75 Op. Att'y Gen. 153 (1986)

75 Op. Att'y Gen. 153, 159-160 (1986)
  The next question is in regard to possible antitrust actions being successfully maintained against the Bar because of the operation of the Unauthorized Practice and Ethics Committees. No specific cases are mentioned, but your predecessor indicates that "several observers have voiced concern that the activities of these two committees as presently constituted might raise antitrust law or constitutional due process of law problems." There is no further elaboration as to what the "observers" contend is the antitrust danger as the committees are presently constituted. Assuming that the contention is that the committees could potentially participate in anticompetitive activities, the question is whether the delegation from the supreme court described above is adequate to provide blanket "state action" antitrust immunity within the meaning of Parker v. Brown, 317 U.S. 341 (1943).

75 Op. Att'y Gen. 153, 160 (1986)
  Any analysis of the state action doctrine must revolve around the two-pronged test articulated by a unanimous court in California Liquor Dealers Assn v. Midcal Aluminum, Inc., 445 U.S. 97 (1980). Midcal provided that for the immunity to apply (1) the state must have clearly articulated and affirmatively expressed a state policy compelling the displacement of competition in the area of the economy at issue, and (2) the state must actively supervise this displacement. Although Midcal's teaching appears superficially straightforward, reconciling it with three other Supreme Court decisions dealing with state action immunity in the context of state bar activities is no mean feat.

75 Op. Att'y Gen. 153, 160 (1986)
  For example, both prongs of the Midcal test appear to have been diluted in Hoover v. Ronwin, 104 S. Ct. 1989 (1984), and Bates v. State Bar of Arizona, 433 U.S. 350 (1977).

75 Op. Att'y Gen. 153, 160 (1986)
  In neither Hoover nor in Bates did the state supreme court in question "compel" the specific conduct at issue. In Hoover, the Bar committee appointed by the supreme court was not compelled to adopt the grading system it adopted. The plaintiff's primary claim against the committee was that it had adopted a "grading scale on the February examination with reference to the number of new attorneys it thought desirable, rather than with reference to some 'suitable' level of competence." 104 S. Ct. at 1994. The plaintiff claimed that the state action doctrine did not apply because the supreme court had not directed the committee "to artificially reduce the number of lawyers in Arizona." Id. at 1999. The Court rejected plaintiffs argument stating that it largely ignored the facts surrounding the delegation of authority by the Arizona Supreme Court to the committee and, most importantly, the fact that the Arizona Supreme Court retained ultimate authority to grant or deny admission to the practice of law in the state. Id. at 1999-2000.

75 Op. Att'y Gen. 153, 160-161 (1986)
  In Bates v. State Bar of Arizona, 433 U.S. 350 (1977), the Court found that the state action exemption was applicable because the Arizona Supreme Court had in effect ratified and adopted the State Bar rule limiting advertising by attorneys. The plaintiff argued that because the state bar had not been compelled to recommend the advertising rule to the Arizona Supreme Court, the Court should follow Cantor v. Detroit Edison Co., 428 U.S. 579 (1976), and reject state action immunity. The Court, however, found state action immunity and distinguished Cantor on the basis that a "utility could not immunize itself from Sherman Act attack by embodying its challenged practices in a tariff approved by a state commission." Bates at 360. In addition to not being required to file the challenged practices in a tariff, the Court held that the state commission had never passed on the challenge practices, and hence, there could be no antitrust immunity. Id. In short, the court in Bates held that the advertising restriction was the action of the court and the mere fact that it was adopted without compulsion was not significant.

75 Op. Att'y Gen. 153, 161 (1986)
  Similarly, it does appear to be fatal to a claim of state action immunity that the state has not clearly articulated and affirmatively expressed a state policy to replace competition with regulation as it relates to a specific action by a state agency. At one level, it is clear that the State of Wisconsin through both the Legislature and the Supreme Court has clearly articulated and affirmatively expressed a state policy to replace open competition in the market for legal services with barriers to entry in the practice of law (e.g., penalties for practicing without a license, sec. 757.30, Stats.) and ethical constraints on how those competing in the market operate their practices (e.g., authorization of Article IV, Section 5, of the State Bar Bylaws creating the Committee on Professional Ethics).

