Last year, litigation was brought against the Louisiana State Board of Certified Public Accountants, alleging violations of federal and state antitrust laws and various constitutional provisions. A number of Louisiana CPAs had offered their clients services as commission-compensated securities brokers in addition to providing accounting services. The Louisiana accountants' business activities, which are the subject of the litigation, were conducted under the auspices of a third-party private concern, which set up, structured and supervised the commission-compensated securities brokerage dimension of the accountants' business. The Louisiana State Board of CPAs initiated proceedings against these accountants based on the Board's Incompatible Occupations Rule and the Rule on Commissions. After the Board determined that one of the accountants had violated the rules, the accountant and several other CPAs filed a complaint in Federal District Court in New Orleans, alleging that the Board's rules violated antitrust law and the U.S. Constitution.
The Board's motion to dismiss the accountants' complaint was denied, without opinion, by the Federal trial court. In support of dismissal of the accountants' action, the Board had asserted that it is not subject to antitrust liability based on the doctrine of state action immunity doctrine, which provides that certain actions of state government, including that of its agencies and political subdivisions, are immune from antitrust attack. The matter is presently on appeal to the United States Court of Appeals for the Fifth Circuit in New Orleans, and a ruling is expected later this year or in early 1998.
In recent years, there has been a great deal of litigation around the country based on diversification in the business of accountancy. Some cases have been based on both antitrust and constitutional grounds, while others have been confined strictly to constitutional issues. For example, on July 30 of this year, the United States Court of Appeals for the Eleventh Circuit in Atlanta rendered a decision in which a Florida accountant, who was employed by American Express Tax and Business Services, Inc., challenged Florida's regulatory scheme. Florida officials asserted that Miller could not disclose his CPA license to the public while performing accounting and tax services through his employment with American Express, because it was a firm not owned by CPAs. Miller, who holds an active CPA license in Florida and is the managing director of an American Express office in Tampa, brought suit based on a theory that the State of Florida's statutory scheme violated both the First Amendment and the Equal Protection Clause of the Fourteenth Amendment. American Express performs tax, bookkeeping and accountant services for the public throughout its regional offices in 26 states. American Express is a wholly owned subsidiary of the publicly traded American Express Company and is neither a professional service corporation nor owned entirely by CPAs. It was therefore deemed by Florida officials to be "a non-CPA firm." The trial court granted summary judgment in favor of CPA Miller and against the State of Florida, including the Florida Department of Business and Professional regulation, as well as members of the Florida Board of Accountancy. On appeal, the Eleventh Circuit joined the trial court in adopting CPA Miller's arguments that the State of Florida's attempt to prevent him from alerting people to his CPA status, in the context of his work for a non-CPA firm, was unconstitutional.
The ongoing Louisiana litigation, as well as the recent decision of the Eleventh Circuit Court of Appeals, demonstrate that state regulatory agencies are encountering difficulty in their attempts to enforce state rules and regulations preventing licensed accountants from diversifying their businesses and affiliating themselves with "non-CPA" third-party enterprises. While, many older decisions upheld the right of state accountancy boards to regulate accountants in this manner, more contemporary decisions evidence a reluctance, if not an outright refusal, on the part of courts to allow state agencies to curtail expanded business activities of accountants. Accountants who have advanced claims under antitrust and constitutional law theories are finding success in challenging state governing agencies' attempts to preclude enhanced business opportunities.