The opinion of the court was delivered by: PRATT
Plaintiff commenced this action on July 18, 1977, alleging that defendants American Bar Association (ABA) and American Telephone & Telegraph Co. (AT&T) violated §§ 1 & 2 of the Sherman Antitrust Act, 15 U.S.C. §§ 1, 2 in implementing and utilizing certain ABA guidelines and an accreditation program with respect to the training of paralegals. An amended complaint added claims under the New York State Donnelly (Antitrust) Act, New York General Business Law § 340 Et seq., and common law claims of interference with a business relationship, unfair competition, and Prima facie tort. By stipulation of the parties pursuant to FRCP 41(a)(2) AT&T was dismissed from the action on October 20, 1977.
Plaintiff subsequently filed motions seeking (1) preliminary injunctive relief; (2) partial summary judgment as to liability; and (3) if the foregoing were granted, complete summary judgment including a permanent injunction, in consideration of a waiver of damages. The ABA cross-moved for summary judgment. At a conference held before the court, it was agreed that plaintiff would withdraw all claims other than those based upon §§ 1 & 2 of the Sherman Act, and that the court would consider plaintiff's various motions and the ABA's opposition as cross-motions for summary judgment pursuant to FRCP 56.
Plaintiff is a New York corporation licensed by the New York State Department of Education, and engaged, since 1972, in the business of recruiting, training and placing paralegals. Plaintiff's place of business is located in New York City. Defendant ABA is a non-profit, unincorporated trade association of attorneys who are licensed to practice law by the respective states of the United States and the District of Columbia. The ABA does not itself have any licensing authority with respect to attorneys or paralegals; however, the ABA Council of the Section of Legal Education and Admissions to the Bar is the only national accrediting entity for the legal profession recognized by the United States Office of Education of the Department of Health, Education, and Welfare, and the private, non-profit Council on Post-Secondary Education. The ABA maintains its national headquarters in Chicago.
Plaintiff claims that the ABA's Guidelines and Procedures for Approval of Legal Assistant Education Programs (Guidelines) and the ABA's paralegal school accreditation program violate the antitrust laws in that they were designed and intended to eliminate competition from, and restrict entry into, the market for the recruitment, training and placement of paralegals, and they are unreasonable when applied to proprietary schools such as plaintiff. The ABA contends that the Guidelines and its accreditation program: (1) have imposed no restrictions on entry into the paralegal training market; (2) do not have any anticompetitive effects on that market; (3) were designed and intended to encourage and facilitate the training and utilization of paralegals; and (4) are reasonable and fairly applied.
Paralegals, also known as lay assistants or legal assistants, are nonlawyers who perform "quasi-legal" functions. A paralegal, who may or may not have formal legal training, performs such functions as legal research, office management, preparing and drafting documents, serving and filing papers, searching records, checking titles, etc. In short, paralegals perform some of the services that would ordinarily be rendered by a licensed attorney. The duties of a paralegal may be delegated by an attorney or may be performed independently, as long as such duties do not involve the giving of legal advice or the practice of law, activities in which only a licensed attorney may engage.
The formal growth of the paralegal field is a relatively recent development. By 1970, only four paralegal schools were operating in the United States; as of the time these motions were filed, approximately 224 such schools were in operation throughout the country.
B. The ABA and the Paralegal Field
The ABA's role in the paralegal field dates back to August, 1968, when the ABA Special Committee on the Availability of Legal Services proposed that the ABA House of Delegates, the policy-making arm of the ABA, adopt the following resolution:
Recognizing that freeing a lawyer from tedious and routine detail thus conserving his time and energy for truly legal problems will enable him to render his professional services to more people, thereby making legal services more fully available to the public, this Committee recommends:
1. That the legal profession recognize that there are many tasks in serving a client's needs which can be performed by a trained, nonlawyer assistant working under the direction and supervision of a lawyer;
2. That the profession encourage the training and employment of such assistants;
The resolution recommended the creation of a special committee to consider, Inter alia, the kinds of tasks that might be performed by a paralegal under the direction and supervision of a lawyer; the type of training that might be necessary for a paralegal; the role of the legal profession and the bar in providing such training; and the merits of recognizing competence and proficiency of paralegals through academic recognition or other suitable means. Upon adoption of the resolution, the ABA created the committee which later became the ABA Special Committee on Legal Assistants (ABA Committee).