75 Op. Att'y Gen. 153, 161 (1986)

  Hoover, Bates and Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975), collectively suggest further that where a state bar or state bar committee acts to effect a state supreme court's policies on setting appropriate limits on competition among those seeking to provide legal services to the public, the court will find those actions which are in furtherance, to some unclear degree, of those policies to be exempt.

75 Op. Att'y Gen. 153, 161-162 (1986)
  The issue, of course, is to what degree must the supreme court "guide" or "direct" the actions of the bar for the exemption to apply. On this point, the contrast between Hoover and Goldfarb is instructive. In Goldfarb, "state law did not refer to lawyers' fees, the Virginia Supreme Court rules did not direct the State Bar to supply fee schedules, and the Supreme Court rules did not approve the fee schedules established by the State Bar." Hoover, 104 S. Ct. at 2001 n.32. Consequently, even though the Virginia State Bar was a state agency, the Court concluded that the actions of the State Bar were not immune under the state action doctrine. Although no state law or supreme court directive told the Arizona Bar committee what its grading formula ought to be, the Court in Hoover impliedly held that the grading formula adopted was "consistent enough" with the general policy of limiting admission to the market for legal services to those reaching a certain degree of competence.

75 Op. Att'y Gen. 153, 162 (1986)
  In short, when one attempts to reconcile Goldfarb with Bates and Hoover, the test that emerges is no longer one of the traditional two-prong test of "compulsion" and "clearly articulated and affirmatively expressed state policy." Rather, it seems that the exemption applies if a Bar or Bar committee acts pursuant to or consistent with the state supreme court guidelines--even if much discretion is left to the Bar committee (e.g., Hoover), even if the Supreme Court did not initiate the action (e.g., apparently in Bates), and even if the court did not specify in detail how the Bar committee should carry out its functions (e.g., Hoover). Where the State Bar acts on its own without any guidelines from the state supreme court, state action immunity will not apply even though the actions of the State Bar are arguably consistent with the general policy of the state supreme court to temper competition among lawyers (e.g., Goldfarb).

75 Op. Att'y Gen. 153, 162 (1986)
  Ultimately, the dividing line between Goldfarb, on the one hand, and Hoover and Bates, on the other hand, seems to hinge on the specific activity of the Bar or Bar committee involved in light of the specific directions given by the state supreme court. For example, in Goldfarb, the State Bar had issued two ethical opinions indicating that the fee schedules could not be ignored. 421 U.S. at 777. Arguably, the fee schedules could be rationalized as consistent with some state supreme court policy affecting competition. Whether or not the activity of the Bar is connected enough to supreme court guidelines and directives would seem to be an issue that has to be decided on a case-by-case basis with reference to the specific setting of the Bar activity.

75 Op. Att'y Gen. 153, 162-163 (1986)
  However, this dependency on the facts of the specific situations creates considerable confusion in dealing with the question of whether state action immunity is available for all actions of the two Bar committees at issue. Simply stating that the committees are acting "within their authority" does not resolve the question. For example, in Goldfarb the Supreme Court had delegated to the State Bar the "authority" to regulate the legal profession. But the Court determined that that was not enough direction to activate state action immunity with regard to the adoption of fee schedules. If the Virginia Supreme Court had articulated a general policy that attorneys should price their services in a "reasonable manner," would that have been sufficient to give the State Bar state action immunity to adopt a specific fee schedule? What if the Bar had asked the Virginia court for more explicit authorization and had been rejected as was the case with the Wisconsin Bar? My reading of these cases suggests that the answer to these questions in the context of the state action doctrine are largely factual and ought to be dealt with on a case-by-case basis.

75 Op. Att'y Gen. 153, 163 (1986)
  Hence, although I tend to believe that much of what the two State Bar committees in this case do may fall within the state action exemption, I share what I think is the Bar's concern that there may be situations where the actions of either committee may not be within the immunity. [For example, what if the Unauthorized Practice Committee decides a particular use of paralegals by an aggressive firm constitutes "unauthorized practice" in the absence of any specific supreme court policy thereby dampening the use of paralegals? Or what if the Ethics Committee rules that such use of paralegals is unethical?] My concern in this regard is not tied to any specific fact pattern, but rather relates to my conclusion that ironclad guarantees are impossible in the face of a rather unsettled situation caused by three supreme court opinions within the last ten years which are more than a little difficult to reconcile.¯3 I suggest that if you have specific actions that either of the two committees intends to take that may be a cause for concern, that you frame those questions to us for an opinion on the state action doctrine at that time.

