Wednesday, December 13, 2006
Attorney: Federal Decision a Win for Companies, Consumers
By a MetNews Staff Writer
An attorney for two national optical retailers yesterday praised a recent federal court decision invalidating restrictions on how out-of-state optical companies may structure their businesses.
Morrison & Foerster partner Lori Schechter, chair of the firm’s litigation department and lead counsel for the plaintiffs who challenged the restrictions, told the MetNews the ruling was “significant” because it struck down a scheme that had been on the books in California for over 70 years.
“This is a gratifying win for optical companies,” she said. “It increases the choices for consumers seeking high quality eye care and eyewear at the same location, and enables all optical companies the ability to compete on a level playing field in one of the most important retail markets in the country.”
The National Association of Optometrists and Opticians and national optical chains LensCrafters, Inc., Eye Care Centers of America sued Attorney General Bill Lockyer in 2002 alleging that three provisions in California’s Business and Profession’s Code, which prohibited out-of-state companies from offering prescription eyewear in the same location where eye examinations are provided, unfairly placed out-of-state retailers at a competitive disadvantage. In-state optometrists, they pointed out, are permitted to sell eyewear in the same location where they offer eye care services.
The suit, the first one to challenge the statutory scheme, was filed after Lockyer brought an enforcement action against another optical company. Schechter said the laws had not been challenged earlier most likely because an enforcement action had never been brought previously.
Both the plaintiffs and Attorney General moved for summary judgment, and in a Dec. 6 decision, Senior U.S. District Judge Lawrence K. Karlton granted the plaintiffs’ motion while denying Lockyer’s.
“The court concludes that the challenged laws substantially effect [sic] and discriminate against interstate commerce and therefore are subject to strict scrutiny under the dormant Commerce Clause,” Karlton wrote at the end of his 50-page opinion. “Although California has legitimate interests in regulating the provision of health services, defendants have failed to meet its burden of showing that it has no other means to advance its legitimate interests.”
The judge rejected Lockyer’s argument that “patient care and privacy are being compromised when lay optical companies control optometrists,” concluding there was no evidence this was a problem unique to national optical chains. Although the restriction was purportedly designed to protect against corporate influence interfering with optometrists’ professional judgment, he said:
“[P]laintiffs present uncontroverted evidence that the same practices which defendants complain of occur in the dispensing optometrists setting as well. In other words, the setting (optometrists affiliated with chains versus dispensing optometrists) makes no difference as to practices—the same practices occur in both settings.”
Karlton also dismissed the argument that the practiced targeted by the challenged scheme harmed public health.
“[D]efendants state that public health is its main concern, however, there is no evidence which links the complained of practices to actual harm to the public’s health,” he wrote. “For example, defendants do not explain how short eye exams harm a patients’ health, or how prescribing only Lenscrafter eyewear endangers health. Similarly, there is no evidence that ‘transitioning’ customers from an exam to the store area threatens the public’s health.”
Counsel for defendants could not be reached for comment.
Schechter said she expects the decision to be appealed.
The case is National Association of Optometrists & Opticians v. Lockyer, No. S-02-1464.
Copyright 2006, Metropolitan News Company