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Keywords

lawsuitattorneyliabilitymalpracticetrustantitrustlegal malpracticelegislative intent

attorneylawyerliabilitymalpracticecorporation

Related Cases

Hass v. Oregon State Bar, 883 F.2d 1453, 58 USLW 2166, 1989-2 Trade Cases P 68,732

Facts

Fred Hass, a member of the Oregon Bar, filed a lawsuit against the Oregon State Bar after it passed a resolution requiring all active Oregon-based attorneys to purchase primary malpractice insurance from the Bar. This resolution was enacted in 1977 and mandated participation in the Oregon State Bar Professional Liability Fund, which provided malpractice coverage. The Bar's authority to impose this requirement was granted by the Oregon legislature, which aimed to ensure that attorneys maintained malpractice insurance to protect the public from potential malpractice claims.

In 1977, exercising its delegated authority, the Board passed a resolution, effective July 1, 1978, requiring all Oregon-based attorneys to carry malpractice coverage with aggregate limits of not less than $100,000.

Issue

Whether the Bar's insurance requirement is immune from challenge under the Sherman Act by virtue of the state action exemption and whether it violates the commerce clause.

The following issues are presented: (1) whether the Bar's insurance requirement is immune from challenge under the Sherman Act by virtue of the state action exemption or by virtue of the exemption for the business of insurance contained in the McCarran–Ferguson Act, 15 U.S.C. §§ 1011 – 1015 (1982); and (2) whether the Bar's insurance requirement violates the commerce clause.

Rule

The court applied the state action exemption to the Sherman Act, determining that the Bar's actions were authorized by the state legislature and thus immune from antitrust scrutiny. Additionally, the court evaluated the commerce clause, concluding that the Bar's resolution did not discriminate against interstate commerce and was justified by a legitimate local purpose.

We find it unnecessary to discuss the McCarran–Ferguson Act because we conclude that the Bar's insurance requirement falls within the state action exemption to the Sherman Act. We also conclude that the requirement does not violate the commerce clause.

Analysis

The court found that the Bar's resolution was enacted pursuant to a clearly articulated state policy to regulate the legal malpractice insurance market. The legislature had granted the Bar the authority to require malpractice insurance, which was a foreseeable consequence of the legislative intent to protect the public. The court also determined that the Bar's actions did not require active supervision by the state, as the Bar was acting as an agent of the state in implementing the policy.

The legislature has authorized the Bar to compel all Oregon-based attorneys to carry malpractice insurance. Or.Rev.Stat. § 9.080 (2)(a) (1987). Toward that end, the Bar is authorized 'to own, organize and sponsor any insurance organization' and 'to establish a lawyer's professional liability fund.'

Conclusion

The court affirmed the district court's ruling, holding that the Bar's requirement for attorneys to purchase malpractice insurance was immune from antitrust challenge and did not violate the commerce clause.

For the foregoing reasons, we hold that the Bar, as an agency of the State of Oregon, need not satisfy the 'active supervision' requirement to qualify for protection under the state action exemption.

Who won?

Oregon State Bar prevailed because the court upheld the Bar's resolution as a valid exercise of state authority that was immune from antitrust scrutiny and compliant with the commerce clause.

The Bar is a public corporation and an instrumentality of the judicial department of the government of the State of Oregon.

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