IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION. Plaintiff, Case No. 1:18-CV WMR

Transcription

1 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 1 of 48 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION SMILEDIRECTCLUB, LLC, v. Plaintiff, Case No. 1:18-CV WMR GEORGIA BOARD OF DENTISTRY, et al., Defendants. DEFENDANTS MEMORANDUM OF LAW IN SUPPORT OF THEIR MOTION TO DISMISS CHRISTOPHER M. CARR Attorney General Georgia Bar No ROGER A. CHALMERS Senior Assistant Attorney General Georgia Bar No BRYON A. THERNES Senior Assistant Attorney General Georgia Bar No STATE LAW DEPARTMENT 40 Capital Square SW Atlanta, Georgia Tel: (404) Fax: (404) rchalmers@law.ga.gov bthernes@law.ga.gov JAMES W. COBB Georgia Bar No MICHAEL A. CAPLAN Georgia Bar No CAPLAN COBB LLP 75 Fourteenth Street NE Suite 2750 Atlanta, Georgia Tel: (404) Fax: (404) jcobb@caplancobb.com mcaplan@caplancobb.com Special Assistants Attorney General Counsel for Defendants

2 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 2 of 48 TABLE OF CONTENTS TABLE OF AUTHORITIES... i FACTUAL BACKGROUND... 3 ARGUMENT AND CITATION TO AUTHORITIES... 9 I. Sovereign immunity bars each of SmileDirect s claims A. Sovereign immunity bars SmileDirect s declaratory-judgment claim B. Sovereign immunity bars SmileDirect s antitrust and constitutional claims against the Board, as well as those against the Board Members and the Executive Director in their official capacities II. SmileDirect has not alleged plausible antitrust or constitutional claims A. SmileDirect has not alleged a plausible antitrust claim under Twombly B. SmileDirect has failed to allege plausible constitutional claims III. State-action immunity bars SmileDirect s antitrust claim against the Board and the Board Members A. The Board and its Members are entitled to ipso facto immunity B. The Board and its Members are entitled to state-action immunity even if Midcal or Hallie scrutiny applies IV. Qualified immunity bars SmileDirect s antitrust and constitutional claims against the Board Members in their individual capacities

3 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 3 of 48 V. SmileDirect s antitrust claim is barred by the intracorporate-immunity doctrine CONCLUSION... 34

4 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 4 of 48 CASES TABLE OF AUTHORITIES Affiliated Capital Corp. v. City of Houston, 735 F.2d 1555, 1570 (5th Cir. 1984) (en banc) Ala. Optometric Ass n v. Ala. State Bd. of Health, 379 F. Supp (M.D. Ala. 1974) Almanza v. United Airlines, Inc., 851 F.3d 1060 (11th Cir. 2017) Am. Chiropractic Ass n v. Trigon Healthcare, Inc., 367 F.3d 212 (4th Cir. 2004) Am. Needle, Inc. v. NFL, 560 U.S. 183 (2010) Ashcroft v. Iqbal, 556 U.S. 662 (2009)... 9, 34 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) , 34 Brown v. Newton Cnty. Sheriff s Office, 273 F. Supp. 3d 1142 (N.D. Ga. 2017) Burnett v. Fulton Cnty. Sch. Dist., No. 1:07-CV-0300-JTC-AJB, 2008 WL (N.D. Ga. May 6, 2008) Builders Flooring Connection, LLC v. Brown Chambless Architects, LLC, No. 2:11CV373-MHT, 2014 WL (M.D. Ala. Jan. 16, 2014) California Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445 U.S. 973 (1980) , Carr v. City of Florence, 916 F.2d 1521 (11th Cir. 1990) Charley s Taxi Radio Dispatch Corp. v. SIDA of Hawaii, Inc., 810 F.2d 869 (9th Cir. 1987) i

5 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 5 of 48 Clark v. Bd. of Dental Examiners of Georgia, 240 Ga. 289 (1977)... 22, 30 Colindres v. Battle, No. 2:15-CV-2843-SCJ, 2016 WL (N.D. Ga. June 6, 2016) Duty Free Americas, Inc. v. Estee Lauder Companies, Inc., 797 F.3d 1248 (11th Cir. 2015)... 7 Duty Free Americas, Inc. v. Estee Lauder Companies, Inc., 946 F. Supp. 2d 1321 (S.D. Fla. 2013) Earles v. State Bd. of Certified Pub. Accountants, 139 F.3d 1033 (5th Cir. 1998) Edelman v. Jordan, 415 U.S. 651 (1974) Edinboro Coll. Park Apartments v. Edinboro Univ. Found., 850 F.3d 567 (3d Cir. 2017) Ex Parte Young, 209 U.S. 123 (1908) F.C.C. v. Beach Commc ns, Inc., 508 U.S. 307 (1993)... 20, 21 Fouche v. Jekyll Island State Park Auth., 713 F.2d 1518 (11th Cir. 1983)... 11, Gary v. City of Warner Robins, Georgia, 311 F.3d 1334 (11th Cir. 2002) Georgia Cemetery Ass n, Inc. v. Cox, 353 F.3d 1319 (11th Cir. 2003)... 20, 21 Georgia State Bd. of Dental Examiners v. Daniels, 137 Ga. App. 706 (1976)... 3, 12, 28 Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975) ii

