in cases “involving the anticompetitive conduct of a


25

nonsovereign state representative,” the Supreme Court “has required a

showing that the conduct is pursuant to a clearly articulated and affirmatively

expressed state policy to replace competition with regulation” and “also has

found the degree to which the state legislature or supreme court supervises its

representative to be relevant to the inquiry.” Id. at 569 (quotation marks omit-

ted); Dental Exam’rs, 135 S. Ct. at 1111-12.

1. Clear articulation

In Town of Hallie v. City of Eau Claire, the Supreme Court held that the

clear-articulation standard is satisfied where anticompetitive conduct by a

nonsovereign actor is “a foreseeable result” of state law. 471 U.S. 34, 41-44

(1985). There, the defendant city operated a sewage-treatment facility and re-

fused to provide sewage service to nearby townships, which sued under the

Sherman Act. Id. at 36-37. State law “authorized the City to provide sewage

services and also to determine the areas to be served.” Id. at 42. That met the

clear-articulation standard: “We think it is clear that anticompetitive effects

logically would result from this broad authority to regulate.” Id. And the clear-

articulation standard does not require that the challenged action have been

“compelled” by the State. Id. at 45. Hence, a state legislature need not “de-

scribe ... in detail” the implementation of a clearly articulated policy to dis-

place competition because doing so would make “it difficult to implement [the

policy] through regulatory agencies ... th[at] are able to deal with problems

unforeseeable to, or outside the competence of, the legislature.” S. Motor Car-

riers Rate Conf., Inc. v. United States, 471 U.S. 48, 64-65 (1985).


26

Of course, clear articulation is lacking if a State’s competition-neutral del-

egation of authority might merely “inadvertently authoriz[e]” the nonsover-

eign actor’s conduct. FTC v. Phoebe Putney Health Sys., Inc., 133 S. Ct. 1003,

1016 (2013). Hence, in Phoebe Putney, the State’s grant to a public hospital au-

thority of “simple permission to play in a market” by making contracts did

not “foreseeably entail” permission to contract for hospital mergers in re-

straint of trade. Id. at 1013 (quotation marks omitted); accord, e.g., Cmty.

Commc’ns Co. v. City of Boulder, 455 U.S. 40, 51 (1982) (home-rule constitu-

tional amendment granting a city general power to enact ordinances did not

imply a choice to effectuate the State’s anticompetitive policies “through the

instrumentality of its cities and towns”); Goldfarb v. Va. State Bar, 421 U.S.

773, 790 (1975) (no immunity where “it cannot fairly be said” that a state su-

preme court’s rules authorized a state bar’s ethics opinions endorsing an at-

torney fee schedule).

But when the subject of the State’s delegation of authority is “an anticom-

petitive regulatory program,” then “the State’s failure to describe the imple-

mentation of its policy in detail” is irrelevant in recognizing its “clear intent

to displace competition.” S. Motor Carriers, 471 U.S. at 64 (clear-articulation

test met by law authorizing state agency to set industry prices); see Frank H.

Easterbrook, Antitrust and the Economics of Federalism, 26 J. Law & Econ. 23,

23 (1983) (“Regulation displaces competition. Displacement is the purpose,

indeed the definition, of regulation.”).


27

2. Active supervision

State-action immunity requires “more than a mere facade of state in-

volvement” in the conduct at issue, “for it is necessary in light of Parker’s

rationale to ensure the States accept political accountability for anticompeti-

tive conduct they permit and control.” Dental Exam’rs, 135 S. Ct. at 1111. Con-

sequently, state-action immunity requires that the conduct of nonsovereign

actors “result from procedures that suffice to make it the State’s own.” Id.

Those procedures vary according to the nature of the actors whose conduct is

challenged.

a. Private nonsovereign actors

The Supreme Court has long dealt with the active-supervision require-

ment in the context of private nonsovereign actors. Four cases define the

Court’s approach, and they are reviewed here to show the private nature of

the action involved in each.

First, in California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., a

California liquor-control statute required that state-licensed wine merchants

could not sell wine below the prices posted with a state agency by either a wine

producer or, failing that, by wholesalers of the wine producer’s brands. 445

U.S. 97, 99 (1980). The Court emphasized that “the State neither establishes

prices nor reviews the reasonableness of the price schedules.” Id. at 105. In-

stead, the State simply “enforces the prices established by private parties.”

Id. The Court held that “what is essentially a private price-fixing arrange-


28

ment” was not sufficiently supervised by the State to qualify as its own sover-

eign regulation. Id. at 106. In so holding, the Court drew a contrast between

the liquor agency’s failure to review the privately set rates and the facts of

Parker, in which the agriculture commission “appointed by the Governor”

approved the proposed marketing program. Id. at 104.

Second, the Supreme Court’s next active-supervision case also involved

private fixing of alcohol resale prices. 342 Liquor Corp. v. Duffy, 479 U.S. 335,

342 (1987) (the conduct “is essentially similar to the violation in Midcal”).

Liquor prices were posted by private parties and enforced by the state’s liquor

authority, but neither that agency nor the state legislature “exerts any signifi-

cant control over retail liquor prices or markups.” Id. at 345 n.7. “As in

Midcal,” the State “neither establishes prices nor reviews the reasonableness

of the price schedules.” Id. at 344-45 (quotation marks omitted). So the Court

found no active supervision of the private parties’ activity. Id.