75 Op. Att'y Gen. 153, 163 (1986)
IV.

75 Op. Att'y Gen. 153, 163-164 (1986)
  The next question relates to the likelihood of success of a claim against the Bar or individual committee members based on denial of property without due process of law. Due process is one of those terms in the law which is not easily defined except as it applies to specific situations. The constitutional provision, of course, prohibits denial of life, liberty and property without due process. To find a violation of due process where it concerns property, we have to determine first that it is property within the constitutional meaning, that there was a deprivation, and that the process afforded did not meet constitutional standards. The United States Supreme Court pointed out in Board of Regents v. Roth, 408 U.S. 564 (1972), in a case arising out of the University of Wisconsin-Oshkosh, that a nontenured professor whose one-year appointment was not renewed had no property interest in reappointment. The Court pointed out that property interests do not arise under the constitution: "Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law-- rules or understandings that secure certain benefits and that support claims of entitlement to those benefits." Board of Regents v. Roth, 408 U.S. at 577.

75 Op. Att'y Gen. 153, 164 (1986)
  Frankly, it is difficult to identify property interests that might be affected by the Unauthorized Practice Committee in the abstract. It would be difficult to show "entitlement" and, therefore, difficult to show a property interest in the unauthorized practice of law. However, if the committees acted against other professionals, e.g., public accountants or paralegals, a protectible property interest may be a present. Again, it is difficult to answer the question you pose in the abstract.

75 Op. Att'y Gen. 153, 164 (1986)
  Perhaps a more useful way to approach this question is with regard to the overall process of initiating unauthorized practice investigations and the prosecution thereof, whether civil or criminal which I outlined above. The Bar committees, in carrying out its unauthorized practice functions, merely requests this office to initiate the complaint process. This office decides whether to initiate an action and the type of action.

75 Op. Att'y Gen. 153, 164-165 (1986)
  In the case of the Ethics Committee which deals with licensed attorneys who have a property interest in the license, there appears to be no due process problem in connection with the issuance of requested opinions relating to future conduct. In the case of opinions relating to past or present conduct being investigated by a professional responsibility committee (formerly grievance committee of the State Bar) or by the Board of Governors, there would appear to be a property interest involvement which would require appropriate due process at some stage prior to any sanctions. But if such opinion led to a hearing before a professional responsibility committee, and subsequently before the Board of Attorneys Professional Responsibility in accordance with chapter SCR 22, the procedures afforded before those two bodies appear to provide adequate due process. If the Board of Governors reported directly to the Board of Attorneys Professional Responsibility concerning ethical conduct, again it appears that due process would be provided by a hearing before the Board of Attorneys Professional Responsibility and ultimately consideration by the supreme court. Disciplinary Proceedings Against Eisenberg, 117 Wis. 2d 332, 336 (1984).

75 Op. Att'y Gen. 153, 165 (1986)
V.

75 Op. Att'y Gen. 153, 165 (1986)
  The final question relates to whether indemnification would be available from the state if a successful claim were made against the Bar, the board, members of the committees and the volunteer lawyers operating the "Hotline," assuming that "all action was in good faith and within the parameters established by State Bar Rule and Bylaw." Your question apparently assumes that liability has been established or is conceded.

75 Op. Att'y Gen. 153, 165 (1986)
  There are, of course, defenses which should be considered whenever claims for money damages are made against the state, its agencies, officers and agents. One of these defenses, the immunity afforded public officers with respect to the performance of their official functions, deserves some discussion. This common law immunity has been recognized by our supreme court as protecting individuals who perform governmental functions from substantive liability for damages. The court listed the public policy considerations for such immunity in Lister v. Board of Regents, 72 Wis. 2d 282, 299, 240 N.W.2d 610 (1976).