6 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 6 of 48 Gonzalez v. Lee Cnty. Hous. Auth., 161 F.3d 1290 (11th Cir. 1998) Green v. Mansour, 474 U.S. 64 (1985) Harden v. Adams, 760 F.2d 1158 (11th Cir. 1985) Heller v. Doe by Doe, 509 U.S. 312 (1993) Holcomb v. Johnston, 213 Ga. 249 (1957)... 22, 30 Holton v. Battle, No. 1:14-CV LMM, 2017 WL (N.D. Ga. Feb. 1, 2017) Hortman v. Yarbrough, 214 Ga. 693 (1959)... 22, 30 In re ING Groep, N.V. ERISA Litig., 749 F. Supp. 2d 1338 (N.D. Ga. 2010) In re Musical Instrs. & Equip. Antitrust Litig., 798 F.3d 1186 (9th Cir. 2015) Jemsek v. N.C. Med. Bd., No. 5:16-CV-59-D, 2017 WL (E.D.N.C. Feb. 21, 2017) Jones v. Fransen, 857 F.3d 843 (11th Cir. 2017) Live Oak Consulting, Inc. v. Dep t of Cmty. Health, 281 Ga. App. 791 (2006)... 12, 14 Locke v. Shore, 634 F.3d 1185 (11th Cir. 2011) Lynn v. Amoco Oil Co., 459 F. Supp. 2d 1175 (M.D. Ala. 2006) iii

7 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 7 of 48 Manders v. Lee, 338 F.3d 1304 (11th Cir. 2003) N.C. State Bd. of Dental Examiners v. F.T.C., 135 S. Ct (2015)... 25, 31, 33 N.C. State Bd. of Dental Examiners v. F.T.C., 717 F.3d 359 (4th Cir. 2013) Neo Gen Screening, Inc. v. New England Newborn Screening Program, 187 F.3d 24 (1st Cir. 1999) Nicholl v. Bd. of Regents of Univ. Sys. of Georgia, 706 F. App x 493 (11th Cir. 2017)... 11, 15, 24 Nichols v. Alabama State Bar, 815 F.3d 726 (11th Cir. 2016) Panama City Medical Diagnostic Ltd. v. Williams, 13 F.3d 1541 (11th Cir. 1994) Parker v. Brown, 317 U.S. 341 (1943) R. Ernest Cohn, D.C. v. Bond, 953 F.2d 154 (4th Cir. 1991) Robinson v. Ga. Dep t of Transp., 966 F.2d 6370 (11th Cir. 1992) Rowe v. City of Ft. Lauderdale, 279 F.3d 1271 (11th Cir. 2002) Saenz v. Univ. Interscholastic League, 487 F.2d 1026 (5th Cir. 1973)... 24, SD3, LLC v. Black & Decker Inc., 801 F.3d 412 (4th Cir. 2015) Seminole Tribe of Fla. v. Fla. Dep t of Revenue, 750 F.3d 1238 (11th Cir. 2014) iv

8 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 8 of 48 Tapley v. Collins, 211 F.3d 1210 (2000) Taylor v. Dep t of Pub. Safety, 142 F. App x 373 (11th Cir. 2005) Tindol v. Ala. Dep t of Rev., 632 F. App x 1000 (11th Cir. 2015) Town of Hallie v. City of Eau Claire, 471 U.S. 34 (1985)... 25, U.S. Anchor Mfg., Inc. v. Rule Indus., Inc., 7 F.3d 986 (11th Cir. 1993) Udick v. Fla., 705 F. App x 901 (11th Cir. 2017) Universal Express, Inc. v. U.S. S.E.C., 177 F. App x 52 (11th Cir. 2006)... 7 Versiglio v. Bd. of Dental Examiners of Alabama, 686 F.3d 1290 (11th Cir. 2012) , 15 Will v. Mich. Dep t of State Police, 491 U.S. 58, (1989) Wrzesinski v. State, 271 Ga. 659 (1999)... 22, 30 STATUTES 15 U.S.C U.S.C , 19 O.C.G.A (a)(6)... 4, 12, 29 O.C.G.A , 12, 29 O.C.G.A , 12, 29 O.C.G.A , 12, 29 v

9 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 9 of 48 O.C.G.A. 43-1C O.C.G.A. 43-1C , 12, 30, 31 O.C.G.A (a)... 5 O.C.G.A O.C.G.A (6)... 5 O.C.G.A O.C.G.A (b)(1) O.C.G.A O.C.G.A (a)... 4, 12 O.C.G.A (b)... 4 O.C.G.A (d)... 4 O.C.G.A (h)... 4 O.C.G.A (i)... 4 O.C.G.A (j)... 4 O.C.G.A (k)... 4 O.C.G.A , 12 O.C.G.A , 12, 30, 33 O.C.G.A (1)... 6 O.C.G.A (3)... 6 O.C.G.A (5)... 6 O.C.G.A (8)... 4 O.C.G.A passim vi

10 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 10 of 48 O.C.G.A O.C.G.A (a)(2)... 5, 21 O.C.G.A (a)(5)... 6 O.C.G.A (a)(6)... 6 O.C.G.A (b)... 6 O.C.G.A O.C.G.A (b)... 5 O.C.G.A A-5(a)... 5 O.C.G.A (c)... 5 O.C.G.A O.C.G.A (a)... 5 O.C.G.A (a)... 5 O.C.G.A (a)... 5 O.C.G.A O.C.G.A (a)... 10, 13 O.C.G.A (b) RULES Ga. Comp. R. & Regs. R (1)... 6 Ga. Comp. R. & Regs. R (3)... 7 Ga. Comp. R. & Regs. R (3)(aa)... 7, 11 OTHER AUTHORITIES Minutes of Board s Dec. 1, 2017 Meeting... 7 vii

11 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 11 of 48 Notice of Intent to Amend Rule of the Board... 8 Minutes of Board s Jan. 12, 2018 Meeting... 8 Minutes of Board s Jan. 24, 2018 Conference Call... 8 In re N.C. Bd. of Dental Examiners (F.T.C. July 14, 2011) In re N.C. Bd. of Dental Examiners (F.T.C. Dec. 7, 2011) Hye-Ran Park, et al., Changes In Views on Digital Intraoral Scanners Among Dental Hygienists after Training in Digital Impression Taking, BMC Oral Health... 7 Am. Dental Ass n, Resolution 50H Am. Dental Ass n, ADA Discourages DIY Orthodontics through Resolution Ga. House of Representatives, Budget & Research Office, General Appropriations Act... 4, 12 viii

