Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 1 of 32

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1 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 1 of 32 FILED 2018 Nov-05 PM 01:57 U.S. DISTRICT COURT N.D. OF ALABAMA IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION D. BLAINE LEEDS, DDS and ) SMILEDIRECTCLUB, LLC, ) ) Plaintiffs, ) ) v. ) CIVIL ACTION NO.: ) BOARD OF DENTAL EXAMINERS ) 2:18-CV RDP OF ALABAMA, et al., ) ) ORAL ARGUMENT Defendants. ) REQUESTED BRIEF IN SUPPORT OF MOTION TO DISMISS Samuel H. Franklin (FRA006) sfranklin@lightfootlaw.com R. Ashby Pate (PAT077) apate@lightfootlaw.com Logan T. Matthews (MAT068) lmatthews@lightfootlaw.com LIGHTFOOT, FRANKLIN & WHITE, L.L.C. The Clark Building th Street North Birmingham, Alabama (205) (205) (Facsimile) Attorneys for Defendants Board of Dental Examiners of Alabama; Adolphus M. Jackson, DMD; T. Gerald Walker, DMD; Douglas Beckham, DMD; Stephen R. Stricklin, DMD; Mark R. Mcilwain, DMD, MD; Kevin M. Sims, DMD, Ms; Sherry S. Campbell, RDH, CDHC

2 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 2 of 32 TABLE OF CONTENTS Page TABLE OF AUTHORITIES... ii INTRODUCTION... 1 STATEMENT OF FACTS... 3 I. SmileDirect and the intra-oral itero digital imaging procedure... 3 II. The Cease and Desist Letter and subsequent suit ARGUMENT AND AUTHORITIES... 7 I. Plaintiffs claims against Board Members in their individual capacities should be dismissed because government officials may not be sued for declaratory or injunctive relief in their individual capacity II. III. The Board of Dental Examiners of Alabama and its members are entitled to Parker immunity for their clear application of Ala. Admin. Code r. 270-x-3-.10(2)(o) Plaintiffs constitutional claims should be dismissed because Ala. Code (7) and Ala. Admin. Code. R. 270-X are self-evidently rationally related to protecting the health, safety, and welfare of the citizens of the State of Alabama and because the State has a legitimate interest that exceeds any incidental burden on commerce A. Equal Protective and Substantive Due Process B. Dormant Commerce Clause IV. This Court lacks jurisdiction over the remaining claims for declaratory judgment and injunctive relief CONCLUSION CERTIFICATE OF SERVICE i

3 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 3 of 32 TABLE OF AUTHORITIES Page(s) Cases Ala. Power Co. v. Smith, 575 So. 2d 1084 (Ala. 1991)... 9 Ameritech Corp. v. McCann, 297 F.3d 582 (7th Cir. 2002)... 8 Bah v. City of Atlanta, 103 F.3d 964 (11th Cir. 1997) Cmty. Mental Health Servs. of Belmont v. Mental Health & Recovery Bd. Serving Belmont, Harrison & Monroe Ctys., 150 F. App x 389 (6th Cir. 2005)... 7 FCC v. Beach Commc ns, Inc., 508 U.S. 307 (1993)... 18, 20 Feit v. Ward, 886 F.2d 848 (7th Cir. 1989)... 7, 8 Frank v. Relin, 1 F.3d 1317 (2d Cir. 1993)... 7 Goldfarb v. Va. State Bar, 421 U.S. 773 (1975) Hatfill v. Ashcroft, 404 F. Supp. 2d 104 (D.D.C. 2005)... 8 Hatfill v. Gonzales, 519 F. Supp. 2d 13 (D.D.C. 2007)... 8 Heller v. Doe, 509 U.S. 312 (1993)... 19, 20, 21 Jackson v. Metro. Edison Co., 419 U.S. 345 (1974)... 9 ii

4 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 4 of 32 Kentucky v. Graham, 473 U.S. 159 (1985)... 7, 10 Locke v. Shore, 634 F.3d 1185 (11th Cir. 2011) Maine v. Taylor, 477 U.S. 131 (1986)... 9 Maxcess Inc. v. Lucent Techs., Inc., 433 F.3d 1337 (11th Cir. 2005)... 4 Moose Lodge No. 107 v. Irvis, 407 U.S. 163 (1972)... 9 In re N.C. Bd. of Dental Exam ers, 152 F.T.C. 75, 2011 WL (2011) N.C. State Bd. of Dental Exam rs v. F.T.C., 717 F.3d 359 (4th Cir. 2013), aff d, 135 S. Ct (2015)...passim Parker v. Brown, 317 U.S. 341 (1943)...passim Pike v. Bruce Church, 397 U.S. 137, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970) Purchasing Power, LLC v. Bluestem Brands, Inc., 851 F.3d 1218 (11th Cir. 2017) United States v. State of Alabama, 791 F.2d 1450 (11th Cir. 1986)... 7 Westphal v. Northcutt, 187 So. 3d 684 (Ala. 2015) Statutes 28 U.S.C. 1367(c)(3) Ala. Code , 20 Ala. Code (2)... 2, 6, 19 iii

