Sulitzer et al v. Tippins et al

Central District of California, cacd-2:2019-cv-08902

COMPLAINT, filed by Plaintiffs Jeffrey Sulitzer, D.M.D., Jeffrey Sulitzer, SmileDirectClub, LLC.

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3 Page ID #:1 1 Byron J. McLain (CA Bar No. 257191) 2 bmclain@foley.com Nicholas J. Fox (CA Bar No. 279577) 3 nfox@foley.com FOLEY & LARDNER LLP 4 555 South Flower Street, Suite 3300 Los Angeles, CA 90071 5 TELEPHONE: 213.972.4500 FACSIMILE: 213.486.0065 6 Attorneys for Plaintiffs Jeffrey 7 Sulitzer, D.M.D; Jeffrey Sulitzer, D.M.D., P.C.; and SmileDirectClub, 8 LLC 9 IN THE UNITED STATES DISTRICT COURT 10 FOR THE CENTRAL DISTRICT OF CALIFORNIA 11 WESTERN DIVISION 12 13 JEFFREY SULITZER, D.M.D., an) Case No.: 2:19-CV-08902 14 individual; JEFFREY SULITZER,) D.M.D., a California Professional) COMPLAINT FOR DAMAGES AND 15 Corporation; and) INJUNCTIVE RELIEF AS TO 16 SMILEDIRECTCLUB, LLC, a) CLAIMS FOR: Tennessee limited liability) 17 company,) (1) Violations of Federal 18) Sherman Antitrust Act (15 Plaintiffs,) U.S.C. § 1, et seq.) 19) v. 20) (2) Violations of Dormant 21 JOSEPH TIPPINS, individually and) Commerce Clause (U.S. in his official capacity as an) Const., art. I, § 8, cl. 3) 22 Investigator in the Enforcement) pursuant to 28 U.S.C. § 1343 23 Unit of the Dental Board of) and 42 U.S.C. § 1983 California; KAREN M. FISCHER,) 24 M.P.A., individually and in her) (3) Violations of Equal 25 official capacity as Executive) Protection Clause (U.S. Director for the Dental Board of) Const., amend. XIV) pursuant 26) to 28 U.S.C. § 1343 and 42 California; and FRAN BURTON, 27 M.S.W.; STEVEN MORROW,) U.S.C. § 1983 D.D.S., M.S.; STEVEN CHAN,) 28 1 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:2 1 D.D.S.; YVETTE CHAPPELL-) (4) Violations of Substantive 2 INGRAM, M.P.A.; ROSS LAI, D.D.S.;) Due Process (U.S. Const., LILIAN LARIN, D.D.S.; HUONG LE,) amend. XIV) pursuant to 28 3 D.D.S., M.A.; MEREDITH) U.S.C. § 1343 and 42 U.S.C. § 4 MCKENZIE, ESQ.; ABIGAIL) 1983 MEDINA; ROSALINDA OLAGUE,) 5 RDA, B.A.; JOANNE PACHECO,) (5) Violations of California's 6 RDH, M.A.O.B.; THOMAS) Unfair Competition Law (Cal. STEWART, D.D.S.; BRUCE L.) Bus. & Prof. Code § 17200, et 7 WHITCHER, D.D.S.; and JAMES) seq.) 8 YU, D.D.S., M.S., each individually) and in their official capacities as) 9 Officers and/or Members of the) DEMAND FOR JURY TRIAL 10 Dental Board of California; and) 11 DOES 1 – 10, inclusive,)) DIST. JUDGE: 12 Defendants.) MAG. JUDGE: 13)) 14) 15 16 17 18 BASIS FOR SUBJECT MATTER JURISDICTION 19 As explained further in the body of this Complaint, this Court has 20 federal question subject matter jurisdiction over several of the claims 21 asserted in this Complaint pursuant to 28 U.S.C. § 1331 because those 22 claims arise under the Constitution or laws of the United States. This 23 Court has supplemental jurisdiction over the remaining claims pursuant 24 to 28 U.S.C. § 1367 because those claims are so related to claims over 25 which this Court has federal question jurisdiction that they form part of 26 the same case or controversy under Article III of the United States 27 Constitution. 28 2 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:3 1 COMPLAINT FOR DAMAGES AND INJUNCTIVE RELIEF 2 Plaintiffs Jeffrey Sulitzer, D.M.D.; Jeffrey Sulitzer, D.M.D., a 3 Professional Corporation; and SmileDirectClub, LLC bring this Complaint 4 against Defendants Joseph Tippins, individually and in his official capacity 5 as an Investigator in the Enforcement Unit of the Dental Board of 6 California ("Board"); Karen M. Fischer, M.P.A., individually and in her 7 official capacity as Executive Director for the Board; and Fran Burton, 8 M.S.W.; Steven Morrow, D.D.S., M.S.; Steven Chan, D.D.S.; Yvette 9 Chappell-Ingram, M.P.A.; Ross Lai, D.D.S.; Lilian Larin, D.D.S.; Huong Le, 10 D.D.S., M.A.; Meredith McKenzie, Esq.; Abigail Medina; Rosalinda Olague, 11 RDA, B.A.; Joanne Pacheco, RDH, M.A.O.B.; Thomas Stewart, D.D.S.; 12 Bruce L. Whitcher, D.D.S.; and James Yu, D.D.S., M.S., each individually 13 and in their official capacities as Officers and Members of the Board; as 14 well as DOES 1 – 10, inclusive, and allege: 15 INTRODUCTION AND NATURE OF THE ACTION 16 1. Plaintiff Jeffrey Sulitzer, D.M.D. is a licensed dentist practicing 17 dentistry in California. Dr. Sulitzer owns Jeffrey Sulitzer, D.M.D., 18 Professional Corporation ("Sulitzer P.C."). He is also the Chief Clinical 19 Officer of Plaintiff SmileDirectClub, LLC ("SmileDirect"). As part of his 20 dental practice, Dr. Sulitzer treats patients with misalignment or 21 "malocclusion" of their teeth. For patients with mild to moderate 22 malocclusion, Dr. Sulitzer has prescribed clear aligner therapy treatment, 23 and continues to work with doctors associated with Sulitzer P.C. on 24 treating patients with clear aligner therapy. An alternative to wire braces, 25 this treatment uses a series of custom-made, removable plastic aligners to 26 move the teeth in increments to their desired positioning. 