12 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 12 of 48 INTRODUCTION Plaintiff SmileDirectClub, LLC ( SmileDirect ) asks this Court to declare that a Georgia dental rule a rule properly adopted by Defendant the Georgia Board of Dentistry (the Board ) and explicitly approved by Georgia s Governor is invalid because it supposedly violates federal antitrust and constitutional law. SmileDirect s principal complaint is that the rule is unnecessary and bad policy. But a federal district court is not the proper forum and SmileDirect s claims are not the proper mechanism for challenging the merits of state policy decisions like this one. The rule in question (the Rule or the Orthodontic Scan Rule ) relates to an important part of dentistry: the diagnosis and treatment of malpositioned teeth. Under the Rule, digital scans of a patient s mouth that are made for fabricating orthodontic appliances must be performed by a trained and qualified expanded-duty dental assistant ( EDDA ). At SmileDirect, so-called technicians who do not hold the minimum qualifications of regular-duty dental assistants, let alone of EDDAs do exactly what the Rule governs; they create digital scans of customers mouths for the purpose of fabricating orthodontic appliances. SmileDirect thus violates the Orthodontic Scan Rule each time its technicians perform a scan. SmileDirect challenges the rule on a number of grounds: first, by asking the Court to declare that the Board exceeded its authority when it promulgated the Rule;

13 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 13 of 48 second, by contending that promulgation of the Rule violated the Sherman Antitrust Act; and third, by contending that the Rule violates the U.S. Constitution s Equal Protection and Due Process clauses. But all of these claims fail as a matter of law. Count I (declaratory judgment). SmileDirect s claim for a declaratory judgment is barred by sovereign immunity. As Georgia s Court of Appeals first recognized over 40 years ago, the Board is an arm of the State of Georgia and is protected by sovereign immunity. This Court, therefore, does not have jurisdiction to consider SmileDirect s declaratory-judgment claim unless Georgia has consented which it has not done here. Count II (Sherman Antitrust Act). SmileDirect s antitrust claim fails for a number of reasons. First, SmileDirect does not (and cannot) plausibly allege an unlawful agreement to restrain trade. At bottom, all SmileDirect alleges is that the Board Members did what Georgia law empowers them to do vote on a rule relating to the practice of dentistry. State officials like the Board Members do not violate federal antitrust law when they fulfill their statutory duty to regulate a profession. Indeed, a contrary conclusion would imperil Georgia s entire system for regulating professions a system that Georgia s General Assembly has put in place for over 40 different professions, from medicine to electrical contracting. Second, SmileDirect s antitrust claim is barred (in whole or in part) by at least four immunity doctrines. The Board itself, as well as the Board Members and the 2

14 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 14 of 48 Executive Director in their official capacities, are protected by sovereign immunity. All Defendants are protected by state-action immunity. Qualified immunity protects the Board Members in their individual capacities. And the entire antitrust claim is barred by intra-corporate immunity. Counts III and IV (Equal Protection and Due Process). The Court should also dismiss SmileDirect s constitutional claims under 42 U.S.C SmileDirect has not alleged sufficient facts to state a plausible claim under either the Equal Protection Clause or the Due Process Clause. The Board had a rational basis for adopting the Orthodontic Scan Rule among other things, the protection of public health and welfare and SmileDirect cannot show to the contrary. SmileDirect s 1983 claims also fail because they are barred by sovereign and qualified immunity. The Court should grant this Motion and dismiss SmileDirect s Complaint in its entirety and with prejudice. FACTUAL BACKGROUND The Board and its Members. The Board is an arm of the State of Georgia. 1 It was created by statute the Georgia Dental Practice Act, O.C.G.A et seq. and is responsible for control[ling] and regulat[ing] the practice of dentistry 1 Georgia State Bd. of Dental Examiners v. Daniels, 137 Ga. App. 706, 707 (1976) (confirming the Board is an instrumentality of the State of Georgia that is entitled to sovereign immunity). 3

15 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 15 of 48 in Georgia to protect the public health. Id The Board is a division of Georgia s Department of Community Health. Id (a). The State of Georgia maintains significant control over the Board Georgia s Governor, for example, appoints (and may remove) all of the Board s members. Id , , Likewise, Georgia s Senate must confirm all Board appointees. Id And Georgia s Dental Practice Act refers to Board Members as state officials. Id The Board is funded through state appropriations. See, e.g., Ga. House of Representatives, Budget & Research Office, General Appropriations Act, (appropriating funds in the amount of $833,125 to the Board for fiscal year 2018) (last visited Nov. 21, 2018). Any licensing fees collected by the Board must be remitted to the state treasury. O.C.G.A (a)(6). And Georgia s Law Department is providing the Board s defense in this case. The Board is one of over 40 professional licensing boards in Georgia, all of which are composed primarily of individuals who are members of the profession 2 The Board s Executive Director is responsible for various administrative duties. See O.C.G.A (d), (h)-(k); see id (b). She is hired by the Board to implement the Dental Practice Act and to provide support. Id (8) 4

16 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 16 of 48 they regulate. 3 The members of these other professional boards, like the members of the Board here, are appointed by the Governor, confirmed by the Senate, and vested by Georgia law with rulemaking authority. The Board s Authority. Georgia s General Assembly, through the Dental Practice Act, has given the Board significant authority to regulate the practice of dentistry, including by defining dentistry broadly: Dentistry means the evaluation, diagnosis, prevention, or treatment, or any combination thereof, whether using surgical or nonsurgical procedures, of diseases, disorders, or conditions, or any combination thereof, of the oral cavity, maxillofacial area, or the adjacent and associated structures, or any combination thereof, and their impact on the human body provided by a dentist, within the scope of his or her education, training, and experience, in accordance with the ethics of the profession and applicable law, including, but not limited to, the acts specified in Code Section Id (6). Section , in turn, sets out a non-exclusive list of acts that constitute prima-facie evidence of the practice of dentistry. Especially relevant here, that list includes attempt[ing] to correct a malposition of the teeth (such as through the use of orthodontic appliances). Id (a)(2). The practice of dentistry also includes the examination of any human oral cavity, teeth, gingiva... or associated structures... for the purpose of diagnosing, treating, or operating 3 See, e.g., O.C.G.A (a) (accountants); id (b) (engineers and land surveyors); id A-5(a) (massage therapists); id (c) (nurses); id (physical therapists); id (a) (private detectives and private security agencies); id (a) (real-estate brokers and salespersons); id (a) (veterinarians and veterinary technicians). 5

