The North Carolina State Board of Dental Examiners sued the Federal Trade Commission today in Raleigh federal court, accusing the federal agency of multiple violations of the US Constitution and the sovereignty of North Carolina. The State Board asked Chief US District Judge Louise W. Flanagan to halt an FTC trial scheduled for later this month on charges that the State Board violated federal antitrust law. The State Board argued it is immune from such claims and the FTC has abused its own power in seeking to nullify the acts of a state government agency.
As reported earlier today, the FTC has objected to the State Board’s decision to classify teeth-whitening services as a form of “dentistry” subject to the Board’s licensing requirements. The FTC issued an administrative complaint claiming the State Board exceeded its authority. The Commission ordered a trial before one of its own judges, which is scheduled to begin on February 17. The FTC also appointed the prosecutors trying the case.
In the lawsuit filed today, the State Board said that as “an agency of the sovereign State of North Carolina,” it cannot be tried under federal antitrust law for its official acts: “The Tenth Amendment does not allow, the Sherman Antitrust Act does not authorize, and Article I, § 8 of the U.S. Constitution does not provide the FTC antitrust jurisdiction over the State Board’s enforcement of the [North Carolina] Dental Practice Act against the unauthorized practice of dentistry.”
The State Board went on to note that North Carolina has not waived its sovereign immunity against lawsuit, the FTC is not a lawful court under Article III of the US Constitution, and accoringly, “The FTC is barred by the U.S. Constitution, Article III, § 2, Clause 2 from forcing the State of North Carolina to be tried in a tribunal that is not either the U.S. Supreme Court or a lesser tribunal established by Congress as part of the federal judiciary.”
The lawsuit detailed numerous allegations of due process violations by the FTC in the course of its ongoing administrative proceedings, which the State Board characterized as an attempt to “unilaterally and forcibly expand [the FTC's] jurisdiction despite the contrary will of Congress, seven decades of adverse court precedent, and even Presidential orders.” Among the State Board’s accusations:
- The FTC initiated its investigation of the State Board at the request of “representatives of the teeth whitening services industry” and this investigation was “managed or supervised by a member of the Commission who previously had a conflict of interest regarding the teeth whitening products industry.”
- During the course of its two-year investigation, the Commission refused to provide the State Board with “a single case or single scrap of evidence to substantiate the FTC’s position.”
- The FTC issued a “false press release” containing “affirmative misstatements” that “omitted critical facts and law.”
- FTC prosecutors misused the discovery process to depose at least one individual who had previously filed a complaint with the State Board against an “illegal teeth whitening” provider; this individual was allegedly forced to travel from Florida to Washington under false pretenses and a lack of legal authority on the FTC’s part. Furthermore, the individual’s dentist was also compelled to give a deposition where an “FTC policy staff member posing the questions demanded he produce his patient’s medical records, despite the patient’s right to confidentiality under HIPAA.”
- Throughout the discovery process, FTC prosecution and policy staff “often engaged in conduct that can best be described as condescending, abrasive, high-handed, and insulting.”
- The FTC’s recently revised rules for internal trials are “intrinsically biased against respondents and unlawfully shift the burden of proof to respondents” in violation of the Fifth Amendment’s Due Process Clause: “At times, neither [State Board's] Counsel, nor [FTC] Counsel, nor even the Commission itself, have completely understood the twists and turns, one way streets and blind alleys presented by the new Rules.”
- “[FTC] Counsel and certain policy staff counsel have displayed a disturbing pattern of distortion and outright false representations in correspondence and pleadings, and a pattern of abuse, including misleading and intimidating witnesses.”
In summing up its experiences to date with the FTC, the State Board pulled no punches:
Perhaps the FTC’s administrative case against the State Board would have been more compelling if the State Board had done to an unauthorized dental practitioner what the FTC has actually done to the State of North Carolina: if it has issued a false press release on a government website stating that it has “reason to believe” that teeth whitening providers had conspired to commit fraud, if it had intimidated and misled witnesses, if it had pursued prosecutions even when courts had rules that it does not have jurisdiction, if it had required teeth whiteners to defend cases 300 miles from home, if it had filed charges against defendants based upon an investigation supervised by a board member with an actual conflict of interest, or if it had hauled defendants before a drumhead, predisposed tribunal at which the prosecutors also acted as judges. But the State Board did none of these. The FTC has done all of them.
If Judge Flanagan grants the State Board’s requested relief, the FTC would be enjoined from continuing its administrative proceeding against the State Board. In effect, the State Board wants a judicial declaration that the FTC has no authority to use its “administrative” powers against state government agencies.