27 28 3 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:4 1 2. Sulitzer P.C. contracts with SmileDirect to support Dr. Sulitzer's 2 practice, as well as the other state-licensed doctors and orthodontists 3 affiliated with Sulitzer P.C. SmileDirect is a dental support organization 4 ("DSO") that provides non-clinical, administrative services, including its 5 tele-dentistry platform ("DSO Services") to the independent dental 6 practices that contractually engage SmileDirect ("Affiliated Dental 7 Practices"). These Affiliated Dental Practices in turn contract with state- 8 licensed dentists and orthodontists ("Treating Doctors"), such as Dr. 9 Sulitzer, who treat patients. SmileDirect pioneered the direct-to-consumer 10 model for orthodontic clear aligners. 11 3. As one of its DSO Services, SmileDirect operates a national 12 chain of SMILESHOP stores. Consumers who visit a SMILESHOP store, 13 among other things, have their health and dental histories gathered 14 electronically, obtain information about financing and pricing of clear 15 aligner therapy, have free traditional and sophisticated photographs of 16 their teeth and gums taken, learn about clear aligner therapy, and are 17 shown visualizations of how clear aligner therapy can change their own 18 smiles. SmileDirect then connects those consumers with Treating Doctors 19 licensed in their respective states of residence for evaluation and, if 20 deemed appropriate by the Treating Doctor, for clear aligner treatment. 21 4. Sulitzer P.C. also owns and operates a bus—called a 22 SmileBus—that collects the same information and features the same 23 photographic equipment as the brick-and-mortar SMILESHOP locations. 24 This bus allows Dr. Sulitzer to reach consumers who cannot easily travel 25 to a SMILESHOP store. The SMILESHOP stores and SmileBus provide 26 consumers with a convenient, comfortable, and familiar environment in 27 28 4 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:5 1 which to start their journeys toward a better smile, as opposed to 2 traditional dental offices. 3 5. However, no one performs any clinical services at a SMILESHOP 4 store or on a SmileBus. Rather, the trained employees at those locations 5 take and then transmit the photographs and other consumer information 6 the employees collect from the consumer to Dr. Sulitzer as a Treating 7 Doctor (or to another Treating Doctor affiliated with Sulitzer P.C.). The 8 Treating Doctor then reviews all of this information, determines whether 9 they need additional information and ultimately determines whether the 10 consumer is a viable candidate for clear aligner therapy treatment. At all 11 times, the Treating Doctor has sole responsibility for determining, 12 diagnosing, managing, and overseeing care for each of his or her patients. 13 6. The direct-to-consumer model supported by SmileDirect allows 14 its Affiliated Dental Practices to reach large numbers of consumers who 15 otherwise lack reasonable, convenient, and affordable access to teeth- 16 straightening services. It also allows consumers to straighten their teeth 17 at 60 to 70 percent below the prices of traditional in-office orthodontic 18 treatments. The accessibility and affordability of clear aligners available 19 through this model, including the use of the SMILESHOP stores and 20 SmileBuses, has disrupted and threatens further to disrupt traditional, 21 higher-cost orthodontic delivery models. 22 7. The majority of the Board consists of practicing dentists in 23 California. By law, the Board must consist of eight practicing dentists, one 24 registered dental hygienist, one registered dental assistant, and five public 25 members. (Cal. Bus. & Prof. Code § 1601.1(a)) Currently, one of the five 26 public members is a registered dental hygienist, and one public spot is 27 28 5 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:6 1 open. In total, eleven of the fourteen Members practice in the dental 2 industry. 3 8. The Board regulates and enforces the standards of the practice 4 of dentistry and dental hygiene in California, but has no authority over 5 activities that do not constitute the practice of dentistry or dental hygiene, 6 or individuals (or organizations) that do not practice dentistry or dental 7 hygiene (such as SmileDirect). California law does not identify non-clinical 8 support services as the practice of dentistry. 