17 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 17 of 48 upon the same.... Id (a)(5). Similarly, a person practices dentistry if she [s]upplies, makes, fits, repairs, adjusts, or relines any appliance that is usable on human teeth. Id (a)(6). The General Assembly has also given the Board rulemaking authority specifically, the authority [t]o adopt, amend, and repeal rules and regulations to carry out the performance of its duties, [t]o make all necessary... rules for the governance of the board and the performance of its duties, and [t]o establish rules regarding licensure. Id (1), (3), (5); see also id ( [T]he board shall prescribe by rule or regulation those acts, services, procedures, and practices which may be performed by... dental assistants... at the direction of and under the supervision of a licensed dentist.... ); id (b); id Finally, the Board sets qualifications and regulates the duties of certain nondentists who work in the dentistry field, such as dental hygienists, dental assistants, EDDAs, and others. Id The Orthodontic Scan Rule. The Board s Rule , which was first promulgated in 1992, establishes a category of dental assistants known as expanded duty dental assistants. To qualify as an EDDA, a dental assistant must satisfy certain special requirements. Ga. Comp. R. & Regs. R (1). Subsection 4 Section of Georgia s Administrative Procedures Act ( APA ) sets forth the process for adoption of rules. That process includes, among other things, a public notice and comment period. See generally O.C.G.A

18 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 18 of 48 (3) of Rule identifies several duties only an EDDA may perform (i.e., the expanded duties ). R (3). Among other things, expanded duties include taking certain impressions of patients teeth and recording patients vital signs. Id. In 2017, the Board considered ten amendments to Rule (3) and began the formal rulemaking process under Georgia s APA. 5 On December 1, 2017, the Board voted to amend Rule (3). Among other things, the Board added the Orthodontic Scan Rule, providing that only EDDAs may perform [d]igital scans for fabrication [of] orthodontic appliances and models. R (3)(aa). The Rule governs a crucial component of the diagnosis and treatment of patients with malpositioned teeth: creating a comprehensive image of a patient s teeth and gums. These digital scans are akin to traditional physical impressions of a patient s teeth and gums. 6 They are used to assess malpositions, determine a 5 Minutes of Board s Dec. 1, 2017 Meeting, (last visited Nov. 21, 2018). On a motion to dismiss, a court may consider [a document] and the facts therein that was referenced in the complaint and is central to the plaintiff s claim.... Duty Free Americas, Inc. v. Estee Lauder Companies, Inc., 797 F.3d 1248, (11th Cir. 2015) (internal quotation marks omitted). The Board s rulemaking process is both referenced in and central to SmileDirect s complaint. See, e.g., Dkt That process is also a matter of public record that is among the permissible facts this Court may consider. Universal Express, Inc. v. U.S. S.E.C., 177 F. App x 52, 53 (11th Cir. 2006). 6 See Hye-Ran Park, et al., Changes In Views on Digital Intraoral Scanners Among Dental Hygienists after Training in Digital Impression Taking, BMC Oral Health, (last visited Nov. 21, 2018) (referring to an 7

19 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 19 of 48 treatment plan, and fabricate appliances used in the treatment plan (such as the clear aligners described in SmileDirect s Complaint). See, e.g., Dkt. 1 3, 20, 28, 30, 32, 47. Following its December 1, 2017 meeting, the Board notified the public and all interested parties of its intention to adopt the Orthodontic Scan Rule. 7 The Board also solicited and received written submissions from interested parties. 8 Finally, on January 24, 2018, the Board held a meeting where it considered and approved the Orthodontic Scan Rule. 9 Soon thereafter, the Board transmitted the Rule, along with supporting materials, to Georgia s Governor in accordance with Georgia s Professional Regulation Reform Act. See O.C.G.A. 43-1C-1 et seq. That statute requires, among other things, that the Governor actively supervise Georgia s professional licensing boards. Id. 43-1C-3. The Governor issued a formal Certificate of Active intraoral scanner as a digital impression-taking method or technique); see also Dkt Notice of Intent to Amend Rule of the Board, (last visited Nov. 21, 2018). 8 Minutes of Board s Jan.12, 2018 Meeting, (last visited Nov. 21, 2018). 9 Minutes of Board s Jan. 24, 2018 Conference Call, (last visited Nov. 21, 2018). 8

20 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 20 of 48 Supervision, confirming that he had actively supervised the Board s rulemaking process and expressly approved the Orthodontic Scan Rule. 10 ARGUMENT AND CITATION TO AUTHORITIES Defendants bring this motion under Federal Rules of Civil Procedure 12(b)(6) and 12(b)(1). Rule 12(b)(6) requires dismissal if the allegations, taken as true, would not entitle the plaintiff to relief. To survive a 12(b)(6) motion, the factual allegations in a complaint must possess enough heft to set forth a plausible entitlement to relief.... Fin. Sec. Assur., Inc. v. Stephens, Inc., 500 F.3d 1276, 1282 (11th Cir. 2007) (internal quotation marks omitted). Allegations that are labels and conclusions, naked assertion[s], [t]hreadbare recitals of the elements, or mere conclusory statements should be ignored. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted); see also Next Cent. Commc ns Corp. v. Ellis, 171 F. Supp. 2d 1374, 1378 (N.D. Ga. 2001). Rule 12(b)(1) requires dismissal when the court lacks subject-matter jurisdiction such as when sovereign immunity bars a claim. Again, the Court should look to the Complaint s factual allegations and ignore conclusory allegations or legal characterizations. Frazer v. IPM Corp. of Brevard, 767 F. 10 A true and accurate copy of the Governor s Certificate of Active Supervision is attached to this Motion as Exhibit A. SmileDirect did not attach the Certificate of Active Supervision to its Complaint, but the Court may nevertheless consider it here because the certificate was referenced in SmileDirect s Complaint and is central to SmileDirect s claims. See, e.g., Dkt. 1 45; see also footnote 5, supra. 9

