Case Brief "Bates v. State Bar of Arizona"

Script 2000 9 Pages

Law - Comparative Legal Systems, Comparative Law


Case Brief

I. Identification of the Case:

The name of the case is "Bates v. State Bar of Arizona" cited in 97 S.Ct. 2691; 433 U.S. 350; 53 L.Ed. 2d 810.

The 27th June 1977, the case was decided on appeal by the United States Supreme Court.

The parties involved were John R. Bates and Van O´Steen as appellants an the State Bar of Arizona as appellee.

II. The material facts of the case

The appellants John R. Bates and Van O' Steen are licensed attorneys and members of the State Bar of Arizona, the appellee. In March 1974, the appellants opened a law office named "legal clinic" in Phoenix.

In order to attract clients and generate the necessary flow of business, they placed an advertisement in the daily newspaper "Arizona Republic", in which they offered "legal services at very reasonable fees". Additional, they listed their fees for certain services such as uncontested divorce, uncontested adoption, simple personal bankruptcy and changes of name.

But the State Bar of Arizona took the position, that the advertisement constituted a clear violation of Disciplinary Rule 2-101 (B), incorporated in Rule 29 (a) of the Supreme Court of Arizona, forbidding advocates advertising with only few exceptions. The appellants conceded that. .

Upon the complaint initiated by the president of the State Bar, a hearing was held before a committee as prescribed by Arizona Court Rule.

This committee recommended that each of the appellants should be suspended from the practice of law for not less than six month.

Upon further review by the Board of Governors of the State Bar, the Board recommended only a one-week suspension for each appellant. The appellants sought review in the Supreme Court of Arizona.

III. Procedural history of the case:

Appellants sought review in the Supreme Court of Arizona, arguing that the disciplinary rule violated §§ 1 and 2 of the Sherman Act because of its tendency to limit competition and that the rule infringed their First Amendment rights. The court rejected both claims stating that even if the rule might otherwise violate the Act, the regulation was exempt from the Sherman Act attack because the rule "is an activity of the State as a sovereign". (Parker v. Brown, 317 U.S. 341; 63 S.Ct. 307; 87 L.Ed.2d 315 (1943)).

Turning to the First Amendment issue, the plurality opinion held that disciplinary rule 2-101- (B) passed the First Amendment muster, though commercial speech was entitled to certain protection under the First Amendment (Virginia Pharmacy Board v. Virginia Consumer Council, 425 U.S. 748; 96 S.Ct. 1817; 48 L.Ed.2d 346 (1976)). But agreeing with the Board of Governors, that the appellants advertised with "good faith", the sanction was reduced to censure only.

In dissent with the majority opinion, Mr. Justice Holohan argued, that the public has a right to know about the activities of the legal profession, so that the disciplinary rule performs a substantial disservice to the public, and found the ban unconstitutional.

The attorneys appealed. The case was argued the 18th January 1977 and decided June 27, 1977.

IV. Issues and holdings of the Case

1. The case presents two issues:

Do the §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, forbid a state regulation as described above, because of its tendency to limit competition?

Does the operation of the rule violates the First Amendment, or is made applicable to the State trough the Fourteenth?

2. Holding:

1) The restraint upon attorney advertising imposed by the Supreme Court of Arizona wielding the power of the State over the practice of law is not subject to attack under the Sherman Act. (Parker v. Brown, 317 U.S. 341; 63 S.Ct. 307; 87 L.Ed.2d 315)

2) Commercial speech, which serves individual and societal interests in assuring informed and reliable decisionmaking, is entitled to some First Amendment protection. (Virginia Pharmacy Board v. Virginia Consumer Council 425 U.S. 748)

The First Amendment overbreadth doctrine is inapplicable to professional advertising.

Appellants advertisement is not misleading and falls within the scope of First Amendment protection, so that the disciplinary rule is violative of the First Amendment.

3) It was NOT held that advertising by attorneys may not be regulated. But that regulations should be done in the interest of the public and because of reasonable circumstances.

- Disposition of case: Lower court's decision affirmed in part (issue 1) and reversed in part (issue 2).