Third, the Supreme Court in Patrick v. Burget, confronted a surgeon’s

claim that other physicians on a private hospital’s peer-review committee vi-

olated the Sherman Act by conspiring to revoke his hospital privileges. 486

U.S. at 96-98. The defendants claimed state-action immunity by arguing that

Oregon actively supervised private peer review through the state health

agency, the state medical board, and the state judicial system. Id. at 101. The

Court rejected that claim because the defendants did not show “that any of

these actors reviews—or even could review—private decisions regarding hos-


29

pital privileges to determine whether such decisions comport with state regu-

latory policy and to correct abuses.” Id. As to judicial review, the Court ex-

pressly declined to “decide the broad question whether judicial review of pri-

vate conduct” can constitute active supervision, id. at 104, because no Oregon

law even appeared to afford such review and because the state court that had

entertained the possibility of such review indicated that it would not “review

the merits of a privilege termination decision to determine whether it accorded

with state regulatory policy,” as to “convert the action of a private party in

terminating a physician’s privileges into the action of the State,” id. at 105.

Finally, the Supreme Court most recently addressed active supervision of

private nonsovereign actors in FTC v. Ticor Title Insurance Co., 504 U.S. 621

(1992). There, six of the nation’s largest title companies used a private asso-

ciation to establish uniform fees for title searches and title examinations,

which were filed with state insurance offices and became effective automati-

cally unless the State rejected them. Id. at 628-29. The Court faulted the pri-

vate companies’ claim to state-action immunity because the state insurance

agencies did not actually review the rates. Id. at 638 (describing state-agency

practices). The Supreme Court stated that no antitrust violation is “more per-

nicious than price fixing” and that the Court’s ruling “should be read in light

of the gravity of the antitrust offense, the involvement of private actors

throughout, and the clear absence of state supervision.” Id. at 639. Hence, the

decision “do[es] not imply that some particular form of state or local regula-

tion is required to achieve” other regulatory ends. Id.


30

b. Governmental nonsovereign actors

The requirement of active state supervision “serves essentially an eviden-

tiary function: it is one way of ensuring that the actor is engaging in the chal-

lenged conduct pursuant to state policy.” Town of Hallie, 471 U.S. at 46. Be-

cause the active-supervision requirement “is flexible and context-depend-

ent,” Dental Exam’rs, 135 S. Ct. at 1116, it applies differently to different types

of governmental actors.

i. Municipalities

“Cities are not themselves sovereign; they do not receive all the federal

deference of the States that create them.” City of Lafayette v. La. Power & Light

Co., 435 U.S. 389, 412 (1978). Because municipal action does not implicate

“‘a state’s control over its officers and agents’ in activities directed by the

legislature,” a municipality’s immunity from antitrust law requires that it is

engaging in the challenged activity pursuant to clearly expressed state policy.

Town of Hallie, 471 U.S. at 38 (quoting Parker, 317 U.S. at 351). A municipal-

ity’s governmental character, however, means that it need not also show ac-

tive state supervision. Id. at 47.

ii. Regulatory agencies

Last year, in North Carolina State Board of Dental Examiners v. FTC, 135

S. Ct. 1101, the Supreme Court took up whether a state regulatory agency in-

voking state-action immunity must show active supervision of its conduct.

That case involved North Carolina’s licensing board for dentists. Six of its

eight members are “elected by other licensed dentists in North Carolina,” and


31

its organic statute “does not create any mechanism for the removal of an

elected member of the Board by a public official.” Id. at 1108. The FTC chal-

lenged the dental board’s conduct of sending cease-and-desist letters ordering

nondentist teeth-whitening providers to stop performing that service, which

the board viewed as the unlicensed practice of dentistry. Id. at 1108-09.

The FTC entered an administrative order that barred the dental board

from sending such letters but “explicitly permit[ted] the Board to bring (or

cause to be brought) judicial proceedings against non-dentist providers, to

bring administrative proceedings against dentists, and to send bona fide litiga-

tion warning letters to targets of investigation.” Final Commission Opinion

and Order, In re N.C. Bd. of Dental Exam’rs, 152 F.T.C. 640, 2011 WL

11798463, at *37 (Dec. 2, 2011). The FTC explained that its proceeding “does

not involve a challenge to a state law or regulation.” Id. at *38. “Rather, this

proceeding challenges actions, including sending cease and desist letters to

non-dentists, that were not authorized by the Dental Practice Act.” Id. at *28;

accord id. at *37.

On appeal, the Supreme Court rejected the dental board’s claim to state-

action immunity from federal antitrust law. Dental Exam’rs, 135 S. Ct. at 1117.

The Court held that the two Midcal requirements provide “a proper analytical

framework” to resolve the “ultimate question whether an anticompetitive

policy is indeed the policy of a State.” Id. at 1112. The “first requirement—

clear articulation—rarely will achieve that goal by itself,” and “the second


32

Midcal requirement—active supervision—seeks to” ensure that the chal-

lenged conduct is the State’s own. Id.

Although the dental board argued that it was “exempt from Midcal’s sec-

ond requirement” as a state agency, the Court held that “the need for super-

vision turns not on the formal designation given by States to regulators but on

the risk that active market participants will pursue private interests in restrain-

ing trade.” Id. at 1113-14. The Court that the supervision requirement turned

on the “structural risk of market participants’ confusing their own interests

with the State’s policy goals.” Id. at 1114. Applying that structural approach,

the Court held that “a state board on which a controlling number of deci-

sionmakers are active market participants in the occupation the board regu-

lates must satisfy Midcal’s active supervision requirement in order to invoke

state-action antitrust immunity.” Id.

The Court did not apply the active-supervision test in Dental Examiners

because the dental board did “not contend in this Court that its anticompeti-

tive conduct was actively supervised by the State or that it should receive Par-

ker immunity on that basis.” Id. at 1116. However, the Court noted in dicta

that its prior cases on active supervision of private conduct had “identified

only a few constant requirements of active supervision,” namely: (1) review

of the substance of the decision and not just the procedures producing it, id.