21 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 21 of 48 Supp. 2d 1369, (N.D. Ga. 2011) (internal quotation marks omitted). I. Sovereign immunity bars each of SmileDirect s claims. A. Sovereign immunity bars SmileDirect s declaratory-judgment claim. Count I of SmileDirect s Complaint seeks a declaration that the Orthodontic Scan Rule is invalid because, SmileDirect contends, creating digital scans for the fabrication of orthodontic appliances does not constitute the practice of dentistry or dental hygiene.... Dkt SmileDirect seeks this declaration under O.C.G.A , a provision of Georgia s APA stating that [t]he validity of any rule... may be determined in an action for declaratory judgment.... O.C.G.A (a); see also Dkt But this claim is barred by sovereign immunity. Under the Eleventh Amendment, States may not be sued in federal court unless they consent to it in unequivocal terms.... Green v. Mansour, 474 U.S. 64, 68 (1985). This immunity applies regardless of the relief sought including to claims for a declaratory judgment. 11 See Nichols v. Alabama State Bar, 815 F.3d 11 Ex parte Young, 209 U.S. 123 (1908), creates an exception to Eleventh Amendment immunity for certain suits seeking prospective relief against state officials, but that exception does not apply here. See Udick v. Fla., 705 F. App x 901, 904 (11th Cir. 2017) ( The Ex Parte Young doctrine is a narrow exception to state sovereign immunity; [i]t applies only to prospective relief, does not permit judgments against state officers declaring that they violated federal law in the past, and has no application in suits against the States and their agencies, which are barred regardless of the relief sought. (internal quotation marks omitted) (alteration in original). SmileDirect s declaratory-judgment claim is asserted exclusively 10

22 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 22 of , 731 (11th Cir. 2016); Seminole Tribe of Fla. v. Fla. Dep t of Revenue, 750 F.3d 1238, 1243 (11th Cir. 2014). And Eleventh Amendment immunity extends to arms of the state, including state agencies, just as if the state itself were named to the suit. See, e.g., Nicholl v. Bd. of Regents of Univ. Sys. of Georgia, 706 F. App x 493, 495 (11th Cir. 2017) (citing Fouche v. Jekyll Island State Park Auth., 713 F.2d 1518, 1520 (11th Cir. 1983)); Versiglio v. Bd. of Dental Examiners of Alabama, 686 F.3d 1290 (11th Cir. 2012) (extending Eleventh Amendment immunity to Alabama s dental board). Whether an entity is an arm of the state for sovereign-immunity purposes depends on the entity s function and character, as determined by state law. See Manders v. Lee, 338 F.3d 1304, 1309 (11th Cir. 2003). The Manders court identified four relevant factors to consider: (1) how state law defines the entity; (2) what degree of control the state maintains over the entity; (3) where the entity derives its funds; and (4) who is responsible for judgments against the entity. Id. In addition, federal courts should give great deference to how state courts have characterized the entity. Versiglio, 686 F.3d at Here, the Board is an arm of the State of Georgia entitled to sovereign immunity. Notably, the Georgia Court of Appeals has already held as much. against a state agency (the Board). Dkt Additionally, the claim seeks a declaration that the Board s prior action of promulgating Rule (3)(aa) is invalid, and does not allege a present or ongoing violation of any federal law. Id. 11

23 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 23 of 48 Daniels, 137 Ga. App. at 707 (holding that the Board is entitled to sovereign immunity). That decision should be given great deference. Versiglio, 686 F.3d at Moreover, the Manders factors all support applying sovereign immunity here: How state law defines the entity. The Board is created by statute, and its purpose is to control and regulat[e] the practice of dentistry to protect the public health. O.C.G.A The Board is also part of Georgia s Department of Community Health. Id (a). 12 And Georgia s Dental Practice Act refers to Board Members as state officials. Id ( Each member of the board shall receive the expense allowance... and the same mileage allowance... as that received by other state officials and employees.... ) (emphasis added). Degree of control maintained by the State. Georgia s Governor has the power to appoint (and remove) all of the Board s members. Id , , Georgia s Senate also must confirm all Board appointees. Id And Georgia s Governor actively supervises the Board and approves its acts and decisions, including its rules. Id. 43-1C-3. Funding. The Board is funded through state appropriations. See, e.g., Ga. House of Representatives, Budget & Research Office, General Appropriations Act, (last visited Nov. 21, 2018). Licensing fees collected by the Board are remitted to the state treasury. Id (a)(6). Responsibility for defense of this lawsuit. Georgia s Law Department, along with additional counsel retained and paid by the State, is providing the defense in this case. Sovereign immunity applies, and the Court should dismiss SmileDirect s claim for a 12 Georgia s Department of Community Health is protected by sovereign immunity. See Live Oak Consulting, Inc. v. Dep t of Cmty. Health, 281 Ga. App. 791 (2006). 12

24 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 24 of 48 declaratory judgment. SmileDirect may argue Georgia has waived sovereign immunity as to the declaratory-judgment claim by enacting O.C.G.A , which allows for certain declaratory-judgment actions under state law. See Dkt (relying on O.C.G.A ). But that is wrong. A waiver of sovereign immunity must be set forth by the most express language or by such overwhelming implications from the text as will leave no room for any other reasonable construction. Edelman v. Jordan, 415 U.S. 651, 673 (1974) (internal quotation marks and alteration omitted). And importantly, a state s consent to suit in its own courts does not waive immunity from suit in federal court. Id. In Fouche, for example, the Eleventh Circuit held that a Georgia statute establishing venue in the Superior Court of Fulton County for suits against a Georgia park authority only waived immunity for suits filed in the designated venue i.e., the Superior Court of Fulton County. 713 F.2d at The statute did not waive immunity to suits brought in federal court. Id. O.C.G.A (a) does not waive the Board s sovereign immunity for suits in federal court. Section (a) provides that [t]he validity of any rule... may be determined in an action for declaratory judgment when it is alleged that the rule... interferes with or impairs the legal rights of the petitioner. But O.C.G.A (b) goes on to state that such actions shall be brought in the 13