9 9. In the past, California dentists have generated substantial fees 10 from providing their dental and orthodontic treatments using a traditional 11 in-office treatment model. The direct-to-consumer model supported by 12 SmileDirect represents a serious competitive threat to their ability to 13 continue to generate such fees through their traditional delivery model in 14 the future. The Members of the Board therefore have undertaken an 15 aggressive, anti-competitive campaign against SmileDirect, its Affiliated 16 Dental Practices, and their direct-to-consumer model. 17 10. This campaign has included, among other things, having one of 18 its investigators (Tippins) (a) conduct a series of coordinated raids on 19 SMILESHOP stores around California (by using teams of Enforcement Unit 20 personnel to invade the SMILESHOP stores); (b) intentionally harass 21 Sulitzer P.C. employees and consumers on a SmileBus (which occurred 22 days after Tippins officially closed an investigation involving an Affiliated 23 Dental Practice, as there was no evidence supporting any violations of 24 California law); and (c) serve a series of unwarranted information requests 25 on SmileDirect designed to intimidate, harass, and unduly burden 26 SmileDirect, Sulitzer P.C., and Dr. Sulitzer. 27 28 6 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:7 1 11. When SmileDirect and Dr. Sulitzer complained to the State and 2 the Board, the Members of the Board ignored their complaints and did 3 nothing to restrain its investigator's ongoing misconduct. Tippins' actions, 4 and the Board's and its Members' knowledge of those actions and 5 intentional failure to act in response to SmileDirect's and Dr. Sulitzer's 6 complaints, represents a de facto assertion of regulatory authority over the 7 activities undertaken at the SMILESHOP stores and on the SmileBuses, 8 even though no practice of dentistry occurs at those locations. 9 12. The Board, its Members, and Tippins have undertaken this 10 campaign in an effort to squelch the competitive threat posed by the 11 business model supported by SmileDirect, and not to protect any 12 legitimate concern about the public health, welfare, and safety of 13 consumers. This campaign instead benefits the interests of Members of 14 the Board who are participants in the orthodontia market (including clear 15 aligner therapy) because the campaign seeks to eliminate competitive 16 threats to private dental and orthodontic organizations to which those 17 Members belong. 18 13. The Board, its Members, and Tippins engaged in this campaign 19 of harassment, intimidation, and anti-competitive conduct without active, 20 substantive supervision or oversight by the California Legislature, 21 Governor's Office, Department of Consumer Affairs, or the Business, 22 Consumer Services, and Housing Agency. 23 14. Dr. Sulitzer, Sulitzer P.C., and SmileDirect therefore bring this 24 action against the Members of the Board and its investigator Tippins: 25 a. To enjoin them from abusing their power and authority of their 26 offices of public trust as a means to harass and to seek to 27 intimidate SmileDirect and its Affiliated Dental Practices, 28 7 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:8 1 including Dr. Sulitzer and Sulitzer P.C. (and their respective 2 employees and customers); and 3 b. To recover damages from the Members of the Board and 4 Tippins, in their individual capacities, for the economic 5 damages they have inflicted and will continue to inflict on Dr. 6 Sulitzer, Sulitzer P.C., and SmileDirect. 7 THE PARTIES 8 15. Plaintiff Dr. Sulitzer has been a licensed dentist in California 9 since October 2003 (License No. 51841). Dr. Sulitzer practices dentistry in 10 the State. Dr. Sulitzer resides in Happy Valley, Oregon. He owns one 11 hundred percent of shares of Sulitzer P.C. 12 16. Plaintiff Sulitzer P.C. is a duly registered California professional 13 corporation (Corporation No. C4079522). Sulitzer P.C. leases SMILESHOP 14 stores in California. Sulitzer P.C. also owns a SmileBus, and it employs 15 technicians for the SmileBus as well as at its SMILESHOP stores. 16 17. Plaintiff SmileDirect is a Tennessee limited liability company 17 with its corporate headquarters in Nashville, Tennessee. SmileDirect is 18 duly registered and authorized to conduct business in California (Entity 19 No. 201709810114). SmileDirect contracts with Sulitzer P.C. to provide 20 various non-clinical, administrative DSO Services. 