Court Deals Blow to Associations: Affirms FTC Authority in Regulating Nonprofit Trade Groups

Article excerpt

Professional associations offering economic benefits to for-profit members are subject to Federal Trade Commission regulation, a unanimous Supreme Court ruled yesterday.

"Nonprofit entities organized on behalf of for-profit members have the same capacity . . . to engage in unfair methods of competition or unfair and deceptive acts," the court said in an opinion written by Justice David H. Souter.

The ruling upholding the FTC's antitrust decision against advertising restrictions of the California Dental Association could impact the huge community of trade associations based in Washington. But FTC General Counsel Debra Valentine said it may just clear away some legal "scuffling" over jurisdiction.

In other decisions on a particularly busy day, the court:

* By a 5-4 vote allowed jury trials for some landowners in federal civil rights lawsuits challenging taking of property through local land regulation without just compensation.

* Rejected the appeal of a Maine dentist sued under the Americans With Disabilities Act (ADA) for insisting that a patient with the AIDS virus have her cavity filled at a hospital rather than in his office.

* Unanimously allowed a Texas woman to collect benefits under a claim that she is unable to work while pursuing a discrimination lawsuit under the ADA against an employer who fired her because a stroke left her too disabled for the job.

In the trade commission case, five justices decided the 9th U.S. Circuit Court of Appeals should have looked more deeply before invalidating the FTC's ban on dentists' price advertising.

The FTC general counsel said the decision clarified authority first granted in a 1980 tie vote in an American Medical Association case. Supreme Court tie votes affirm lower-court action, but do not dictate the outcome of other cases.

"Now the court has simply made very clear that we do have jurisdiction over nonprofit corporations whose activities [financially aid] their for-profit members," Miss Valentine said. …