(citing Patrick, 486 U.S. at 102-03); (2) power to veto or modify decisions that

do not accord with state policy, id. (citing Patrick, 486 U.S. at 102-03); (3) ac-

tual and not merely potential review by the supervisor, id. (citing Ticor, 504


33

U.S. at 638); and (4) a supervisor not itself an active market participant, id. at

1117.

The Court also noted that the active-supervision test “is flexible and con-

text-dependent.” Id. at 1116. “Active supervision need not entail day-to-day

involvement in an agency’s operations or micromanagement of its every deci-

sion.” Id. The Court explained that the ultimate focus of both the clear-artic-

ulation and active-supervision test “is not whether the challenged conduct is

efficient, well-functioning, or wise.” Id. at 1111. “Rather, it is whether anti-

competitive conduct engaged in by nonsovereign actors should be deemed

state action and thus shielded from the antitrust laws.” Id. (quotation and al-

teration marks omitted).1

II. The clear-articulation requirement is met here.

Under binding Fifth Circuit precedent, the Texas Medical Practice Act is

a clear articulation of a policy to displace unbridled competition with a system

of regulation and enforcement of professional standards of care. See Earles v.

State Bd. of Certified Pub. Accountants of La., 139 F.3d 1033, 1042-43 (5th Cir.

1998). Earles is unaffected on this point by the Supreme Court’s recent deci-

sion in Dental Examiners, which expressly did not adjudicate the clear-articu-

lation issue. 135 S. Ct. at 1110 (“The parties have assumed that the clear artic-

ulation requirement is satisfied, and we do the same.”). The district court here

1 By invoking state-action immunity, the Board of course is not relinquishing its

right to object to the merits of plaintiffs’ claim, including on the issues of conspiracy and anticompetitive effect. But those merits issue are not presented in this appeal.


34

also did not decide the clear-articulation issue. ROA.2389. But resolution of

that issue is necessary to recognize state-action immunity, and the issue is

properly resolved by this Court on appeal because it is a “question of law.”

Martin, 86 F.3d at 1397.

Earles involved Louisiana’s licensing board for certified public account-

ants, which issued rules barring licensed accountants from working on com-

mission and from the “incompatible profession” of simultaneously selling se-

curities. 139 F.3d at 1034. This Court held that state-action immunity fore-

closed an antitrust challenge to those rules, as the Midcal clear-articulation re-

quirement was met. Id. at 1034, 1041-44. The relevant Louisiana statutes gave

the accounting board “broad power to regulate the profession of accounting.”

See id. at 1042-43 (quoting statutes). The plaintiffs argued that the Louisiana

statutes did not “expressly state an intention to displace competition in the

accounting profession by restricting the practice of ‘incompatible professions’

and the acceptance of commissions”—as the challenged rules did. Id. at 1043.

But this Court rejected that critique, because the test does not require that

level of specificity. Id.

As Earles held, Louisiana’s decision that the board should regulate the

practice of accounting according to professional standards had the “foreseea-

ble result” of rulemaking “that has anticompetitive effects.” Id. That satisfies

Midcal’s clear-articulation requirement. Id. at 1042-43 (“It is enough ... if sup-

pression of competition is the foreseeable result of what the statute author-

izes.”) (quotation marks omitted).


35

That holding applies here. Similar to the Louisiana accounting statutes,

Texas law directs the Texas Medical Board to license physicians and take dis-

ciplinary action when they fail to comply with professional standards. See Tex.

Occ. Code § 164.051(a)(6). Indeed, Texas law is more specific in expressly di-

recting the Board to ensure that patients using telemedicine receive quality

care. Tex. Gov’t Code § 531.0217(i); Tex. Occ. Code §§ 111.004(1), 153.004.

Earles correctly holds that this meets the clear-articulation test. To require the

Legislature to minutely “catalog all of the anticipated effects” of a regulatory

statute would take “an unrealistic view of how legislatures work and of how

statutes are written.” Town of Hallie, 471 U.S. at 43. Indeed, such a “close

examination of a state legislature’s intent” would be “undesirable also be-

cause it would embroil the federal courts in the unnecessary interpretation of

state statutes.” Id. at 44 n.7 (“Besides burdening the courts, it would undercut

the fundamental policy of Parker and the state action doctrine of immunizing

state action from federal antitrust scrutiny.”).

III. The active-supervision requirement is met here.

The Supreme Court has not adopted a one-size-fits-all approach to active

supervision. Rather, when a State staffs its agencies as Dental Examiners de-

scribed, the active supervision required for the agency’s conduct to receive

state-action immunity is “flexible” and “context-dependent.” 135 S. Ct. at

1116. That requires a context-specific assessment of the “risk that active mar-

ket participants will pursue private interests” instead of faithfully pursuing

state policy. Id. at 1114.


36

The degree of that risk in a given context informs what sort of governmen-

tal procedures create a “realistic assurance” that agency regulations promote

state policy and thus “suffice to make [the agency action] the State’s own.”

Id. at 1111, 1112. One degree of supervision might be sufficient for a govern-

ment officer acting through official channels, while a greater degree of super-

vision might be required to show that a private agreement between two firms

somehow implements state policy. See, e.g., Earl W. Kintner, Federal Antitrust

Law § 76.12, at 179 (1994) (“There may be situations in which the line be-

tween [state] agencies and purely private actors is not clear.... In these circum-

stances, it has been held that a lower level of ‘active supervision’ should be

required than would be appropriate for clearly ‘private’ parties.”).