5 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 5 of 32 Ala. Code (7)... 2, 6, 18, 19 Ala. Code (a)... 6 Ala. Code , 11, 12 Ala. Code (b)(1) Ala. Code Ala. Code Other Authorities Fed. R. Civ. P , 7, 23, 25 iv

6 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 6 of 32 BRIEF IN SUPPORT OF MOTION TO DISMISS The Defendants, the Board of Dental Examiners of Alabama; Adolphus M. Jackson, DMD; T. Gerald Walker, DMD; Douglas Beckham, DMD; Stephen R. Stricklin, DMD; Mark R. McIlwain, DMD, MD; Kevin M. Sims, DMD, MS; and Sherry S. Campbell, RDH, CDHC, individually and in their official capacities as Members of the Alabama Board of Dental Examiners, submit this brief in support of their motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) and (6). INTRODUCTION On September 20, 2018, the Alabama Board of Dental Examiners issued a cease and desist letter to SmileDirect because one of SmileDirect s local stores in Inverness does not have a dentist physically present while its non-licensed employees perform intra-oral procedures on patients namely, the insertion of an itero device into patients oral cavities for the purpose of creating digital images and digital impressions that can later be used to create orthodontic devices. Under Alabama law, digital images of teeth taken intra-orally can only be performed under the direct supervision of a dentist. See Ala. Admin. Code r x-3-.10(2)(o) (emphasis added). As such, SmileDirect s insistence on taking intra-oral digital images at its SmileShop without a dentist physically present constitutes the unlicensed practice of dentistry, which is defined, in pertinent part, as directly or indirectly, by any means or method, mak[ing] an impression of the 1

7 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 7 of 32 human tooth, teeth, jaws, or adjacent tissue or using a digital imaging machine for the purpose of making... digital images..... Ala. Code (2) & (7). After receiving the cease and desist letter, SmileDirect quickly filed this lawsuit against the Board and its members in their official and individual capacities. The Complaint seeks two things: (1) a judicial declaration that the procedures being performed at the SmileShop do not constitute the taking of digital images under Alabama law and (2) an injunction that prohibits the Board and its individual members from requiring SmileDirect s local store to have a dentist physically present on site while intra-oral digital imaging is being performed. Plaintiffs insist that the digital images created by the itero device are not really digital images, but are rather photographs which are then stored or processed digitally, as if there is a meaningful difference and this, despite the fact that itero s own product brochures refer to what they do as digital imaging. Further, Plaintiffs allege that requiring a dentist to be on site during these intra-oral digital imaging procedures, as required by Alabama law, violates a panoply of SmileDirect s rights under the U.S. Constitution s Dormant Commerce Clause, Due Process Clause, Equal Protection Clause, its rights under the Alabama Constitution, its rights under the Sherman Act, and claims for declaratory and injunctive relief. 2

8 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 8 of 32 This Complaint should be dismissed in its entirety. First, the claims against the defendants in their individual capacities must be dismissed because lawsuits seeking only declaratory and injunctive relief cannot be brought against Board members in their individual capacities. Second, the Defendants are immune from the Sherman Anti-Trust Act claims under Parker v. Brown, 317 U.S. 341 (1943) and Ala. Code Third, because the Alabama laws challenged by SmileDirect are self-evidently rationally related to Alabama s legitimate purpose of protecting the public health, safety, and welfare of the citizens of the State of Alabama, see Ala. Code , the Constitutional claims for equal protection, due process, and dormant commerce clause violations fail as a matter of law. All that remains are claims for declaratory and injunctive relief based on an issues of pure Alabama state law. Because there is not a valid basis for federal court jurisdiction over those claims in the absence of the federal claims that are due to be dismissed, those claims are likewise due to be dismissed. STATEMENT OF FACTS I. SmileDirect and the intra-oral itero digital imaging procedure SmileDirect is an out-of-state company that uses local store fronts, such as the Inside Sola Salon SmileShop located in Inverness Corners in Birmingham ( SmileShop ), to take digital images and digital impressions of patients teeth through the use of an itero device. See Complaint (Doc. 1 at 28). These digital 3

