Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975), was a U.S. Supreme Court decision. It stated that lawyers engage in "trade or commerce" and hence ended the legal profession's exemption from antitrust laws.

Facts

In 1971, Ruth and Lewis Goldfarb decided to buy a house in Fairfax County, Virginia. To get a mortgage, they needed to perform a title search on the house, which can only be performed by a lawyer i.e. a member of the Virginia State Bar. Goldfarb contacted a lawyer, who quoted him a price suggested in a minimum-fee schedule published by the Fairfax County Bar Association, which was 1% of the property's value. Goldfarb attempted to find a cheaper quote. He sent 36 letters to other lawyers and received 19 responses, all declining to quote a fee lower than the minimum-fee schedule suggests. Some said that they did not know of any attorney who would do so. Unable to find a lower price, Goldfarb agreed to the 1% quote and subsequently sued both the State Bar and the County Bar alleging that the fee schedule amounted to price-fixing and a violation of Section 1 of the Sherman Antitrust Act, seeking both injunctive relief and damages. The minimum-fee schedule was a list of prices, suggested by the county bar for various basic legal services, such as wills, marriage contracts, and title searches. The enforcement power lay in the hands of the State Bar, which was the administrative agency used by the Supreme Court of Virginia to regulate the legal profession. Without a license from the State Bar, no one can practice law in Virginia. The State Bar did not compel adherence to this fee schedule, but it had published several reports condoning the practice and had opined that habitual violation of the minimum-fee schedule suggests misconduct on the part of the lawyer.

Petitioners' arguments

The plaintiffs argued that the minimum-fee schedule created an artificial price floor for title searches in Fairfax County and that, in the absence of this fee schedule, they would have been able to procure a quote lower than the one listed in the schedule. They pointed to the history of Section 1, Sherman Act enforcement. In Addyston Pipe and Steel Company v. United States, Judge Taft created the distinction between naked and ancillary restraints of trade, and the Virginia State Bar's restraints are naked. In United States v. Trenton Potteries, the Supreme Court first established per se illegality of price-fixing because a reasonable price today may become unreasonable tomorrow and the courts cannot be expected to re-confirm every price. The reasonableness of the fees on the minimum-fee schedule is, then, immaterial. And finally, in United States v. Socony-Vacuum Oil Co, Inc., the Court proclaimed, in a famous footnote, that price-fixing need be neither intentional or feasible to be found per se illegal. Hence, the fact that the State Bar's power of compulsion was not absolute does not mean the fee schedule is legal.

Respondents' arguments

The defendants posed four separate arguments.

Judgment

The Supreme Court held that since prices were fixed, since price-fixing is per se illegal under the Sherman Act, and since no valid exemption from the Sherman Act could be shown, the minimum-fee schedule violates Section 1 of the Sherman Act. The Circuit Court judgment was reversed, and the case was remanded to District court to determine the proper remedy. The court rejected each defense attempted by the respondents as follows.