The state-court judicial review provided as of right in Texas constitutes

sufficient active supervision for the Board’s formal rulemaking. Indeed, the

federal government told the Supreme Court in Dental Examiners that the den-

tal board’s challenged conduct there failed the active-supervision test and was

“subject to antitrust scrutiny only because [the dental board] chose not to ex-

ercise the powers granted to it under North Carolina law, and instead utilized

coercive measures that state law did not authorize.” Resp. Br. 51, Dental

Exam’rs, 135 S. Ct. 1101 (2015); see Dental Exam’rs, 135 S. Ct. at 1116 (“the

Board relied upon cease-and-desist letters threatening criminal liability, rather

than any of the powers at its disposal that would invoke oversight by a politi-

cally accountable official”). In contrast, the Board rules here were issued

through formal channels, subject to judicial review and legislative oversight.


37

If that were not sufficient to immunize the Board from a federal antitrust

lawsuit for its formal rulemaking, an antitrust lawsuit could be threatened for

almost every disciplinary action taken by the Board. That would seriously im-

pair not only the Board but any number of Texas agencies and agencies in

other States—impairing those agencies’ fulfillment of their duties by subject-

ing them to federal antitrust scrutiny of official conduct to which the Sherman

Act was never meant to apply. State officials’ resources are strained enough

without the extra burden of serving as witnesses in civil litigation and respond-

ing to allegations that they did not do their job. See R. Ernest Cohn, D.C.,

D.A.B.C.O. v. Bond, 953 F.2d 154, 159 (4th Cir. 1991) (noting that one of the

“underlying purposes” of the state-action doctrine is to free government from

the “dehabilitating effects of antitrust actions”); Merrick B. Garland, Anti-

trust and State Action, 96 Yale L.J. 486, 510 (1987) (“If antitrust concepts de-

veloped for private restraints are applied to state action, regulations as dispar-

ate as zoning and occupational licensing, exclusive franchises and rent control,

minimum wages and minimum hours could all be overturned.”). Fortunately,

that is not the law: “Congress, in enacting the Sherman Act, did not intend to

compromise the States’ ability to regulate” their economies. S. Motor Carri-

ers, 471 U.S. at 56.


38

A. Features of the Board’s membership minimize the risk that it will forego its mandate and act with only a private purpose.

For purposes of its motion to dismiss, the Board accepts that its state-

action immunity requires some type of active supervision under Dental Exam-

iners because a majority of the Board’s members are physicians and because

the Board regulates physicians, among several other professions. The Su-

preme Court appears to have held that this structure precludes exempting the

Board from the active-supervision requirement. 135 S. Ct. at 1113-14. But see

id. at 1123 (Alito, J., dissenting) (noting open questions about the relationship

between “the jurisdiction of the entire agency” and specific fields in which

officers practice).

After that threshold issue, however, one must determine what type of ac-

tive supervision suffices in the specific context here. That requires assessing

the magnitude of the risk that a majority of the Board members would disre-

gard the Board’s public mission and focus only on advancing their personal

interests. To begin with, three features of the Board’s membership mitigate

that risk: (1) the Governor’s appointment of Board members, as opposed to

their election by physicians; (2) the Governor’s concomitant power to remove

Board members; and (3) the breadth of the Board’s regulatory mission and the

diverse practice types of the Board’s physician members. All of those features

stand in contrast to the board at issue in Dental Examiners.

1. First, the risk that the Board would depart from its public mission is

mitigated here because members of the Board are appointed by the Governor


39

and confirmed by the Senate. See supra p. 4. Consequently, they are account-

able to Texas state government—not to private physicians.

In contrast, the board in Dental Examiners was “elected by other licensed

dentists in North Carolina.” 135 S. Ct. at 1108. Indeed, that fact was a signifi-

cant part of the government’s argument: “Because petitioner’s dentist-mem-

bers are chosen by other dentists rather than by the public or by any elected

official, no official of North Carolina can be held politically accountable for

petitioner’s unsupervised anticompetitive conduct.” Resp. Br. 20, Dental

Exam’rs, 135 S. Ct. 1101 (2015); accord id. at 30 (“elected by and accountable

to no one but other dentists”); id. at 35 (“that feature distinguishes petitioner

from the vast majority of its counterparts in other States, whose members are

appointed by the Governor or another disinterested state official”). And this

Court too has placed emphasis on that consideration. Saenz v. Univ. Interscho-

lastic League, 487 F.2d 1026, 1028 (5th Cir. 1973) (holding an entity immune

from antitrust scrutiny as a state actor in part because its executive committee

“is appointed by the President of the University”).

2. Second, and relatedly, the Board’s members can be removed by the

Governor with the consent of the Senate. See supra p. 4. That only confirms

the Board members’ political accountability to the State compared to nongov-

ernmental actors making private business agreements. In contrast, the Su-

preme Court in Dental Examiners noted that the law creating the dental board

there “does not create any mechanism for the removal of an elected member

of the Board by a public official.” 135 S. Ct. at 1108.


40

3. Third, unlike the narrow profession of dentistry, the Texas Medical

Board regulates not only numerous fields of medical practice, but several other

distinct occupations such as acupuncture, perfusion, and surgical assis-

tantship. See supra pp. 3-4. As the Supreme Court reasoned in Dental Exam-

iners, the breadth of a regulator’s mandate “reduc[es] the risk that it would

pursue private interests while regulating any single field.” 135 S. Ct. at 1113.

Moreover, the twelve physician members of the Board are all specialists,2

which reduces the likelihood of being distracted from their official charge by

any common interest in avoiding competition with each other. See, e.g., Ri-

vera-Nazario v. Corporacion del Fondo del Seguro del Estado, No. 14-cv-1533,

2015 WL 9484490, at *8 (D.P.R. Dec. 29, 2015) (finding less risk than in Den-

tal Examiners where the majority of a regulatory body “could be gynecologists,

neurologists, gastroenterologists, or many others that do not compete with

chiropractors”).