25 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 25 of 48 Superior Court of Fulton County or in the superior court of the county of residence [or principal place of business] of the petitioner.... Under Fouche, this venue statute does not consent to suit in federal court; at most, it consents to suit in certain of Georgia s superior courts. See 713 F.2d at ; see also Live Oak Consulting, Inc. v. Dep t of Cmty. Health, 281 Ga. App. 791, 796 (2006) ( [I]t is only pursuant to O.C.G.A that the state has specifically consented to be sued and has explicitly waived its sovereign immunity as to declaratory judgment actions in which the rules of its agencies are challenged. ). Count I of the Complaint should be dismissed. B. Sovereign immunity bars SmileDirect s antitrust and constitutional claims against the Board, as well as those against the Board Members and the Executive Director in their official capacities. Sovereign immunity also bars SmileDirect s antitrust and 1983 claims (i) against the Board and (ii) against the Board Members and the Executive Director in their official capacities. [A]n unconsenting state is immune from lawsuits brought in federal court by the state s own citizens, and that rule applies equally to claims against a state official in his or her official capacity.... Carr v. City of Florence, 916 F.2d 1521, 1524 (11th Cir. 1990); see also Taylor v. Dep t of Pub. Safety, 142 F. App x 373, (11th Cir. 2005) (holding that 1983 claim against arm of the state was barred entirely by Eleventh Amendment and that Georgia has not consented to be sued under 1983 or waived its sovereign immunity). The Eleventh Circuit has 14

26 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 26 of 48 already applied sovereign immunity to claims against a dental board, see Versiglio, 686 F.3d at , as well as to claims against members of a state board, see Harden v. Adams, 760 F.2d 1158, (11th Cir. 1985). And the analysis does not change based on the type of claim at issue sovereign immunity, for example, bars antitrust claims because [t]he antitrust laws do not supersede the Eleventh Amendment.... Ala. Optometric Ass n v. Ala. State Bd. of Health, 379 F. Supp. 1332, 1340 n.3 (M.D. Ala. 1974). 13 Section 1983 claims are also barred. See, e.g., Robinson v. Ga. Dep t of Transp., 966 F.2d 637, 640 (11th Cir. 1992) ( Congress, in passing 1983, did not intend to override sovereign immunity). Sovereign immunity applies to the antitrust and 1983 claims asserted here against the Board, as well as to the official-capacity claims against the Board Members and the Executive Director. As explained above, the Board is an arm of the State of Georgia. See supra at Part I.A. Thus, suits against the Board, along with those against its Members in their official capacities, are suits against the State itself. See, e.g., Earles v. State Bd. of Certified Pub. Accountants, 139 F.3d 1033, 1039 (5th Cir. 1998); see also Nicholl, 706 F. App x at 495 ( The Board is considered a state entity that is an arm of the state of Georgia for purposes of the Eleventh Amendment.... ). The same reasoning protects the Executive 13 See also Jemsek v. N.C. Med. Bd., No. 5:16-CV-59-D, 2017 WL , at *5 n.1 (E.D.N.C. Feb. 21, 2017), aff d, 697 F. App x 234 (4th Cir.) (collecting cases). 15

27 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 27 of 48 Director who serves in an administrative capacity and did not vote on the Rule. Cf. Brown v. Newton Cnty. Sheriff s Office, 273 F. Supp. 3d 1142, 1160 (N.D. Ga. 2017) ( [C]ourts in this circuit have determined that when a sheriff is acting as an arm of the state, his deputies are also entitled to Eleventh Amendment immunity. ) (quotation marks omitted). The Court should dismiss SmileDirect s antitrust and 1983 claims against the Board, as well as the official-capacity claims against the Board Members and Executive Director. II. SmileDirect has not alleged plausible antitrust or constitutional claims. A. SmileDirect has not alleged a plausible antitrust claim under Twombly. The Court should dismiss SmileDirect s antitrust claim because the Complaint does not plausibly allege an unlawful agreement among the Defendants. See Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). SmileDirect merely alleges that the Board Members voted in favor of the Orthodontic Scan Rule. Dkt But that, at most, is an allegation of parallel conduct which, in the absence of some additional plus factor, is not sufficient to state an antitrust claim. To state a claim under Section 1 of the Sherman Act, a plaintiff must allege sufficient facts to give rise to a plausible inference of an unlawful agreement to restrain trade. See, e.g., U.S. Anchor Mfg., Inc. v. Rule Indus., Inc., 7 F.3d 986, 1001 (11th Cir. 1993). Allegations of parallel conduct, without more, stop[] short of the line between possibility and plausibility of entitlement to relief. 16

28 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 28 of 48 Twombly, 550 U.S. at 557 (internal quotation marks and alteration omitted); see also Almanza v. United Airlines, Inc., 851 F.3d 1060, 1069 (11th Cir. 2017) (allegations of parallel conduct and interdependence are insufficient to pass the plausibility threshold ). 14 And allegations of consistent votes which is all SmileDirect alleges here merely reflect parallel conduct... equally consistent with legal behavior. SD3, LLC v. Black & Decker Inc., 801 F.3d 412, 437 (4th Cir. 2015), cert. denied, 136 S. Ct (2016). The Fourth Circuit s decision in SD3 is instructive. The SD3 plaintiffs manufactured a safety device for table saws and alleged, among other things, that the defendants conspired to cause a standard-setting organization to reject a proposed rule calling for the plaintiff s technology to be adopted industry-wide. Id. at 419. Notably, the plaintiffs allegations of parallel conduct were similar to (but more detailed than) SmileDirect s allegations here. Among other things, the SD3 plaintiffs alleged that a collective decision was made, that defendants agreed to vote as a bloc, and that defendants actions were a smokescreen. Id. at 437. But the Fourth Circuit nevertheless affirmed dismissal, reasoning that the alleged parallel conduct was equally consistent with legal behavior. Id. 14 See also Duty Free Americas, Inc. v. Estee Lauder Companies, Inc., 946 F. Supp. 2d 1321, 1329 (S.D. Fla. 2013) ( [A]llegations of parallel conduct coupled with bare assertions of conspiracy will not suffice. ); Lynn v. Amoco Oil Co., 459 F. Supp. 2d 1175, 1182 (M.D. Ala. 2006) (same). 17