9 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 9 of 32 images and digital impressions are then transmitted out of state to plaintiff Dr. Leeds, who creates clear aligner therapy treatment based on the images, and sends these devices in the mail to patients. See Complaint, Introduction (Doc. 1). The itero is an intra-oral device. That means, to take digital images and digital impressions of a patient s teeth, a non-licensed employee places a long, foreign probe inside a patient s mouth, and uses his or her own hands to manipulate the mouth of the patient while the itero captures thousands of highresolution digital images, which are then combined to make a digital impression of a patient s mouth. During the itero procedure, the non-licensed employee comes into direct contact with the mucosal membranes and bodily fluids of the patient and, as a result, must wear sanitary gloves and a mask while performing the procedure. This is why, as the Complaint states, steps must be taken with the itero to ensure that no germs are transmitted from patient to patient. (Doc. 1 at 29). Defendants refer the Court to the official itero Element Orthodontic Training Video and itero Element Orthodontic Patient Video placed on YouTube by the manufacturer of the device itself, both of which show the intra-oral, clinical nature of this digital imaging procedure. 1 As this Court can tell, 1 While a motion to dismiss is generally decided on the pleadings alone, matters outside the pleadings may be considered at the motion to dismiss phase if they are central to the plaintiff s claim and their authenticity is not challenged. See Maxcess Inc. v. Lucent Techs., Inc., 433 F.3d 1337, 1340 n.3 (11th Cir. 2005). The link to the YouTube video is here: 4

10 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 10 of 32 digital images are self-evidently being created indeed, the patient video begins with the narration: Every smile tells a story and every story creates an impression. That s why we ve invested in the latest digital imaging technology. 2 Moreover, the procedure, complete with latex gloves and surgical masks, is hardly nonclinical, as Plaintiffs insist as many as 18 times in their Complaint alone. The Oxford Dictionary defines clinical as [r]elating to the observation and treatment of actual patients rather than theoretical or laboratory studies. The itero digital imaging process is plainly clinical, as the video demonstrates. And despite the intra-oral digital imaging that is plainly occurring there, no licensed dentist is on site at its Birmingham-based SmileShop. II. The Cease and Desist Letter and subsequent suit. On September 20, 2018, the Board sent a cease and desist letter to SmileDirect because its SmileShop did not have a dentist physically present on-site 2 5

11 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 11 of 32 while these intra-oral digital imaging procedures were taking place. 3 Alabama law requires that digital images of teeth taken intra-orally can only be performed under the direct supervision of a dentist. See Ala. Admin. Code r. 270-x-3-.10(2)(o). 4 Thus, SmileDirect s insistence on doing so without a dentist present, the Board concluded, constituted the unlicensed practice of dentistry in violation of Ala. Code (2) and (7): Any person shall be deemed to be practicing dentistry who... [d]irectly, or indirectly, by any means or method, makes impression of the human tooth, teeth, jaws, or adjacent tissue [or] [u]ses a... digital imaging machine for the purpose of making... digital images..... Ala. Code (2) and (7). Upon receipt of this letter, SmileDirect engaged in discussions about the letter with various members of the Board s staff. After speaking with SmileDirect and listening to SmileDirect s concerns, the Board reconsidered its position at an October 4-5, 2018 meeting of the Board of Dental Examiners of the Alabama. But because the law is clearly stated and prohibits this conduct, no change was made. This lawsuit followed. 3 The Board of Dental Examiners has been empowered by the Alabama State Legislature to carry out the purposes and enforce the provisions of the statutes governing the practice of dentistry in Alabama. Ala. Code (a). 4 Direct supervision is defined as supervision by a dentist who authorizes the intraoral procedure to be performed, is physically present in the dental facility and available during performance of the procedure and takes full professional responsibility for the completed procedure. Ala. Admin. Code r. 270-x

12 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 12 of 32 ARGUMENT AND AUTHORITIES I. Plaintiffs claims against Board Members in their individual capacities should be dismissed because government officials may not be sued for declaratory or injunctive relief in their individual capacity. SmileDirect s attempt to sue members of the Board of Dental Examiners in their individual capacity for declaratory and injunctive relief fails as a matter of law under Fed. R. Civ. P 12(b)(6). In fact, every federal court of appeals decision located by counsel that addresses this issue has concluded that there is no basis for asserting a claim for declaratory or injunctive relief against a government official in his or her individual capacity. 5 As the Supreme Court has held, it is the nature of the relief sought that dictates the capacity in which a plaintiff may sue a government actor. See Kentucky v. Graham, 473 U.S. 159, 167 (1985) ( Personal capacity suits seek to impose personal liability upon a government official for actions he takes under color of state law. Official-capacity suits, in contrast, 5 See, e.g., Cmty. Mental Health Servs. of Belmont v. Mental Health & Recovery Bd. Serving Belmont, Harrison & Monroe Ctys., 150 F. App x 389, 401 (6th Cir. 2005) ( Just as a plaintiff cannot sue a defendant in his official capacity for money damages, a plaintiff should not be able to sue a defendant in his individual capacity for an injunction in situations in which the injunction relates only to the official s job, i.e., his official capacity. ); Frank v. Relin, 1 F.3d 1317, 1327 (2d Cir. 1993) (holding equitable relief could be obtained against [defendant] only in his official, not his individual, capacity ); Feit v. Ward, 886 F.2d 848, 858 (7th Cir. 1989) ([Plaintiff s] attempt to obtain declaratory and injunctive relief from the defendants in their personal [or individual] capacities fails to state a claim upon which relief may be granted.... ); United States v. State of Alabama, 791 F.2d 1450, 1457 (11th Cir. 1986) (construing lawsuit against Alabama Board of Education as a suit against the Board in their official capacity because it sought to enjoin the Board members from approving a teacher education program which was an official action... not one undertaken by individuals acting independently to their offices ). 7