The question here is not the risk that a regulation will benefit some or even

all physicians. The question is the risk that an agency’s regulation cannot be

fairly deemed the State’s—i.e., that common private interests supplant public

service and sever the regulation’s link to the State. See Ticor, 504 U.S. at 635

2 Eleven of the twelve are shown at ROA.296-98, 303-05, 310-12, 316-18, 322-24,

329-31, 341-43, 347-49, 355-57, 362-64, 369-71. Dr. Holliday’s specialty in anesthesiol-ogy is shown at https://public.tmb.state.tx.us/HCP_Search/searchinput.aspx, under license number L7756.


41

(“Much as in causation inquiries,” the question is “whether the anticompet-

itive scheme is the State’s own.”); City of Columbia v. Omni Outdoor Advert.,

499 U.S. 365, 378 (1991) (noting that a government official’s monetary self-

interest “has no necessary relationship to whether the governmental action is

in the public interest”). The Texas Medical Board is not tantamount to a busi-

ness group submitting privately fixed prices for rubber-stamping into law. Due

to its political accountability and structure, the Board presents much less of a

risk that its rulemaking does not pursue state policy. That context is relevant

in determining the necessary degree of active supervision. See Phillip E.

Areeda & Herbert Hovenkamp, Antitrust Law ¶ 227a, at 221 (2013) (“the kind

of supervision appropriate for a public body, even of the kind involved in Hoo-

ver, could well be far less than for an entirely private party”) (discussing Hoo-

ver, 466 U.S. 588, which involved a public body staffed by licensed lawyers

regulating entrance into the legal profession).

B. Texas’s good-government laws and reporting requirements further reduce the risk that the Board will shirk its official duties and pursue only private interests.

In addition to the membership features discussed above, three other fea-

tures of Texas law show the gulf between the degree of risk shaping the active

supervision required for private parties and the degree of risk shaping the ac-

tive supervision needed for the Board’s rulemaking: (1) Texas’s sunshine and

ethics laws; (2) Board members’ oaths to the State; and (3) the Legislature’s

reporting requirements for sunset review and other purposes.


42

1. The Supreme Court has recognized that being “subject to ‘sunshine’

laws or other mandatory disclosure regulations” may provide “greater pro-

tection against antitrust abuses than exists for private parties.” Town of Hallie,

471 U.S. at 45 n.9; see also Acker v. Tex. Water Comm’n, 709 S.W.2d 299, 300

(Tex. 1990) (“[The Texas Legislature] recognized the wisdom contained in

the words of Justice Brandeis that: ‘Sunlight is said to be the best of disinfect-

ants; electric light the most efficient policeman.’”) (citation omitted). That is

true here. The Board is subject to numerous obligations and limitations that

apply only to government officials, not private actors. These include:

• Texas’s open-meetings law. Tex. Gov’t Code § 551.001(3)(A); see Acker, 709 S.W.2d at 300 (“The executive and legislative decisions of our governmental officials as well as the underlying reasoning must be discussed openly before the public rather than secretly behind closed doors.”).

• Texas’s open-records law, allowing public access to Board records. Tex. Gov’t Code § 552.003(1)(A)(i).

• Board-specific conflict-of-interest requirements. Tex. Occ. Code §§ 152.004(c), 152.055.

• Texas’s statewide requirements for ethics, conflicts of interest, and accounting. Tex. Gov’t Code chs. 572 (personal financial disclosure, standards of conduct, and conflicts of interest), 2101 (accounting pro-cedures), 2051 (government documents, publications, and notices).

• Due process, equal protection, free speech, and other constitutional requirements not applicable to a private actor. E.g., Granek v. Tex. State Bd. of Med. Exam’rs, 172 S.W.3d 761, 772 (Tex. App.—Austin 2005, no pet.) (“The due process protections of our federal and Texas constitution apply to agency proceedings.”).


43

All of these give further assurance that the risk of abuse of state power is

minimal. And Dental Examiners does not preclude consideration of these fac-

tors, because the dental board there did not make a supervision argument and

the Court did not rule on what degree of supervision is required in any specific

context.

2. Second, Board members must swear an oath to fulfill the duties of

their office and uphold the laws of Texas. See supra p. 4. That solemn oath

further distinguishes regulatory decisions by a state official from those that

might be made by a purely private party. And that oath is reinforced by the

Governor’s appointment power. See Rivera-Nazario, 2015 WL 9484490, at *8

(holding that a regulatory system “reduces the risk that [a regulatory body’s]

members would pursue private interests [when] the Governor should appoint

individuals he believes will carry out state interests, and he can remove a mem-

ber for failing to do so”).

3. Third, the Legislature has imposed reporting requirements that fur-

ther ensure that the Board will adhere to state policy expressed by the Legis-

lature. As part of an agency’s sunset review, the Legislature requires the

agency to submit a comprehensive report to a state commission, detailing the

agency’s mission, effectiveness, conflict-of-interests rules, openness to the

public, and rulemaking process, and describing whether any less restrictive

means could satisfy agency functions and while adequately serving the public.

Tex. Gov’t Code § 325.011. The Board’s recent sunset-review report was well


44

over 100 pages, with telemedicine one of the top issues identified.3 Moreover,

on an ongoing basis, the Board must also refer any proposed rule to the appro-

priate standing committee of the Legislature for review. Id. § 2001.032(a).

These reporting requirements have a disciplining effect on the Board given its

dependency on the Legislature.

Finally, the state health agency with which the Board must consult before

adopting rules to ensure that telemedicine patients receive appropriate care,

see id. § 531.0217(i), must submit biennial reports to the Legislature on a num-

ber of telemedicine metrics concerning Medicaid, including the number of

physicians providing telemedicine and the number of patients receiving it. Id.