29 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 29 of 48 The same rationale applies here. SmileDirect alleges no specific facts concerning any agreement among Defendants. See generally Dkt Instead, it merely alleges the Board voted on a proposed rule pursuant to its statutory duty to regulate the practice of dentistry. Dkt These are precisely the type of allegations that Twombly, SD3, and other courts have held to be insufficient. 16 SmileDirect has not pled any facts showing who agreed to what, when they did so, or how they did so. See generally Dkt. 1. The Court should dismiss the antitrust claim SmileDirect alleges an agreement among Defendants in three paragraphs, see Dkt. 1 91, 94, and 97, but these conclusory allegations are simply a recitation of the formulaic elements of an antitrust claim, and do not allege any plausible agreement. 16 Other courts have also dismissed antitrust claims containing substantially more detailed allegations than SmileDirect s. See, e.g., In re Musical Instrs. & Equip. Antitrust Litig., 798 F.3d 1186, 1189, 1194 (9th Cir. 2015) (affirming dismissal where plaintiffs pleaded that guitar manufacturers each adopted similar advertising policies, shared a common motive to conspire, acted against their self-interest, simultaneously adopted substantially similar [minimum advertised price] policies, participated in a trade association, had entered into a consent decree with the FTC, and where retail prices for guitars and guitar amplifiers rose during the period at issue even as the number of units sold fell. ). But even with those allegations, the court dismissed the plaintiffs claims. Id. at SmileDirect broadly alleges its Sherman Act claim against [a]ll [d]efendants. Dkt. 1 at 28. But the Executive Director does not have the power to vote on Board decisions. See generally O.C.G.A , Accordingly, SmileDirect has not, and cannot, state an antitrust claim against the Executive Director. 18

30 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 30 of 48 B. SmileDirect has failed to allege plausible constitutional claims. SmileDirect asserts two 1983 claims, one challenging the Rule under the Equal Protection Clause and a second under the Due Process Clause. 18 Both claims fail for at least two reasons. First, the Board, as well as the Board Members and the Executive Director in their official capacities, are not persons subject to suit under 42 U.S.C See, e.g., Will v. Mich. Dep t of State Police, 491 U.S. 58, 71 (1989) ( [N]either a State nor its officials acting in their official capacities are persons under ); Tindol v. Ala. Dep t of Rev., 632 F. App x 1000, 1001 (11th Cir. 2015) (per curiam). Second, as SmileDirect concedes (see, e.g., dkt. 1 44, 104, 109), rationalbasis review applies to the Equal Protection and Due Process 1983 claims. 19 See, e.g., Locke v. Shore, 634 F.3d 1185, 1195 (11th Cir. 2011); Panama City Medical Diagnostic Ltd. v. Williams, 13 F.3d 1541, 1545 (11th Cir. 1994); see also Gary v. City of Warner Robins, Georgia, 311 F.3d 1334, 1338 n.10 (11th Cir. 2002). Both 18 SmileDirect contends that the Orthodontic Scan Rule violates the Equal Protection Clause because the Rule supposedly discriminates between persons and entities who offer digital scans by technicians (such as [SmileDirect]), and persons and entities who offer digital scans by licensed dentists or orthodontists or by expanded duty dental assistants, acting under the direct supervision of a licensed dentist or orthodontist. Dkt In its Due Process challenge, SmileDirect contends that the rule unconstitutionally deprives [SmileDirect] of its liberty and property interests. Id SmileDirect concedes that both of its constitutional claims should be analyzed under rational-basis review. Dkt. 1 44, 104, 109 (alleging that the Orthodontic Scan Rule does not have a rational basis). 19

31 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 31 of 48 claims fail under this standard. In areas of social and economic policy, a statutory classification that neither proceeds along suspect lines nor infringes fundamental constitutional rights must be upheld against equal protection challenge if there is any reasonably conceivable state of facts that could provide a rational basis for the classification.... F.C.C. v. Beach Commc ns, Inc., 508 U.S. 307, 313 (1993); see also Holton v. Battle, No. 1:14-CV LMM, 2017 WL , at *9 (N.D. Ga. Feb. 1, 2017) (applying rational-basis review and finding that the Board had a rational basis for prohibiting certain individuals from performing teeth-whitening services); Colindres v. Battle, No. 1:15-CV-2843-SCJ, 2016 WL , at *5-6 (N.D. Ga. June 6, 2016) (same). Such classifications are entitled to a strong presumption of validity and a plaintiff challenging the classification must negat[e] every conceivable basis which might support it. Beach Commc ns, 508 U.S. at (internal quotation marks omitted) (emphasis added). While the defendant must offer a conceivable rational basis for the challenged rule, the reviewing court may not look past the proffered reason and subject the regulation to courtroom fact-finding. Id. at 315. The reviewing court, for example, cannot explore [w]hether the conceived reason was in fact the reason for the legislation or [w]hether substantial evidence supports the conceived rationale. Georgia Cemetery Ass n, Inc. v. Cox, 353 F.3d 1319, 1321 (11th Cir. 2003) (per 20