21 18. Defendant Joseph Tippins works as an Investigator in the 22 Board's Enforcement Unit. On information and belief, he resides in Placer 23 County, California. 24 19. Defendant Karen M. Fischer, M.P.A., serves as the Executive 25 Director of the Board. The Board is an entity authorized by and constituted 26 under the California Dental Practice Act (Cal. Bus. & Prof. Code § 1600, et 27 28 8 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:9 1 seq.). On information and belief, she resides in Sacramento County, 2 California. 3 20. Defendant Fran Burton, M.S.W., serves as President of the 4 Board. On information and belief, she resides in Sacramento County, 5 California. 6 21. Defendant Steven Morrow, D.D.S., M.S., serves as Vice 7 President of the Board. On information and belief, he resides and practices 8 dentistry in Los Angeles County, California. On information and belief, 9 Morrow is a Life Member of the American Dental Association ("ADA") and 10 the American Association of Endodontists ("AAE"), and a member of the 11 California State Association of Endodontists, Tri-County Dental Society, 12 Southern California Academy of Endodontics, and the American Dental 13 Education Association. 14 22. Defendant Steven Chan, D.D.S., serves as Secretary of the 15 Board. On information and belief, he resides and practices dentistry in 16 Alameda County, California. On information and belief, Chan is a member 17 of the ADA, past President of the California Dental Association ("CDA"), 18 has served as vice chair on five of CDA's for-profit subsidiary companies, 19 and is a member of its political action committee. 20 23. Defendant Yvette Chappell-Ingram, M.P.A., serves as a member 21 of the Board. On information and belief, she resides in Alameda County, 22 California. 23 24. Defendant Ross Lai, D.D.S., serves as a member of the Board. 24 On information and belief, he resides and practices dentistry in Alameda 25 County, California. On information and belief, he is a member of the ADA. 26 25. Defendant Lilian Larin, D.D.S., serves as a member of the 27 Board. On information and belief, she resides and practices dentistry in 28 9 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:10 1 San Diego County, California. On information and belief, Larin is a 2 member of the ADA, Past President of the National Hispanic Dental 3 Association and the American Association of Women Dentists, and she is 4 a board member of the San Diego County Dental Association. 5 26. Defendant Huong Le, D.D.S., M.A., serves as a member of the 6 Board. On information and belief, she resides and practices dentistry in 7 Oakland County, California. On information and belief, Le is a member of 8 the ADA, CDA, and is a board member of the Alameda County Dental 9 Society. 10 27. Defendant Meredith McKenzie, Esq., serves as a member of the 11 Board. On information and belief, she resides in Santa Clara County, 12 California. 13 28. Defendant Abigail Medina serves as a member of the Board. On 14 information and belief, she resides in San Bernardino County, California. 15 29. Defendant Rosalinda Olague, RDA, B.A., serves as a member of 16 the Board. On information and belief, she resides and works as a dental 17 assistant in Los Angeles County, California. 18 30. Defendant Joanne Pacheco, RDH, M.A.O.B., serves as a 19 member of the Board. On information and belief, she resides and works as 20 a dental hygienist in Fresno County, California. On information and belief, 21 Pacheco is a member of the American Dental Hygienists' Association, 22 American Dental Educator's Association, and the California Dental 23 Hygienists' Association. 24 31. Defendant Thomas Stewart, D.D.S., serves as a member of the 25 Board. On information and belief, he resides and practices dentistry in 26 Kern County, California. On information and belief, Stewart is a member 27 of the ADA, served as President of the CDA in 2010, Vice Chair of the CDA 28 10 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:11 1 Holding Company's board of directors, and Chair of the CDA delegation to 2 the ADA. 3 32. Defendant Bruce L. Whitcher, D.D.S., serves as a member of the 4 Board. On information and belief, he resides and practices dentistry in 5 San Luis Obispo County, California. On information and belief, Whitcher 6 is a member of the ADA, Central Coast Dental Society and the CDA. 7 33. Defendant James Yu, D.D.S., M.S., serves as a member of the 8 Board. On information and belief, he resides and practices dentistry in 9 San Francisco County, California. On information and belief, Yu is a 10 member of the ADA and San Francisco Dental Society. 