13 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 13 of 32 generally represent only another way of pleading an action against an entity of which an officer is an agent..... ). This principle is illustrated in Hatfill v. Gonzales, 519 F. Supp. 2d 13 (D.D.C. 2007). In Hatfill, Dr. Hatfill sued Justice Department officials in their individual and official capacities for constitutional violations in relation to their announcement that he was a person of interest in the FBI s anthrax investigation in the fall of See Hatfill v. Ashcroft, 404 F. Supp. 2d 104 (D.D.C. 2005). Citing the Seventh Circuit s decisions in Feit v. Ward, 886 F.2d 848 (7th Cir. 1989) and Ameritech Corp. v. McCann, 297 F.3d 582 (7th Cir. 2002), the district court reasoned that the ultra vires or authority stripping theory enunciated in Young... does not support maintaining a legal action against government officers in their individual capacity where equitable relief is sought.... Rather, state officials may be sued in their official capacities for injunctive relief.... Id. at 22 (emphasis added). Here, Dr. Leeds and SmileDirect have asserted eleven causes of action against the individual Board members all for declaratory and injunctive relief. See Complaint (Doc. 1). But each of these claims relates to actions taken within the course of the defendants official duties as members of the Board of Dental Examiners and none of them seek money damages. Therefore, to the extent 8

14 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 14 of 32 Plaintiffs claims are asserted against Board members in their individual capacity, all of them should be dismissed on this common-sense ground alone. Moreover, Plaintiffs constitutional claims against Defendants in their individual capacities are also due to be dismissed because these claims require proof of state action. See Maine v. Taylor, 477 U.S. 131, 138 (1986) (noting that the first consideration in determining whether there has been a violation of the Commerce Clause is whether the State has overstepped its role in regulating interstate commerce ); Jackson v. Metro. Edison Co., 419 U.S. 345 (1974) (affirming dismissal of substantive due process claim under the Fourteenth Amendment because Plaintiff had failed to allege that the defendant engaged in state action); Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 172 (1972) (noting that the well-established principle that the Equal Protection Clause of the Fourteenth Amendment prohibits discriminatory action by the state, and that the Clause is no shield to private conduct, however discriminatory or wrongful (internal citations and quotations omitted)); see also Ala. Power Co. v. Smith, 575 So. 2d 1084, 1086 (Ala. 1991) ( Without state action, the due process clauses of the Federal or State Constitutions have no field of operation.... ). Because members of the Board of Dental Examiners cannot exercise state action in their individual capacity, Plaintiffs constitutional claims against the individual Board members should be dismissed for this reason as well. 9

15 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 15 of 32 Finally, Plaintiffs Sherman Act theory provides no basis to save their individual capacity claims. Plaintiffs may argue that the individual capacity claims should at least remain because Plaintiffs have alleged, under the Sherman Act, that Defendants entered a contract, combination, or conspiracy in restraint of trade.... (Doc. 1 at 115 & 129). But the Sherman Act neither contemplates nor requires that claims be pleaded against Board members in their individual capacities. First, the alleged contract, combination, or conspiracy that Plaintiffs are complaining about is, in essence, that Defendants used their authority as official members of the Board of Dental Examiners to corruptly influence the market for dentistry within the State. That claim is one against the Board members in their official capacities as members of the Board of Dental Examiners it is not one that seeks to impose personal liability against an individual board member. Kentucky, 473 U.S. at 167. Second, the case upon which Plaintiffs rely heavily in their motion for Temporary Restraining Order N.C. State Bd. of Dental Exam rs v. F.T.C., 717 F.3d 359 (4th Cir. 2013), aff d, 135 S. Ct (2015) proves Defendants point. In that case, despite reaching the very result Plaintiffs now seek in this case, the individual board members of the North Carolina Board of Dental Examiners were never named in their individual capacity. See id. Instead, the FTC noted that the nature of the complaint was against Dentists in North Carolina, acting through the 10

16 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 16 of 32 instrument of the North Carolina Board of Dental Examiners.... See In re N.C. Bd. of Dental Exam ers, 152 F.T.C. 75, 2011 WL (2011). No relief may be granted as to Plaintiffs individual capacity claims and in fact, Plaintiffs have not even asked for any. As such, Plaintiffs claims against the members of the Board of Dental Examiners in their individual capacities should be dismissed. II. The Board of Dental Examiners of Alabama and its members are entitled to Parker immunity for their clear application of Ala. Admin. Code r. 270-x-3-.10(2)(o). The Board of Dental Examiners of Alabama and its members are immune from suit from the Sherman Act claim. The Alabama Legislature has expressed its intent to immunize the Board from cases such as this one, statutorily granting immunity from all state and federal anti-trust laws. See Ala. Code And this is entirely consistent with Parker immunity because the Board was applying clear and unambiguous Alabama law, as opposed to interpreting or extending Alabama policy. Indeed, the Sherman Act does not prohibit anticompetitive restraints imposed by a state as an act of government. See Parker v. Brown, 317 U.S. 341, 352 (1943). Here, the Alabama Legislature itself expressly approved of Ala. Admin. Code r. 270-x-3-.10(2)(o) and 270-x-3-.06, which together require a licensed dentist to be physically present at the facility when intra-oral dental digital 11