V. Reasoning of the court:

Majority Opinion, delivered by Mr. Justice Blackmun

1) concerning the Sherman Act, the court interpret the Act in following way:

Sherman Act was not intended to apply against certain state action, when the state as sovereign imposed a restraint as an act of government. (Parker v. Brown)

2) concerning the First Amendment, the court develops common law:

In question, whether lawyers may constitutionally advertise the prices at which certain routine services will be performed, the court decided, by taking account of following questions.

Regarding a negative effect on professionalism, the court declared, that the habit and tradition, linked with the belief that lawyers are somehow "above" trade, has become an anachronism, because clients know that they must pay for the services, and is so not an adequate answer to a constitutional challenge.

The question, whether Advertisement by attorneys is always misleading or not , the court decided, that price advertisement is not misleading when the services are routine once. Like those offered by Mr. Bates and Mr. O' Steen. Secondly, the terms "legal clinic" and "very reasonable fees" are not misleading because they can be understood and interpreted by the clients. Third, the failure to disclose that some of the offered services can done by the client without legal aid, is no reason to suppress advertisement, because this is the case with most legal services.

Third, it is said, that advertising will have the undesirable effect of stirring up litigation. This argument was not accepted by the court, because advertisement might offer the benefit to reach and serve those people who suffer from a wrong, because of a lack of information.

Fourth, it is claimed, that there will be an undesirable economic effect through advertising for the public in price and for young attorneys as barrier to entries. But the court found that both arguments are unpersuasive. With regard to products, it has been shown, that competition and advertising causes lower prices and more information. To the second argument, the court stated, that the ban in fact serves to perpetuate the market position of established attorneys because young attorneys must rely on minimal contacts.

Also the claim that advertising will have negative effects on the quality of the service was rejected because the court stated that there must not necessarily be any bigger cut on quality and that the positive effects for the public, especially information and a possible increase of quality, overweight.

As final argument against advertising by lawyers, are the difficulties of enforcement and regulation that will occur when there is any change regarding the ban. But the arguments given by the State Bar did not seem consistent and incongruous to the court.

VI. Evaluation:

1. Regarding the Sherman Act, the court's analysis is convincing and all judges agree as to the result that the Sherman Act be barred by the Parker v. Brown case. This part of the decision will be important for subsequent cases as widely applicable precedent.
2. Only dissent occurs concerning the First Amendment protection of the appellant's advertisement.

The opinions differ in the application of the Virginia Pharmacy case and about the question whether professional advertisements are the sort of expression to be protected under the First Amendment. These differences among the judges and their content are important for the rule of the decision as precedent for subsequent cases.

A. Partly concurring and partly dissenting opinion (filed by Mr. Chief Justice Burger):

Following this opinion the court misinterprets the Virginia Pharmacy Board case as legal services vary greatly from case to case and therefor standardized or routine services cannot be identified in opposite to standardized products. Because of this, court takes a great "leap into the unexplored", without any need for this hasty plunge.

While agreeing that there is a need of the public for information, he demands, that the flow of information shall be organized by the Bar. Therefor, he calls the current decision to be "Draconian".

B. Partly concurring and partly dissenting opinion (filed by Mr. Justice Powell and joined by Mr. Justice Stewart):

First, there is a dissents as to decision on Commercial free speech as it will have

profound effect on the practice of law without being required by the First Amendment nor being in the public interest.

Regarding the Virginia Pharmacy case the court gives insufficient weight to the vastly increased potential for deception and to the enhanced difficulty of effective regulation on the public interest.

In this opinion a serious enforcement problem is mentioned. The majority opinion

underestimates the problems and overestimates the capabilities of the Bar to assure that price advertising can be both unrestrained and truthful.

Following this opinion the public's need for information should not be satisfied by advertising through the legal profession for the reasons of a danger of misuse as lawyers do not dispense standardized products.

This opinion also regards the terms "legal clinic" and "very reasonable fees" as misleading and stresses the problem of enforcement.

Furthermore this opinion does not see the advertisement at hand as free from quality implications.

It demands to take into account that restrictions as to time, place and manner of commercial price advertisement for professional services should be broader than for standardized products.

Finally , it is said, that the decision of the majority opinion is not in the public interest as it will inhibit ongoing experimentation with other solutions and will limit the control of a State over its lawyers. As result out of this, there is the fear, that lawyers will see the decision as an invitation to engage in competitive advertising on an escalating basis.