§ 531.0216(f). Again, the requirements to keep the Legislature informed of the

Board’s telemedicine rules and their effects create a strong ex ante incentive

for the Board not to shirk its official duties. The point is not simply that the

political process is available to any affected party to try to overturn any regu-

lation. The point is that, unlike a private association of business actors, the

Board is dependent on the Legislature for its existence, and that is a potent

incentive that defines and shapes the Board’s actions. Of course, the way the

State has staffed the Board may give rise to some offsetting structural risk that

requires active supervision for state-action immunity to attach. But the degree

of that risk is much less than for a private business that is simply given a blank

3 Texas Medical Board, Self-Evaluation Report (Aug. 2015), https://www.sunset.

texas.gov/public/uploads/files/reports/Medical%20Board%20SER%20Sept%201%202015.pdf%20-%20Adobe%20Acrobat%20Pro_0.pdf.


45

slate on which to write the State’s laws. See, e.g., Fuchs v. Rural Elec. Conven-

ience Co-op, Inc., 858 F.2d 1210, 1217 (7th Cir. 1988) (holding that a govern-

mental entity’s state-action immunity required some supervision because the

entity “is not subject to public scrutiny through sunshine laws or the political

process,” but that its other governmental characteristics required “some

lower level of supervision” than for private actors).

C. State-court judicial review provides sufficient active super-vision of the Board’s rulemaking.

State-court judicial review of the Board’s rulemaking constitutes active

supervision for purposes of state-action immunity. The reviewing state-court

judges are elected officials in Texas. Judicial review is not merely theoretical

but, rather, available as of right. Texas courts review the substance of a rule

for harmony with the Legislature’s general objectives expressed in its laws.

And Texas courts enjoin as invalid rules not in harmony with those policy ob-

jectives. See supra pp. 10-11.

The Supreme Court has noted the open question whether judicial review

can constitute active supervision for state-action immunity purposes. Patrick,

486 U.S. at 103. And Dental Examiners did not address this question. Because

the active-supervision requirement is context-specific, and based on the

Board’s membership and the other relevant features of Texas law noted

above, state judicial review of the Board’s formal rulemaking provides active

supervision sufficient to show “realistic assurance” that the rulemaking ac-

cords with state policy expressed by the Legislature.


46

Teladoc and the district court asserted three objections to that conclu-

sion, but none are persuasive, and none consider the difference in the degree

of risk that governmental actors, as opposed to private parties, are acting with-

out regard to state policy. Teladoc also raised a fourth objection, which was

not accepted by the district court and is without merit.

1. First, the district court noted Dental Examiners’ statement that active

supervision must examine the substance of the agency decision, not merely

the procedures used to produce it. 135 S. Ct. at 1116. But the Texas APA allows

both procedural and substantive rule challenges. E.g., Tex. Med. Ass’n v. Tex.

Workers Comp. Comm’n, 137 S.W.3d 342, 346 (Tex. App.—Austin 2004, no

pet.) (“Appellants assert substantive and procedural challenges to the Com-

mission’s rule ....”).

2. Second, the district court pointed, ROA.2385, to the statement in

Dental Examiners that a supervising entity “must have the power to veto or

modify particular decisions to ensure they accord with state policy,” 135 S.

Ct. at 1116 (citing Patrick, 486 U.S. at 102-03). And the district court stated

that Texas courts do not “decide matters of policy.” ROA.2384-85 (quoting

Gulf Coast Coal. of Cities v. PUC, 161 S.W.3d 706, 712 (Tex. App.—Austin

2005, no pet.)). But the quoted language means that Texas courts do not create

state policy. They do, however, ensure that agency rules are in accord with the

policy objectives set by the Legislature. Gulf Coast, 161 S.W.3d at 711 (“The

determining factor in whether a particular administrative agency has exceeded


47

its rulemaking authority is whether the rules are ‘in harmony’ with the general

objectives of the legislation involved.”).

The district court wrongly dismissed that system as insufficient. When

the Legislature sets policy objectives and a state agency implements them,

judicial review in state court will ensure that the agency’s interstitial rules are

in harmony with the Legislature’s policy objectives, as opposed to the court’s

own policy goals. That requires the reviewing court’s independent judgment

in interpreting the Legislature’s objectives and weighing their fit with the

agency’s regulations. At times, the mismatch may be evident to the court. E.g.,

Tex. Orthopaedic Ass’n, 254 S.W.3d at 722 (invalidating board’s rule on sub-

stantive grounds); Tex. Med. Ass’n, 375 S.W.3d at 475-88 (same). And a re-

viewing court can afford deference to the expert agency’s view on matters

such as professional standards of care and still screen out the extreme in-

stances in which a potential incentive for self-dealing has manifested itself in

a rule not grounded in the Legislature’s objectives. In this case, that conclu-

sion is reinforced by the low risk of such a breach of duty.

3. The district court also faulted state-court judicial review for lacking

the power to “veto or modify” a rule to ensure it accords with state policy;

the district court reasoned that state courts cannot “modify” a rule.

ROA.2385. But the Supreme Court has not held that active supervision of

even private action requires both a power to veto and a power to modify. In

Parker itself, the reviewing Agriculture Prorate Commission could decline to


48

approve a marketing program but could not modify and implement a market-

ing program by itself; that step required a favorable referendum of producers.