During the first few years of its existence, the ABA Committee conducted, co-sponsored or participated in a variety of programs to investigate and consider various aspects of the paralegal field: (1) a study to determine the types of tasks that were being performed by lay personnel; (2) a study and conferences to identify the efforts then underway to train paralegals; and (3) a pilot project to train lawyers and paralegals to work productively together. The ABA Committee then published the results of these projects along with a proposed curriculum for paralegal institutions in ABA publications.
During this period many new paralegal training programs surfaced, and the ABA received many inquiries from educators seeking assistance in paralegal program development and from potential students requesting information on the quality of the widely varied programs available. In response to these inquiries, the ABA Committee decided to promulgate minimum standards for educational institutions offering paralegal programs and to develop a system for identifying those institutions which met or exceeded those standards. The ABA Committee hired, as its consultant for this project, an expert qualified in occupational programs generally and legal assistant educational programs specifically. The project resulted in the publication of The Training and Use of Legal Assistants: A Status Report, which contained a description of the curricula and admission requirements of each institution offering paralegal training.
The ABA Committee then set about developing minimum requirements for paralegal institutions. A tentative draft was written and circulated to over 7,000 persons for review and comment, and a two day conference was held in May, 1973, to consider the issues raised. The proposed standards were then submitted with the ABA Committee's recommendation for adoption to the ABA House of Delegates, where they were adopted in August, 1973, as the Guidelines.
During the year following the adoption of the Guidelines, the ABA Committee solicited the attendance of educators, attorneys and paralegals at several meetings and conferences to discuss the implementation of an evaluation system for the paralegal programs. In September, 1974, the ABA Committee published the Guidelines and the application procedures for institutions seeking ABA approval.
The ABA accreditation process involves the following steps: (1) the applicant institution prepares and submits a self-evaluation report; (2) the ABA Committee checks the report for completeness and compliance with the Guidelines, requesting additional information if necessary; (3) a three member evaluation team (composed of an ABA Committee member, a director from a non-competing paralegal training program, and a practicing paralegal) makes an on-site inspection of the institution; and (4) the ABA Committee members review the report of the on-site inspection team and submit a recommendation to the ABA House of Delegates for final action. The cost to an applying institution is limited to $ 950 (a $ 200 application fee plus visitation expenses up to $ 750). Paralegal institutions seek ABA approval because a program obtaining ABA accreditation is permitted to advertise the fact of its approval in an attempt to recruit new students.
From September, 1974, when the ABA Committee began accepting applications for ABA accreditation, until the time of this motion, a total of 55 institutions had submitted applications. With respect to those applications, 35 programs have been given final approval, no program has been denied accreditation, three institutions have withdrawn their applications, and 17 programs are currently under review or operating with provisional approval. Upon receiving a request for information regarding legal assistant education programs, the ABA Committee provides a list of all known paralegal programs with a designation to indicate institutions that are ABA approved.
The ABA argues that plaintiff lacks standing to sue under the antitrust laws because it never applied for accreditation under the program it now challenges, and because it is unable to prove that its alleged injury is related to the ABA's activities. The ABA relies in part on Gordon v. New York Stock Exchange, Inc., 366 F. Supp. 1261 (SDNY 1973), Aff'd 498 F.2d 1303 (CA2 1974), Aff'd 422 U.S. 659, 95 S. Ct. 2598, 45 L. Ed. 2d 463 (1975), where the court held that a person who never applied for membership in a stock exchange could not bring suit alleging that such memberships are arbitrarily limited. Plaintiff counters that it is not suing in order to compel accreditation from the ABA, but seeks relief from what it considers to be an illegal conspiracy by the ABA and others to edge out paralegal schools that do not follow the Guidelines, through the coercive granting or withholding of ABA accreditation.
In Hennessey v. National Collegiate Athletic Assn., 564 F.2d 1136 (CA5 1977), the court stated that:
Standing to bring the treble damage anti-trust claim depends upon proof that the plaintiffs (1) suffered injury to their "commercial interests or enterprises" and (2) were in ...