VII. Dissenting opinion in part (filed by Mr. Justice Rehnquist):

He dissents with the court opinion that the First Amendment is infringed.

He believes that the First Amendment is demeaned by invocation to protect by advertisement of goods and services, which means that appellants advertisement is not the sort of expression that the Amendment was adopted to protect.

3. Conclusion:

As presented, there are important differences concerning the First Amendment

protection of the appellant's advertisement. The arguments of the dissenting judges, even they are not as convincing as those of the majority, show, that the application of the "Bates case" as precedent for subsequent case has to be carefully handled and only applied to those, where the facts are very similar. In cases where facts highly differ, it is possible that dissenting opinions will be highly persuasive.

VII. Synthesis:

Regarding the discussion of the cases "Parker v. Brown", "Goldfarb v. Virginia State Bar", "Cantor v. Detroit Edison Co." and "Virginia Pharmacy Board v. Virginia Consumer Counc il", which are presenting similar issues, in the decision, one sees, that in the last three case, there is a different outcome.

1. Parker v. Brown (317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943)):

A. Overview:

In Parker, a raisin producer- packer brought suit against California officials challenging a state program to restrict competition and maintain the prices. The Court held that the State, "as sovereign, imposed the restraint as an act of government which the Sherman Act did not undertake to prohibit.

B. Analysis and Conclusion:

Also in Bates was the rule "an activity of the State of Arizona acting as sovereign" and therefor shielded from the Sherman Act by the state- exemption of Parker v. Brown.

2. Goldfarb v. Virginia State Bar (421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975))

A. Overview:

In this case it was argued that the publication of a minimum- fee schedule by a country bar association and its enforcement, would be shielded by the state- action exemption. The court concluded, that it was not protected because "it cannot fairly be said, that the State of Virginia required these anticompetitive activities through its Supreme Court Rules."

B. Analysis and Conclusion:

The reason for the different outcome is, that the challenge restraint in the command of the Arizona Court Rule under its Rule 27(a) and 29 (a) and its Disciplinary Rule 2-101

(B). That court is the ultimate body wielding the State's power over the practise of law and the restraint is "compelled by direction of the State acting as a sovereign.

3. Cantor v. Detroit Edison Co (428 U.S. 579, 96 S.Ct. 3110,49 L.Ed.2d 1141


A. Overview:

In this case, the plaintiff claimed, that an electric utility, who distributed light bulbs for free to its customers, was using its monopoly power in the distribution of electricity to restrain competition in the sale of bulbs.

The Court held that the utility could not immunise itself from Sherman Act attack by embodying its challenged practices in a tariff approved by a state commission.

B. Analysis and Conclusion:

The instant Bates case is in several details different. First, Cantor involves a private company and not a claim against the State, in Bates case, the Arizona Supreme Court, because it is the ultimate trier of facts and law in the enforcement process. Second, the state had no independent regulatory interest in the market for light . bulbs. Third, the light- bulb program in Cantor was instigated by the utility, not by the state. The situation in Bates case is entirely different. The disciplinary rules reflects a clear articulation of legitimate state power and interest. Moreover, one can see the significant clearly and affirmatively expressed active policy and supervision in Bates case.

4. Virginia Pharmacy Board v. Virginia Consumer Council (425 U.S.748, 96 S.Ct. 1817, 48 L.Ed.2d 346 (1976))

A. Overview:

1. The facts of this case are, that a pharmacist advertised medical prescription drug prices, in the form of: "I will sell you the X prescription drug at the Y price."
2. The court held, that this kind of commercial speech was protected by the 1st amendment free speech right.
3. Reasoning: First off all, a legitimate state interest of pharmacy regulation and maintaining professionalism is not support by advertising ban. Second, high professional standards were assured in large part by the close regulation on which pharmacists in Virginia were subject. Moreover, it was noted that excessive state protectiveness is paternalism and as a result, that people are kept in ignorance, although information in advertising can be useful. Finally it was it was said, that even if there is there are dangers arising from a free flow of information, it is the purpose of the 1st amendment to keep the channels of communication open rather than closed.

B. Conclusion: The decision in Bates flows naturally from the Virginia case.


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Case Brief Bates State Arizona



Title: Case Brief "Bates v. State Bar of Arizona"