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contractattorneylawyerappealclass action
contractlawyerappealrespondent

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Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572, 1975-1 Trade Cases P 60,355

Facts

In 1971, petitioners contracted to buy a home in Fairfax County, Virginia, which required a title examination that could only be performed by a member of the Virginia State Bar. They attempted to find a lawyer who would charge less than the minimum fee set by the Fairfax County Bar Association's fee schedule but were unsuccessful. Consequently, they filed a class action against the Virginia State Bar and the County Bar, claiming that the fee schedule constituted price-fixing in violation of the Sherman Act.

Petitioners, husband and wife, contracted to buy a home in Fairfax County, Va., and the lender who financed the purchase required them to obtain title insurance, which necessitated a title examination that could be performed legally only by a member of respondent Virginia State Bar.

Issue

Whether the minimum-fee schedule for lawyers published by the Fairfax County Bar Association and enforced by the Virginia State Bar violates Section 1 of the Sherman Act.

We granted certiorari to decide whether a minimum-fee schedule for lawyers published by the Fairfax County Bar Association and enforced by the Virginia State Bar violates s 1 of the Sherman Act.

Rule

The minimum-fee schedule and its enforcement mechanism constitute price fixing, and the activities of the state and county bars are not exempt from the Sherman Act as 'state action' unless compelled by the state acting as a sovereign.

The schedule and its enforcement mechanism constitute price fixing since the record shows that the schedule, rather than being purely advisory, operated as a fixed, rigid price floor.

Analysis

The Court found that the fee schedule operated as a fixed price floor, significantly restraining competition among attorneys. It determined that the schedule affected interstate commerce because a substantial amount of funds for home purchases in Fairfax County came from outside the state, and title examinations are integral to such transactions. The Court rejected the argument that the practice of law is exempt from the Sherman Act as a 'learned profession' and concluded that the activities of the state and county bars did not qualify for the state action exemption.

The necessary connection between the interstate transactions and the restraint of trade provided by the minimum-fee schedule is present because, in a practical sense, title examinations are necessary in real estate transactions to assure a lien on a valid title of the borrower.

Conclusion

The Supreme Court reversed the Court of Appeals' decision, holding that the minimum-fee schedule violated Section 1 of the Sherman Act and remanded the case for further proceedings.

The judgment of the Court of Appeals is reversed and the case is remanded to that court with orders to remand to the District Court for further proceedings consistent with this opinion.

Who won?

Petitioners prevailed in the case because the Supreme Court found that the fee schedule constituted illegal price-fixing under the Sherman Act.

Petitioners therefore contacted a lawyer who quoted them the precise fee suggested in a minimum-fee schedule published by respondent Fairfax County Bar Association; the lawyer told them that it was his policy to keep his charges in line with the minimum-fee schedule which provided for a fee of 1% of the value of the property involved.

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