75 Op. Att'y Gen. 153, 165 (1986)
  These considerations have been variously identified in the cases as follows: (1) The danger of influencing public officers in the performance of their functions by the threat of lawsuit; (2) the deterrent effect which the threat of personal liability might have on those who are considering entering public service; (3) the drain on valuable time caused by such actions; (4) the unfairness of subjecting officials to personal liability for the acts of their subordinates; and (5) the feeling that the ballot and removal procedures are more appropriate methods of dealing with misconduct in public office.

75 Op. Att'y Gen. 153, 165-166 (1986)
  This common law immunity is available only where the act complained of was within the scope of the official authority of the individual and in line with official duty and involves the exercise of some discretion and judgment. The negligent performance of purely ministerial duties would not entitle the individual to common law immunity. There are various other exceptions to the rule which are determined by judicial balancing of the need of public officers to perform their functions freely against the right of an aggrieved party to seek redress.

75 Op. Att'y Gen. 153, 166 (1986)
  The question of indemnification of volunteer lawyers who perform services in connection with the operation of the "Hotline" involves a determination as to whether such volunteers are agents of the state within the meaning of section 895.46(1)(a). That statute provides in part: "Agents of any department of the state shall be covered by this section while acting within the scope of their agency."

75 Op. Att'y Gen. 153, 166 (1986)
  A similar question was raised in regard to the members of the professional responsibility committees appointed by the Bar who assist the Board of Attorneys Professional Responsibility in the investigation of lawyer conduct. I concluded in an unpublished opinion, OAG 48-78, that the committee members are "public officers" within the meaning of then sections 895.45 and 895.46. At that time, the statute covered agents of any department of the state where there was a written agreement entered into prior to the occurrence of any act. Chapter 20 of the Laws of 1981 adopted the present language in regard to agents which eliminates the requirement of a written agreement. If the volunteer members of the professional responsibility committees are considered to be "public officers," one might argue that "Hotline" volunteers are "agents." If so, indemnification would be appropriate subject to the limitations set out in section 895.46(1)(a) and subject to the limitations of section 893.82.

75 Op. Att'y Gen. 153, 166-167 (1986)
  However, this issue may be moot given that Article VII of the bylaws of the Bar provides for indemnification of officers, employes and agents of the Bar and subsection 5 specifically authorizes the Bar to purchase and maintain insurance on behalf of any "State Bar Person" against any liability incurred in any capacity as a "State Bar Person." Article VII, section 1 defines a "State Bar Person." I understand that the Bar has errors and omissions insurance to cover the general liability of officers, committees, employes and agents of the Bar. Indemnity under section 895.46 would be available only to the extent that such liability is not covered by any insurance which might be applicable, including such person's own malpractice liability insurance.

75 Op. Att'y Gen. 153, 167 (1986)
  Section 893.82 contains both a notice of claim requirement and a limitation of damages provision which apply to state officers, employes or agents. Section 893.82(3) provides that a claimant must serve the attorney general with notice of claim within 120 days of the event causing the injury. The amount recoverable by any person is limited by section 893.82(6) to $250,000 and no punitive damages may be recovered. The notice of claim and limitations on damages statutes do not apply to civil rights actions brought under 42 U.S.C. 1983. Doe v. Ellis, 103 Wis. 2d 583, 309 N.W.2d 375 (Ct. App. 1981); Thompson v. Village of Hales Corners, 115 Wis. 2d 289, 340 N.W.2d 704 (1983).

75 Op. Att'y Gen. 153, 167 (1986)
BCL:KJO

75 Op. Att'y Gen. 153, 153 (1986) - Footnote

Destination-96   1 In the matter of the amendment of SCR Chapter 10 State Bar Rules (February 7, 1985).

75 Op. Att'y Gen. 153, 153 (1986) - Footnote

Destination-97   2 Id. at 1-2.

75 Op. Att'y Gen. 153, 153 (1986) - Footnote

Destination-98   3 Note that the vote in Goldfarb was 8-0, the vote in Bates was 9-0 on the state action issue (5-4 on the first amendment issue), and in Hoover the vote was 4-3 with two abstentions and a vigorous dissent by Justice Stevens. The fact that Justice Rehnquist voted with the majority in both Bates and Goldfarb, while abstaining in Hoover, together with O'Connor's addition to the court after Bates and Goldfarb and her abstention in Hoover, makes it even more difficult to predict how the court would decide future such state action cases.
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