The California Dental Association (CDA) is a voluntary
nonprofit association of local dental societies to which some
nineteen thousand dentists belong, about three-quarters of
those practicing in the state. The CDA lobbies on behalf
of its members’ interests and conducts marketing and
public relations campaigns for their benefit. The dentists
who belong to the CDA through these associations agree
to abide by a Code of Ethics (Code), which includes a
regulation limiting their right to advertise. Responsibility
for enforcing the Code rests in the first instance with the
local dental societies. Applicants who refuse to withdraw or
revise objectionable advertisements may be denied mem-
bership, and members are subject to censure, suspension, or
expulsion from the CDA.
The Federal Trade Commission (FTC) brought a com-
plaint against the CDA, alleging that it applied its Code so as
to restrict truthful, nondeceptive advertising and therefore
violated Section 5 of the FTC Act. The FTC alleged that the
CDA unreasonably restricted price advertising—particularly
discounted fees—and advertising relating to the quality of
dental services.
a. What are the arguments that the per se standard applies
to this case?
b. What are the arguments that a rule of reason standard
applies to this case?
c. Which standard should apply to this case? Explain.
