Unfair or Deceptive Commercial Practices

Subject:

Requested By: Representative Robert L. Farmer

Questions: (1)

What is meant by the phrase "learned profession" found in G.S. 75-1.1(b)?

(2)

Are members of a learned profession exempt from G.S. 75-1.1?

Conclusion: (1)

The phrase "learned profession" applies to physicians, attorneys, clergy and related profession. These professions are characterized by the need of unusual learning, the existence of confidential relations, and adherence to standards of ethics higher than that in the marketplace.

(2)

No.

When the Senate Judiciary II Committee considered House Bill 1050, the Committee was concerned that the provisions of the bill which expanded the scope of G.S. 75-1.1 might have a severe impact upon legal and medical professions. The basis for this fear was the use of the all encompassing term "commerce," which would now define the boundaries of the treble damage provisions of Chapter 75. While the Committee recognized that rendering of legal services was not "commerce" as that term is usually defined, it wished to make certain that poor performance by an attorney on behalf of his client could not be characterized as an unfair commercial practice. For that reason, the Committee voted a Committee Substitute for House Bill 1050 which read, in pertinent part, as follows:

"(b) For purposes of this section, "commerce" includes all business activities, however denominated, but does not include professional services rendered by a member of a learned profession." (underscoring added).

The underscored language was not meant to work any substantive change in the proposed law. Rather, it was simply intended to recognize the fact that professional services rendered by members of learned professions are not by nature commercial activities. To ensure that this intention was clear, the additional language was strictly drawn. As a result, two factors must be shown before a particular practice may be excluded from the definition of "commerce." First, the person performing the act must be a member of a "learned profession." Each member of the Committee had before him the following statement to use as a guide when the Committee unanimously adopted the language in question:

"Learned Profession

Physicians, attorneys, clergy, and related professions have traditionally been referred to by the term ‘learned profession." This term has been used in reference to trade regulation statutes as recently as the United States Supreme Court decision in Goldfarb v. Virginia State Bar, 421 U.S. 773, 44 L.Ed. 2d 572, 95 S.Ct. 2004. In Goldfarb, the court notes that the classic basis traditionally advanced to distinguish learned professions is the fact that "competition is inconsistent with the practice of the profession because enhancing profit is not a goal of professional activities; the goal is to provide services necessary to the community."

The standard is otherwise referred to as an occupation "characterized by need of unusual learning, existence of confidential relations, adherence to a standard of ethics higher than that of the marketplace." Commonwealth v. Brown, 20 N.E. 2d 478, 481, 302 Mass. 523."

Once the first threshold is met, e.g., it is determined that the person performing the conduct is indeed a member of a learned profession, a second question still remains to be answered. That is, was the conduct in question a rendering of professional services. Attorneys and physicians regularly engage in activities other than performance of professional services on behalf of a client. For example, attorneys are now allowed to advertise. Advertising by an attorney is a practice apart from his actual performance of professional services. Indeed it is not a professional practice at all, but rather a commercial one. See Bates and O’Steen v. State Bar of Arizona, ___

U.S. ___,___ , 97 S.Ct. 2691, ___ 53 L.Ed. 2d, 810, 819 (1977). Therefore, deceptive advertising by an attorney would subject him to provisions of G.S. 75-1.1. Likewise, if two or more attorneys were to conspire to fix the prices which they charge for services, such an activity would not be the rendering of a professional service. It is only those activities which distinguish an individual as a member of a profession which are protected by the language added to G.S. 75-1.1(b).

In summary, the exclusion of professional services was added to G.S. 75-1.1(b) in order to clarify the intent of the legislature to reach only commercial activities and not activities of a strictly professional nature.

Rufus L. Edmisten Attorney General

Alan S. Hirsch Assistant Attorney General