Shepard Goldfein and Karen Hoffman Lent
In the past several years, the doctrine of state action immunity has been a target for reform by judges, scholars, and policymakers across the country. After the U.S. Supreme Court issued decisions in 2012 and 2015 heightening judicial scrutiny of state action immunity, bipartisan efforts at both the state and federal levels have emerged in an attempt to minimize the potential for misuse of state action immunity, particularly among state professional licensing boards. With the Supreme Court set to hear oral arguments this month in yet another case involving state action immunity, further reform may be on the horizon.
Originally established in 1943 by the Supreme Court in Parker v. Brown, state action immunity exempts state governments from antitrust scrutiny under the Sherman Act. In its 1980 decision in California Retail Liquor Dealer Ass’n v. Midcal Aluminum, the Supreme Court established the modern two-part test for courts to use in determining whether anticompetitive actions taken by state and local regulators will receive state action immunity. Under the Midcal test, courts will grant immunity to regulations that displace competition so long as the regulator (1) is acting pursuant to a clearly articulated state policy, and (2) receives active supervision from the state government.