317 U.S. at 347. And, in Patrick, the Supreme Court simply noted that the state

medical board did not have “the power to disapprove private privilege deci-

sions” and thus could not satisfy the active-supervision requirement. Patrick,

486 U.S. at 103. Perhaps that is why Dental Examiners’ dicta used the disjunc-

tive in stating that its cases had looked for the power to “veto or modify” par-

ticular decisions. 135 S. Ct. at 1116. And Texas courts undoubtedly have power

to “veto” a rule by declaring it invalid and enjoining its application. That is

the greater power from a supervision perspective, as it keeps the policy under

review from taking any effect.

4. Teladoc also objected that judicial review of rulemaking is inadequate

because courts cannot “initiate sua sponte review of agency rules.” ROA.2147.

The district court did not adopt this objection, see ROA.2383-88, and active

supervision is not precluded when the supervisor “exercises its powers only

when called upon to do so.” TEC Cogeneration Inc. v. Fla. Power & Light Co.,

76 F.3d 1560, 1569 (11th Cir. 1996). In TEC, the Eleventh Circuit found active

supervision where “the doors to the [reviewing entity] were open to all with

standing to complain.” Id. at 1570 (“Whether or not [the agency] ... exercises

its control sua sponte is not material....”). The Eleventh Circuit drew an anal-

ogy to its own powers: “For example, the decisions of this circuit govern or

control a plethora of legal issues—but if a particular issue is never brought


49

before us—it doesn't mean we don’t have control. We don’t have oppor-

tunity—but we still have control. We still have active supervision.” Id. at

1570. If judicial review could never constitute active supervision of preceding

conduct, the Supreme Court would have held that in Patrick, rather than mov-

ing on to examine the nature of the judicial review available, if any. See Patrick,

486 U.S. at 104-05.

Teladoc’s argument below, ROA.2148, took out of context the Supreme

Court’s statement in Ticor that the “mere potential for state supervision is not

an adequate substitute for a decision by the State.” 504 U.S. at 638, quoted in

Dental Exam’r, 135 S. Ct. at 1116. Ticor involved “private pricefixing arrange-

ments” embodied in rates filed with state agencies. 504 U.S. at 633. Ticor con-

trasted “the mere potential” for state supervision with an actual “decision by

the State,” and Ticor then pointed out that “at most the rate filings were

checked for mathematical accuracy” and “[s]ome were unchecked alto-

gether.” Id. at 638. Ticor used “potential” to refer to mere statutory authority

for review as opposed to whether that review was actually undertaken. Id. at

629 (rejecting a mere “theoretical mechanism for substantive review”).

In contrast, Texas courts must adjudicate the merits of a substantive rule

challenge—and are reversed on appeal if they do not. Bellegie v. Tex. Bd. of

Nurse Exam’rs, 685 S.W.2d 431, 433, 435 (Tex. App.—Austin 1985, writ ref’d

n.r.e.) (where nurses alleged that a professional regulation “is not reasonably

related to or necessarily referable to any specific statutory provision,” they

“were entitled to a judgment from the district court declaring the law with


50

respect to the contentions”). That guarantees an actual decision to anyone

affected by a rule. Ticor did not address such a system, much less hold it inad-

equate. Indeed, Ticor did not address supervision of governmental conduct at

all. It addressed private price-fixing, the most “pernicious” of all antitrust vi-

olations. Id. at 639 (“Our decision should be read in light of the gravity of the

antitrust offense, the involvement of private actors throughout, and the clear

absence of state supervision. We do not imply that some particular form of

state or local regulation is required ....”).

D. Legislative oversight contributes to active supervision.

The active supervision provided by judicial review of the Board’s rule-

making is reinforced by the Texas Legislature’s oversight of the Board in two

ways.

First, the Texas Administrative Procedure Act requires that each pro-

posed state-agency rule must be referred to the appropriate standing commit-

tee of the Texas Legislature. Tex. Gov’t Code § 2001.032(a). Unlike with pri-

vate action, therefore, proposed rulemaking by a state agency such as the

Board will necessarily be placed before a committee of the Texas Legislature

for review. And the Legislature has assigned each such committee the duty to

investigate all matters within its purview and draft any necessary legislation in

response. Id. § 301.104(a) (“Each standing committee shall ... conduct a con-

tinuing study of any matter within its jurisdiction and of the instrumentalities

of government administering or executing the matter ... [and] initiate, draft,


51

and recommend to the appropriate house any legislation the committee be-

lieves is necessary and desirable.”). To achieve those ends, a standing com-

mittee has the power to inspect the records of each state agency. Id.

§ 301.104(c). And the Legislature requires state agencies to assist legislative

committees in their work. Id. § 301.028(b).

The district court did not address these legislative committees’ duty to

investigate proposed rules and propose any necessary responsive legislation.

ROA.2387-88 (stating that a committee’s only power is to send the agency a

statement supporting or opposing a proposed rule). In any event, even if this

legislative review of proposed rules does not amount to active supervision on

its own, it buttresses the supervision provided by judicial review.

Second, the Texas Legislature oversees the Board’s conduct through the

sunset-review process. Not only must a state agency report to the State’s Sun-

set Commission, see supra p. 43, but the Sunset Commission must conduct a

review of the agency based on statutory criteria, Tex. Gov’t Code § 325.008,

including “whether less restrictive or alternative methods of performing any

function that the agency performs could adequately protect or provide service

to the public,” id. § 325.011(5). The Sunset Commission must present its find-

ings and recommendations to the Legislature. Id. §§ 325.010, 325.012. And

the Legislature then decides whether the agency should continue to exist at all

and, if so, whether any “legislation relative to a state agency” is warranted. Id.

§ 325.015.


52

The district court reasoned that sunset review is insufficient oversight be-

cause the Sunset Commission “does not have the power to veto or modify any

rule.” ROA.2387. Of course, the Sunset Commission reports to the Texas

Legislature, which does have that power. But, again, even if sunset review is

not by itself sufficient to constitute active supervision, it reinforces compo-

nents of the active supervision provided by judicial review and legislative-

committee review of proposed agency rules.