17 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 17 of 32 images are taken. These Administrative Code provisions which specifically prohibit the taking of intra-oral digital images without a dentist present were first subject to the Sunset Committee of the Alabama Department of Examiners or Public Accounts to determine whether the regulations were in conflict with Alabama law. Further, the Alabama Legislature reviewed these regulations as codified under Ala. Code (b)(1). The Legislative Services Agency then reviewed the rules for antitrust issues pursuant to Ala. Code The Joint Committee on Administrative Regulation Review reviewed the rules prior to their adoption pursuant to Ala. Code And finally, the Alabama Legislature specifically found and declared that its rules prioritize[] patient health, safety, and welfare, even if the rule[s] appear anti-competitive or have an anticompetitive effect.... Ala. Code SmileDirect does not dispute that the Alabama Legislature approved these Alabama Administrative Code provisions that prohibit intra-oral digital imaging without a dentist present. Rather, SmileDirect argues that the itero device doesn t actually take digital images, but rather, the itero takes photographs which are then stored or processed digitally. (Doc. 1 at 57). Plaintiffs took great pains to use that turn of phrase photographs which are then stored or processed digitally throughout their Complaint and Motion for Temporary Injunction, and to avoid using the term digital images. They use the 12

18 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 18 of 32 phrase or some variation of it over 40 times in their Complaint and over 65 times in their Motion for Temporary Restraining order. At one point in their Motion for Temporary Restraining Order, Plaintiffs pains border on the absurd, when on page 12 of their brief, Plaintiffs state, The only sense in which the imaging performed by the itero is digital is that its photographic images are stored on digital storage media instead of film. (Doc. 3 at 12) (emphasis added). This is disingenuous at best. SmileDirect s own website extols the quality of its full mouth digital impressions, 6 stating that, [i]n less than 30 minutes, we ll make a 3D image of your smile at one of our SmileShops. 7 itero s patient training video states: That s why we ve invested in the latest digital imaging technology! itero s Google homepage states: Since 2007, itero has led a revolution in 3D digital dentistry. Traditional dental impressions are replaced with highly accurate digital images from our new itero And itero s own Twitter page touts that it is: Your official connection to the latest information... related to the itero Intraoral Scanner and digital imaging. 9 But now, SmileDirect disavows that the itero takes digital images when it realizes that Alabama law plainly prohibits it. Instead, what SmileDirect says that it does is take photographs which are then

19 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 19 of 32 stored or processed digitally. As the old saying goes, if it walks like a duck, and quacks like a duck and refers to itself as a duck when it thinks no one is looking it s a duck. Alabama s Administrative Code provisions, which specifically prohibit intra-oral digital imaging without a dentist physically present, were approved by the state legislature as an act of the sovereign not the function of some capricious or discretionary interpretation of mere Board-made rules. In sending the cease and desist letter, the Board enforced a plainly-worded law prohibiting digital imaging against SmileDirect s use of the itero without a dentist present, where the itero s own manufacturer calls it digital imaging, and SmileDirect calls it a digital impression and a 3D Image. Enforcing a clear and unambiguous act of the sovereign in this way cannot, as a matter of law, be an anticompetitive restraint imposed by a private actor in violation of the Sherman Act. Put another way, the Board is entitled to take the Alabama legislature and SmileDirect itself at their respective words. Under clear law, outlined below, the Board cannot be responsible for the anticompetitive effects of its enforcement of Alabama s stated policy on this issue. Plaintiffs inappositely rely on N.C. State Bd. of Dental Exam rs. 135 S. Ct (2015). In that case, the United States Supreme Court considered whether the Board was entitled to Parker immunity, because its members were invested by 14

20 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 20 of 32 North Carolina with the power of the State and that, as a result, the Board s actions [were] cloaked with Parker immunity. Id. at In deciding that the Board was not entitled to Parker immunity, the Court noted that the Board did not receive active supervision by the State when it interpreted the Act as addressing teeth whitening and when it enforced that policy by issuing cease-and-desist letters to nondentist teeth whiteners. Id. (underline added). In other words, because the North Carolina Legislature had conferred discretionary authority upon the Board to interpret the unlawful practice of dentistry to include teeth whitening services and because the Board was composed of active market participants, active supervision was required. But the Court also explained that Parker immunity does apply when the actions in question are an exercise of the State s sovereign power. Id. And though most non-sovereign actors, including municipalities and state agencies which have been delegated regulatory power, only qualify for Parker immunity when they meet both of Midcal s requirements, i.e., (1) when the State has articulated a clear policy to allow the anticompetitive conduct, and (2) when the State provides active supervision of the anticompetitive conduct, the Court clarified that there are instances in which an actor can be excused from Midcal s active supervision requirement when the policy being implemented is enacted by 15

