By Zach Arnold | August 2, 2016
It sounds innocuous enough — Senate Bill 1195. A peak inside the bill reveals a fascinating but nebulous venture to protect California’s Department of Consumer Affairs from anti-trust violations.
The question is why UFC, according to Sacramento lobbying records, spent $40,000 through their lobbyist Platinum Advisors in Sacramento to get involved in a fight involving powerful nursing associations.
The Department of Consumer Affairs is one of California’s most powerful bureaucratic behemoths and the State Athletic Commission is under DCA’s umbrella. So is the board for registered nursing, the medical board, the contractor’s licensing board, and many other powerful agencies. The state’s governor chooses the political appointments of who oversees DCA.
Senate Bill 1195 in California is a response to try to protect the board and bureaus under Consumer Affairs’ umbrella from anti-trust lawsuits. The impetus for such action is based on a 2015 Supreme Court case called North Carolina Board of Dental Examiners vs. Federal Trade Commission. The FTC targeted the North Carolina Board for having active dental licensees occupy a regulatory board that made business decisions that the Feds viewed as anti-competitive and suppressing business competition. The FTC attacked North Carolina’s claims of legal immunity from Federal anti-trust claims.
SCOTUSBlog explains the questions at heart:
Antitrust immunity generally covers non-state actors only if the state both (1) clearly articulates the anticompetitive policy, and (2) actively supervises the policy. This case deals with the second requirement. If a professional licensing board is a state agency, must another state actor supervise the agency in order for the agency to be immune from the antitrust laws?
California’s Senate Bill 1195 attempts to address the Supreme Court ruling by offering the following:
- No more active licensees in a certain profession can become the Executive Officer of a board of bureau which manages that certain profession (e.g. an active fight promoter or matchmaker cannot be Executive Officer of the State Athletic Commission)
- Adding a layer of decision making participation by ordering the Director (boss) of DCA to approve, modify, or veto any newly approved regulations from a board or bureau and explain in writing why each decision was rendered (addressing the “supervision” question from the Supreme Court ruling)
- Categorizes that treble damages from anti-trust actions brought against boards and bureaus “are not punitive or exemplary damages”
SB 1195 initially zoomed through the state Senate but stalled out in early June after the California Nurses Association protested the bill for prohibiting active licensees from being active on their professional board. SB 1195 was placed in the state Senate’s inactive file
Why is UFC getting involved in a California anti-trust fight?
UFC’s lobbying records in California do not state a reason as to why they spent $40,000 last quarter to lobby for SB 1195. Therefore, the following is an educated guess as to what is happening here.
The Supreme Court decision in the North Carolina/FTC case attacks immunity for not only states but also personal liability protections for any state board or bureau member involved in an anti-trust lawsuit. This would include both members and Executive Officers.
In Sacramento, UFC is Andy Foster’s lobbying muscle. The UFC fuels the political fire. UFC carries great clout in California even if they don’t bring major shows to the state. Without their money and top lobbyist Tim Lynch at Platinum Advisors, Andy’s political power would be minimal at best. How significant is the lobbying power of Platinum Advisors? 35 year old former PA lobbyist Melinda McClain was appointed to Governor Jerry Brown’s office two weeks ago after being the deputy director of legislative and regulatory review at… the Department of Consumer Affairs.
Connect the dots. The State Athletic Commission often goes along with what UFC wants introduced or enforced on regulatory matters. If a licensee or a business in California thinks they are getting screwed by the State Athletic Commission on behalf of UFC’s business interests, the Supreme Court ruling opens the door for anti-trust lawsuits against the state of California and individual Athletic Commission board members or operatives. The motive becomes very clear as to why UFC would spend the cash to lobby for SB 1195. They are already dealing with one anti-trust lawsuit and don’t want a second potential anti-trust case involving political players they control.
SB 1195 is a largely cover-your-ass measure to re-introduce state immunity from such anti-trust lawsuits. What the politicians didn’t count on was the powerful California Nurses Association jamming things up. CNA and other powerful entities see SB 1195 as a “camel’s nose under the tent” bill that would strip the state boards of their power and concentrate all the decision making in the hands of one person who would be under enormous political pressure. That man is Awet Kidane.
You would think that a compromise will eventually arise to address this anti-trust immunity issue raised by the Supreme Court. However, the state and members of its various boards are now vulnerable to anti-trust lawsuits until a legislative fix is passed to address immunity. The longer this drags out, the more paranoid businesses like the UFC will become in how they politically operate in states like California.