E. Finding a lack of active supervision would intrude on the State’s sovereignty and alter the balance of cooperative fed-eralism.

State regulation of the practice of medicine “is a quintessentially sover-

eign act.” Cal. State Bd. of Optometry v. FTC, 910 F.2d 976, 982 (D.C. Cir.

1990). And a State’s choices about the individuals who serve in its government

are decisions “of the most fundamental sort for a sovereign entity.” Gregory

v. Ashcroft, 501 U.S. 452, 460 (1991).

In exercising that power, Texas has chosen to staff many of its licensing

boards with active members of the profession being licensed because those

professionals ordinarily have “specialized knowledge” that the “lay public,”

career bureaucrats, and legislators lack. Cal. Dental Ass’n v. FTC, 526 U.S.

756, 772 (1999); S. Motor Carriers, 471 U.S. at 64 (“Agencies are created be-

cause they are able to deal with problems unforeseeable to, or outside the com-

petence of, the legislature.”). Doctors, nurses, attorneys, and many other pro-


53

fessions go through years of advanced study, certification, and continuing ed-

ucation. It is not often that persons with such hard-won and often expensive

knowledge and expertise will be willing to give up their entire trade to serve as

a full-time government regulator.

Moreover, active professionals maintain a current knowledge base that in-

active individuals with similar training will not have. Thus, even if sufficiently

qualified professionals could be convinced to join full-time employment in

some fields, that would not necessarily be desirable. See, e.g., Filarsky v. Delia,

132 S. Ct. 1657, 1662-63, 1665 (2012) (noting that practicing professionals’

“specialized knowledge or expertise” as well as the normal reasons to reduce

the size of the full-time “bureaucracy,” explains the longstanding government

practice of employing “public servant[s]” who only “temporarily or occasion-

ally discharge[] public functions” and are otherwise “permitted to carry on

some other regular business”). Highly specialized fields such as medicine

change quickly. It is often individuals who practice in those fields who are best

situated to spot emerging threats to public welfare.

Here, Texas chose to staff its agency with practicing professionals and

built in accountability to the State through appointment and removal powers,

solemn oaths, ongoing financial dependency on the Legislature, and ethics,

conflict-of-interests, and open-government laws. It would undermine Texas’s

sovereign regulatory choices to hold that state-action immunity from federal

antitrust law requires more active supervision than the judicial review and leg-

islative oversight already provided by Texas. Indeed, the Supreme Court has


54

directed that federal legislation threatening to trench on the States’ arrange-

ments for conducting their own governments should be treated with great

skepticism and read in a way that preserves a State’s chosen disposition of its

power. Nixon v. Mo. Mun. League, 541 U.S. 125, 140 (2004); see also E.R.R.

Presidents Conf. v. Noerr Motor Freight, Inc., 365 U.S. 127, 141 (1961) (“The

proscriptions of the [Sherman] Act, tailored as they are for the business world,

are not at all appropriate for application in the political arena.”).

Texas has carefully crafted mechanisms to ensure that state governmental

bodies—including regulatory boards—are staffed with appropriate officials

and exercising their delegated powers. The district court’s ruling violates state

sovereignty because it would subject this state-designed regime to intrusive

federal-court review in almost every antitrust action concerning an agency set

up and supervised like this one. This invades on the States’ authority to de-

termine which of their agencies “exercise[s] [which] of [their] governmental

powers.” Lawrence H. Tribe, American Constitutional Law § 6-25, at 480 (2d

ed. 1988) (“to give the state-displacing weight of federal law to mere congres-

sional ambiguity would evade the very procedure for lawmaking on which

Garcia relied to protect states’ interests”).

Conclusion

The Court should reverse the district court’s order and direct dismissal

of plaintiffs’ antitrust claim as barred by defendants’ state-action immunity.


55

Ken Paxton Attorney General of Texas Jeffrey C. Mateer First Assistant Attorney General Office of the Attorney General P.O. Box 12548 (MC 059) Austin, Texas 78711-2548 Tel.: (512) 936-1700 Fax: (512) 474-2697

Respectfully submitted. Scott A. Keller Solicitor General /s/ J. Campbell Barker J. Campbell Barker Deputy Solicitor General [email protected]

Counsel for Defendants-Appellants


56

Certificate of Service

On June 17, 2016, this brief was served via CM/ECF on all registered

counsel and transmitted to the Clerk of the Court. Counsel further certifies

that: (1) any required privacy redactions have been made in compliance with

Fifth Circuit Rule 25.2.13; (2) the electronic submission is an exact copy of the

paper document in compliance with Fifth Circuit Rule 25.2.1; and (3) the doc-

ument has been scanned with the most recent version of Symantec Endpoint

Protection and is free of viruses.

/s/ J. Campbell Barker J. Campbell Barker

Certificate of Compliance

This brief complies with: (1) the type-volume limitation of Federal Rule

of Appellate Procedure 32(a)(7)(B) because it contains 13,303 words, exclud-

ing the parts of the brief exempted by Rule 32(a)(7)(B)(iii); and (2) the type-

face requirements of Rule 32(a)(5) and the type style requirements of Rule

32(a)(6) because it has been prepared in a proportionally spaced typeface (14-

point Equity) using Microsoft Word (the same program used to calculate the

word count).

/s/ J. Campbell Barker J. Campbell Barker


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No. 16-50017 In the United States Court of Appeals for the ...static.politico.com/4a/f0/2c468f1c45e3abc3f7c027c5e846/...Jeffrey C. Mateer First Assistant Attorney General Office of