21 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 21 of 32 the State itself. Id. at 1112 (citing California Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980) ( Midcal )). Id. This distinction is evident in the Third Circuit s decision in Massachusetts Sch. of Law at Andover, Inc. v. Am. Bar Ass n. See 107 F.3d 1026 (3d Cir. 1997). There, the Massachusetts School of Law ( MSL ) brought an antitrust action against the American Bar Association ( ABA ), and others, after the ABA denied MSL provisional accreditation. The ABA filed a motion for summary judgment, arguing that Parker immunity applied, which the District Court granted. On appeal, the Third Circuit affirmed, reasoning, [b]ecause the states are sovereign in imposing the bar admission requirements, the clear articulation and active supervision requirements urged by MSL are inapplicable. Id. at 1036 (emphasis added). In other words, because the state, and not private, conduct caused MSL s injury, the ABA was not subject to suit for any of the anticompetitive effects of its decision. Put simply, in Massachusetts, the State of Massachusetts was sovereign in imposing bar admission requirements, even though those plainly-worded requirements were enforced and policed by the state bar. Here, the State of Alabama was sovereign in specifically prohibiting the taking of intra-oral digital images without a dentist present and the Alabama Board of Dental Examiners simply enforced the clearly-worded intra-oral digital imaging prohibition against a 16

22 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 22 of 32 company that openly calls what it is doing digital imaging and openly admits it is being done without a dentist present. Despite Plaintiffs insistence to the contrary, the N.C. State Bd. of Dental Exam rs case is not on all fours with the real facts here. The N.C. Board was given broad discretion to interpret the scope and meaning of the phrase unlawful practice of dentistry to include the practice of teeth whitening, for which there was previously no explicit legal prohibition. Here, the Alabama Legislature specifically prohibited the taking of intra-oral digital images without a dentist present. SmileDirect and itero tout their products and services as the taking of digital images. Thus, there is no Board discretion or interpretation of ambiguous terms here, as Plaintiffs desperately want this Court to find with its repeatable phrase photographs which are then stored or processed digitally. Rather, the Board is enforcing the duly-enacted policy of the State of Alabama by applying the digital imaging statute against a company that admits everywhere except in its legal pleadings that it is performing digital imaging. The Board is entitled to Parker immunity, and the Sherman Act claims should be dismissed. 17

23 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 23 of 32 III. Plaintiffs constitutional claims should be dismissed because Ala. Code (7) and Ala. Admin. Code. R. 270-X are self-evidently rationally related to protecting the health, safety, and welfare of the citizens of the State of Alabama and because the State has a legitimate interest that exceeds any incidental burden on commerce. A. Equal Protective and Substantive Due Process Plaintiffs claims for violations of Equal Protection and Substantive Due Process under the Fourteenth Amendment, as well as the Due Process claim under the Alabama Constitution, should also be dismissed. This is because [r]ational basis review applies to Due Process and Equal Protection Clause challenges to state professional regulations, because the right to practice a particular profession is not a fundamental one. Locke v. Shore, 634 F.3d 1185, (11th Cir. 2011) (citing Williamson v. Lee Optical of Okla., 348 U.S. 483, 488 (1955)); see also Goldfarb v. Va. State Bar, 421 U.S. 773, 792 (1975) ( States have a compelling interest in the practice of professions within their boundaries, and... they have broad power to establish standards for licensing practitioners and regulating the practice of professions. ). And Plaintiffs admit as much. 10 On rational-basis review, a classification in a statute... bear[s] a strong presumption of validity. FCC v. Beach Commc ns, Inc., 508 U.S. 307, 314 (1993). A statute is constitutional if there is any reasonably conceivable state of facts that could provide a rational basis for [it]. Id. at 313. Importantly for 10 Plaintiffs agree that rational basis review applies. (Doc. 3 at 28 30). 18

24 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 24 of 32 purposes of this Motion to Dismiss, [a] State, moreover, has no obligation to produce evidence to sustain the rationality of a statutory classification. A legislative choice is not subject to courtroom factfinding and may be based on rational speculation unsupported by evidence or empirical data. Heller v. Doe, 509 U.S. 312, 320 (1993) (quoting Beach Commc ns, Inc., 508 U.S. at 315) (emphasis added)). The party challenging the statute bears the burden of proving that the statute lacks a rational basis. See Bah v. City of Atlanta, 103 F.3d 964, 967 (11th Cir. 1997) (citing Beach Commc ns, Inc., 508 U.S. at ). Plaintiffs challenge Ala. Code (7) and Ala. Admin. Code r. 270-X , which together require that digital images of teeth taken intra-orally can only be performed under the direct supervision of a dentist, and that any person who does so is considered to be practicing dentistry in the state. See Ala. Admin. Code r. 270-x-3-.10(2)(o) (emphasis added) and Ala. Code (2) and (7). Plaintiffs argue that the Board s interpretation of these code provisions serves no legitimate purpose. The taking of digital photographs using a device such as the itero is extremely safe and non-invasive, so there is no medical reason for a dentist to be close at hand. (Doc. 3 at 30). They go on to argue that the sole purpose of the Board s interpretation of these rules is to stifle competition in the market for aligners to treat malocclusion a purely protectionist motive that is devoid of constitutional protection. Id. This too borders on the absurd. 19