32 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 32 of 48 curiam). And importantly, [a] State... has no obligation to produce evidence to sustain the rationality of a statutory classification. Heller v. Doe by Doe, 509 U.S. 312, 320 (1993). Moreover, even if the Rule is based on faulty premises, it should still be deemed constitutional as long as there is any conceivable rational basis for it. Georgia Cemetery, 353 F.3d at 1321 (internal quotation marks omitted) (emphasis added and removed). Because of these highly deferential standards for state economic and policy regulations, the Supreme Court has described regulations that involve scope-of-coverage line drawing, like the Orthodontic Scan Rule, as virtually unreviewable. Beach Commc ns, 508 U.S. at 316. Against this deferential backdrop, the Orthodontic Scan Rule survives constitutional review. The Rule ensures that an essential aspect of dentistry the diagnosis and treatment of malpositioned teeth is performed by an adequately trained, qualified, and supervised EDDA. Indeed, Georgia s General Assembly has explicitly defined the practice of dentistry to include attempt[ing] to correct a malposition of the teeth. O.C.G.A (a)(2) The scans at issue are essentially impressions made digitally, thanks to advancement in technology. 20 Impressions of patients mouths are critical to determining the degree of malpositioning, whether a patient qualifies for particular forms of treatment, the proper course of treatment, creating orthodontic appliances, 20 See footnote 6, supra. 21

33 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 33 of 48 and for determining whether treatment has been effective. And, importantly, Georgia law has long recognized that making impressions is one aspect of the practice of dentistry. See Holcomb v. Johnston, 213 Ga. 249, 253 (1957) ( The operations performed by this defendant in taking impressions and fitting dental prosthetics for a fee are clearly acts required to be performed by a licensed dentist.... ) (emphasis added); see also Wrzesinski v. State, 271 Ga. 659, 659 (1999) (rejecting constitutional challenges of a criminal defendant convicted for t[aking] impressions of teeth for the purpose of making appliances usable as teeth ); Hortman v. Yarbrough, 214 Ga. 693, (1959). 21 The Board has more than a rational basis for promulgating the Rule it has a compelling interest in doing so. See Holcomb, 213 Ga. at 252 ( There can be no doubt that the practice of dentistry is affected with the public interest, and to insure protection of the public health and welfare the profession of dentistry is a logical subject for regulation.... ). 22 The Rule ensures that scans are performed safely, 21 See also Clark v. Bd. of Dental Examiners of Georgia, 240 Ga. 289, 293 (1977) ( The trial judge did not err... in finding as a matter of law that the appellant examined and treated conditions of human teeth and gums. By the appellant s own testimony, he admitted that he had... made impressions for the purpose of making appliances usable on teeth or as teeth, for which he charged a fee.... [This] constitutes the practice of dentistry.... ). 22 Accord Goldfarb v. Virginia State Bar, 421 U.S. 773, 792 (1975) ( We recognize that the States have a compelling interest in the practice of professions within their boundaries, and that as part of their power to protect the public health, safety, and other valid interests they have broad power to establish standards for licensing practitioners and regulating the practice of professions. ). 22

34 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 34 of 48 consistently, and correctly throughout the State of Georgia. It allows for licensed dentists and orthodontist to assess tooth mobility which has a direct impact on the success or failure of orthodontic treatment and which can be determined only by an examination and diagnosis by a dentist or orthodontist. And the Rule ensures that if a pathology or abnormality is observed during the scan process, a licensed medical practitioner is readily available to assess the patient and provide medical guidance. There is a rational basis for the Board s determination that the process for making digital impressions should, at the very least, be performed by an EDDA. 23 SmileDirect s 1983 claims should be dismissed The American Dental Association agrees with the Board s rationale, and has stated its belie[f] that supervision by a licensed dentist is necessary for all phases of orthodontic treatment including... study models of scans of the mouth.... Am. Dental Ass n, ADA Discourages DIY Orthodontics through Resolution, (last visited Nov. 21, 2018); see also Am. Dental Ass n, Resolution 50H SmileDirect s Equal Protection claims also fails because the Complaint does not identify a similarly situated person or entity from whom SmileDirect is being treated differently. By its terms, the Rule treats everyone in Georgia the same anyone who wants to conduct digital scans for the purpose of fabricating orthodontic devices must do so with an EDDA or a licensed dentist or orthodontists. See, e.g., Burnett v. Fulton Cnty. Sch. Dist., No. 1:07-CV-0300-JTC-AJB, 2008 WL , at *10 (N.D. Ga. May 6, 2008) ( A party establishes a violation of the Equal Protection clause by showing that: (1) the plaintiff was treated differently from similarly situated persons in all relevant respects; and (2) the different treatment was a result of discriminatory intent or purpose. ) (citing, inter alia, Jones v. Ray, 279 F.3d 944, (11th Cir. 2001)). 23

35 Case 1:18-cv WMR Document 29-1 Filed 11/21/18 Page 35 of 48 III. State-action immunity bars SmileDirect s antitrust claim against the Board and the Board Members. Even if SmileDirect had stated a cognizable antitrust claim (which it has not), the Court should dismiss Count II of the Complaint because the Board and Board Members are protected by state-action immunity. 25 State-action immunity, sometimes referred to as Parker immunity, arises because federal antitrust law does not prohibit the states, their agencies, and their officers from engaging in anticompetitive conduct. Parker v. Brown, 317 U.S. 341 (1943). States possess a significant measure of sovereignty under the U.S. Constitution, and States may impose restrictions on occupations, confer exclusive or shared rights to dominate a market, or otherwise limit competition to achieve public objectives without running afoul of federal antitrust laws. Edinboro Coll. Park Apartments v. Edinboro Univ. Found., 850 F.3d 567, 572 (3d Cir. 2017) (providing a detailed description of the doctrine) (internal quotation marks omitted). State-action immunity is absolute; it protects against all antitrust liability. See id.; see also, e.g., Saenz v. Univ. Interscholastic League, 487 F.2d 1026, 1028 (5th Cir. 1973); Nicholl, 706 F. App x at 496. There are three approaches to analyzing state-action immunity: (1) ipso facto 25 The Executive Director is entitled to state-action immunity for the same reasons she is entitled to sovereign immunity her role is administrative and she did not vote on the Rule. 24