Antitrust Law Daily Wrap Up, ANTITRUST—W.D. Pa.: Claims against state licensing board stayed pending state action, (May 24, 2016)

By Linda O’Brien, J.D., LL.M.

During the pendency of a parallel state court action, the federal district court in Pittsburgh has declined to hear declaratory and injunctive relief claims, under antitrust and constitutional law, brought by an attorney and model toy train hobbyist against the state auctioneering licensing board for imposing sanctions against him for conducting toy train collection auctions without a license (Bauer v. Pennsylvania State Board of Auctioneer Examiners, May 23, 2016, Fischer, N.).

Drew Bauer is a licensed Pennsylvania attorney who is also an avid hobbyist of model toy trains. Due to his expertise, his legal practice attracted the estates of toy train collectors, many of whom sought assistance in disposing of their collections. In 2004, Bauer formed a sole proprietorship—AmbroseBauer Trains (ABT)— to serve this market. His clients would grant Bauer the authority to sell their toy train collections though an online auction site. Since 2004, Bauer disposed of over $20 million in property in 235 auctions. In 2010, the Pennsylvania State Board of Auctioneer Examiners issued Bauer a citation for violating the Pennsylvania Auctioneer and Auction Licensing Act by conducting auctions without a state auctioneer license. The Board also assessed a fine to Bauer and ABT.

In May 2014, Bauer filed a petition to review the Board’s decision in state court for a declaratory judgment and injunctive relief. Bauer’s request for a preliminary injunction was denied but his remaining claims are still pending.

In October 2015, Bauer filed suit against the Board and several individual Board members, asserting claims under the Section 2 of the Sherman Act as well as the Equal Protection and Due Process clauses of the Fourteenth Amendment. The defendants moved for dismissal.

The court decided to abstain from hearing the plaintiff’s claims for declaratory and injunctive relief and stay the case regarding his claims for monetary damages. Bauer argued that the Board’s enforcement activities violated the Sherman Act because the Board was primarily composed of active auctioneers seeking to exclude the plaintiff from the market for anticompetitive reasons. Under the U.S. Supreme Court decision in Younger v. Harris, 401 U.S. 37 (1971), the abstention doctrine provides that federal courts should abstain in certain circumstances—either quasi-criminal in nature or civil enforcement proceedings—from exercising jurisdiction over a claim where resolution of that claim would interfere with an ongoing state proceeding, the court explained.

Courts have routinely held that disciplinary proceedings brought by a state licensing board fell within that category, the court noted. The complaint alleged that the Board opened an investigation into the plaintiff’s auctioneering activities for the purpose of enforcing state licensing laws and the investigation resulted in the issuance of a formal citation and the imposition of a fine. The state court proceedings were ongoing at the time the federal action was filed and implicate Pennsylvania’s strong interest in regulating the practice of professions within its borders. Furthermore, the state proceeding provides an adequate opportunity to raise constitutional challenges to the defendants’ action.

The court also noted that the plaintiff’s Sherman Act claim was independent of his constitutional claims, the Sherman Act claim was not raised in state court, and Bauer would not be entitled to monetary damages if he prevailed in the state court proceeding. Thus, the court stayed rather than dismiss the Sherman Act claim that was not cognizable in the parallel state proceeding and the claims for monetary relief.

The case is No. 2:15-cv-01334-NBF.

Attorneys: Drew J. Bauer, pro se. Thomas L. Donahoe, Office of Attorney General, for Pennsylvania State Board of Auctioneer Examiners.

Companies: Pennsylvania State Board of Auctioneer Examiners

Cases: Antitrust PennsylvaniaNews