25 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 25 of 32 First, the Board is not interpreting rules. It is applying the clear letter of the law. In any event, these provisions, as written, are self-evidently rationally related to the Alabama s legitimate purpose of protecting the public health, safety, and welfare of the citizens of the State of Alabama. See Ala. Code ( [T]he practice of dentistry... affect[s] the public health, safety, and welfare and should be subject to regulation. ). 11 Second, even assuming the Legislature s clear findings are not enough, common sense demonstrates that ample facts [exist] that could provide a rational basis for 12 the Board s application of these rules and the law plainly allows this Court to engage in rational speculation 13 to arrive at those facts. Put another way, the law allows this Court to use its common sense to conclude that anytime an intra-oral procedure is performed, where non-licensed employees insert foreign probes into people s oral cavities, a trained dentist should be present to ensure proper procedures are followed. 14 Indeed, this law and the Board s enforcement of it is rationally-related to any one of the following bases 11 The Legislature further declared, All provisions of this chapter relating to the practice of dentistry... shall be liberally construed to carry out these objects and purposes. Id. (emphasis added). 12 FCC, 508 U.S. at, Heller v. Doe, 509 U.S. 312, 320 (1993) (quoting Beach Commc ns, Inc., 508 U.S. at 315)). 14 The Alabama Supreme Court has expressed reluctance to opening the door for judicial determinations as to what particular procedures or services within an accepted field of professional practice might be safely carved out for performance by laymen. Westphal v. Northcutt, 187 So. 3d 684, 694 n.4 (Ala. 2015). 20

26 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 26 of 32 for requiring a dentist to be physically present: (a) to ensure that sterilization procedures, which Plaintiffs admit they perform on the itero, are followed in order to prevent the spread of communicable diseases; (b) to use his or her skill and training in the event of a sudden medical emergency, such as a patient going into anaphylactic shock brought on by the use of latex gloves, or the itero device inadvertently dislodging a patient s crown, which the patient then aspirates; (c) to diagnose pre-existing conditions that contraindicate the need for malocclusion therapy in the first place, such as gum disease; or (d) to verify that an patient s oral cavity is accurately and faithfully being captured by the itero device at all. These common sense rationales all obtain even if, as Plaintiffs contend, these non-licensed employees really are just taking photographs of a patient s smile, which of course they are not. And any one of these conceivable, common sense rationales are self-evidently related to the public health, safety, and welfare and to ensuring public confidence in the practice of dentistry throughout the State. Though Defendants are prepared to present expert testimony about the rather obvious rational bases for this law, outlined above, the law is clear that such is not necessary: [a] State, moreover, has no obligation to produce evidence to sustain the rationality of a statutory classification. A legislative choice is not subject to courtroom factfinding and may be based on rational speculation unsupported by evidence or empirical data. Heller, 509 U.S. at

27 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 27 of 32 B. Dormant Commerce Clause For the same reasons, Plaintiffs constitutional claims under the dormant commerce clause fail because Alabama has a legitimate local interest in regulating this kind of activity. Again, Plaintiffs challenge the law that digital images of teeth taken intra-orally can only be performed under the direct supervision of a dentist. Ala. Admin. Code r. 270-x-3-.10(2)(o). But this law does not directly attempt to regulate interstate commerce. On its face, it simply requires that certain, intra-oral procedures be performed under the direct supervision of a dentist. [W]here the statute regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits. Pike v. Bruce Church, 397 U.S. 137, 142, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970). As discussed in section III.A. above, numerous legitimate state interests exist for ensuring that intra-oral procedures are performed safely and under the direct supervision of a trained dentist. But Plaintiffs Complaint wholly fails to plead facts other than conclusory statements of the legal standard that show that the incidental burden on interstate commerce outweighs these legitimate state interests. Plaintiffs many constitutional claims should dismissed even at this early stage in the litigation. * * * 22

28 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 28 of 32 With respect to the dismissal of all of Plaintiffs constitutional claims, the Eastern District of Louisiana s decision in Veritext Corp. v. Bonin is particularly instructive. There, that court dismissed at the 12(b)(6) stage similar claims brought against the Louisiana Board of Examiners of Certified Shorthand Reporters. See 259 F. Supp. 3d 484 (E.D. La. 2017), aff d 901 F.3d 287 (5th Cir. 2018). In Veritext, Louisiana passed a law preventing court reporters from entering into volume-based contracts with frequent users of court reporting services. Veritext, a provider of court reporting services, sued the Louisiana Board of Examiners of Certified Shorthand Reporters for violations of the Equal Protection and Due Process Clauses of the Fourteenth Amendment, the Dormant Commerce Clause, and the Sherman Act. See id. at 489. In granting defendants motion to dismiss under Rule 12(b)(6) as to all of plaintiff s claims except its Sherman Act claims against defendants in their official capacity the court noted that defendants had a rational basis for distinguishing between court reporting firms that contract with party litigants and court reporting firms that do not. The court noted that, although the challenged statute may have economic implications, the primary motivation behind the law was to protect the professional integrity of the court reporting industry, which survives rational basis scrutiny. Id. at 490. Further, the court dismissed the dormant commerce clause claim because the 23

29 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 29 of 32 complaint [did] not allege that [the Louisiana Act] discriminates against interstate commerce through treating in-state and out of state corporations differently. Id. In fact, Louisiana Court reporting firms and the Plaintiff are subject to the same requirements.... Id. (emphasis added). Finally, the court reasoned, even if there was incidental discrimination against out-of-state court reporting agencies, the law had a legitimate justification because it sought to ensur[e] the reliability and ethical quality of its court reporter s work product. Id. Here, as in Veritext, Plaintiffs constitutional claims are due to be dismissed. The law requiring dentists to be present during intra-oral digital imaging applies with equal force to in-state and out-of-state dentists. This Court can use its common sense to determine that it is perfectly rational to require that a licensed professional needs to be on-site to protect against the risks outlined in Section III.A. IV. This Court lacks jurisdiction over the remaining claims for declaratory judgment and injunctive relief. After all the Constitutional and anti-trust claims are dismissed, all that remains is a claim for declaratory and injunctive relief arising solely under state law with no basis for federal question jurisdiction. And though Plaintiffs have alleged diversity jurisdiction, it is improperly pleaded. SmileDirect alleges that, [t]his is an action between citizens of different states, and the amount in controversy exceeds $75,000.00, exclusive of interest and costs. (Doc. 1 at 18). 24

30 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 30 of 32 But other than listing the citizenships of Plaintiff Dr. Leeds (Tennessee) and of Defendants (Alabama), Plaintiffs have failed to allege the citizenship of Plaintiff SmileDirectClub, LLC, as required by clear Eleventh Circuit precedent. See Purchasing Power, LLC v. Bluestem Brands, Inc., 851 F.3d 1218, 1220 (11th Cir. 2017) ( When determining citizenship of the parties for diversity jurisdiction purposes, a limited liability company (LLC) is a citizen of every state that any member is a citizen of. ). Moreover, Plaintiffs have sought no monetary relief much less amount in excess of $75, The Complaint should therefore be dismissed under Fed. R. Civ. P. 12(b)(1). See 28 U.S.C. 1367(c)(3). CONCLUSION This lawsuit should be dismissed. The Defendants are immune from suit for the Sherman Act claims, and the individual defendants cannot be sued for the state claims in their individual capacities. All claims based on the U.S. or Alabama Constitutions, whether under the dormant commerce clause, equal protection, or due process, fail on the face of the complaint because challenged have rational bases and do not discriminate against out of state actors. As a result, there is no jurisdiction for the remaining claims seeking relief on issues of only state law. 15 But even if there is arguably federal question jurisdiction, the Court should still strike the diversity jurisdiction allegation. Because Plaintiffs federal claims may, at some point, be dismissed from this lawsuit, potentially leaving this Court without subject-matter jurisdiction as to Plaintiffs remaining state-law claims, [i]t is in everyone s best interest, both the litigants and the court[ s], to verify that diversity jurisdiction exists before proceeding with the case. Id. 25

31 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 31 of 32 /s/ R. Ashby Pate One of the Attorneys for Defendants Board of Dental Examiners of Alabama; Adolphus M. Jackson, DMD; T. Gerald Walker, DMD; Douglas Beckham, DMD; Stephen R. Stricklin, DMD; Mark R. Mcilwain, DMD, MD; Kevin M. Sims, DMD, Ms; Sherry S. Campbell, RDH, CDHC OF COUNSEL: Samuel H. Franklin (FRA006) R. Ashby Pate (PAT077) Logan T. Matthews (MAT068) LIGHTFOOT, FRANKLIN & WHITE, L.L.C. The Clark Building th Street North Birmingham, Alabama

32 Case 2:18-cv RDP Document 19 Filed 11/05/18 Page 32 of 32 CERTIFICATE OF SERVICE I hereby certify that on this 5th day of November, 2018, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following: Matthew H. Lembke David G. Hymer Michael R. Pennington J. Bradley Robertson BRADLEY ARANT BOULT CUMMINGS LLP 1819 Fifth Avenue North Birmingham, AL /s/ R. Ashby Pate Of Counsel 27