11 34. Dr. Sulitzer, Sulitzer P.C., and SmileDirect sue Fischer, Burton, 12 Morrow, Chan, Chappell-Ingram, Lai, Larin, Le, McKenzie, Medina, 13 Olague, Pacheco, Stewart, Whitcher, and Yu in their individual and official 14 capacities as Executive Director, officers, and Members of the Board 15 (collectively, "Members"). 16 35. Dr. Sulitzer, Sulitzer P.C., and SmileDirect name Does 1 17 through 10 at present as fictitious defendants ("Doe Defendants"). Dr. 18 Sulitzer, Sulitzer P.C., and SmileDirect are presently ignorant and 19 unaware of the true names and identities of these Doe Defendants, and 20 therefore sue such unknown Doe Defendants by fictitious names. Dr. 21 Sulitzer, Sulitzer P.C., and SmileDirect are informed and believe that each 22 such fictitious Doe Defendant is in some manner responsible for, 23 participated in, or contributed to the matters and things of which they 24 complain, and each fictitious Doe Defendant has legal responsibilities for 25 those matters and things. These Doe Defendants may include other 26 employees of the Board; employees of the Board's Enforcement Unit; or 27 other persons acting at the direction of, or in concert with, the Board or 28 11 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:12 1 its Members. When Dr. Sulitzer, Sulitzer P.C., and SmileDirect ascertain 2 the exact nature and identity of each such fictitious Doe Defendant, they 3 will amend this Complaint. Merritt v. County of Los Angeles, 875 F.2d 765, 4 768 (9th Cir. 1989) ("Doe" pleading in Federal Question cases); Anderson 5 v. Allstate Ins. Co., 630 F.2d 677, 683 (9th Cir. 1980) ("Doe" pleading 6 requirements track those of California); Cal. Code Civ. Proc. § 474. 7 36. On information and belief, the Board and its Members, the Doe 8 Defendants, and each of them, were or are the owners, agents, members, 9 employees, employers, officers, directors, managers, partners, 10 representatives, predecessors, successors, transferees, licensees, assigns, 11 or servants of each of the other defendants named herein, and at all 12 relevant times alleged were acting within the course and scope of that 13 relationship, agency, or employment, with full notice, consent, and 14 ratification of the acts or omissions of each of the other defendants. 15 JURISDICTION AND VENUE 16 37. This Court has subject matter jurisdiction over Count I 17 pursuant to 28 U.S.C. §§ 1331 and 1337 (Federal Question and Antitrust), 18 because this claim arises under the laws of the United States, including 19 the Federal Sherman Antitrust Act (15 U.S.C. § 1, et seq.). 20 38. This Court has subject matter jurisdiction over Count II – IV 21 pursuant to 28 U.S.C. §§ 1331 and 1343 (Federal Question and Civil 22 Rights), because these claims arise under the Constitution and laws of the 23 United States, including violations of the Dormant Commerce Clause, 24 Equal Protection Clause, and Substantive Due Process brought pursuant 25 to 42 U.S.C. § 1983. 26 39. This Court has supplemental jurisdiction over Count V 27 pursuant to 28 U.S.C. § 1367 (Supplemental Jurisdiction), because this 28 12 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:13 1 state-law claim arises out of the same transaction or occurrence as, and 2 has a common nucleus of operative facts with, the claims over which this 3 Court independently exercises jurisdiction. 4 40. This Court has general personal jurisdiction over Tippins and 5 the Members, because, upon information and belief, each of them resides 6 in California, subjecting each individual defendant to the general personal 7 jurisdiction of California courts, including this Court. Milliken v. 8 Meyer (1940) 311 U.S. 457, 462 – 63. 9 41. Venue is proper in this Judicial District pursuant to 28 U.S.C. 10 § 1391(b)(1), because the Members are all residents of California, and 11 Medina, Olague, and Whitcher are residents of this Judicial District. 12 FACTUAL BACKGROUND 13 I. SmileDirect's Revolutionary Tele-Dentistry Platform 14 42. SmileDirect has revolutionized the way in which dental care is 15 administered in the United States with its unique tele-dentistry platform 16 called SmileCheck—a proprietary system that remotely connects patients 17 with state-licensed Treating Doctors through a web-based portal. Affiliated 18 Dental Practices contracting with SmileDirect for its DSO Services use 19 SmileCheck to view photographs of a patient's mouth, review a patient's 20 medical and dental histories and chief complaint that the patient wants 21 corrected with alignment, review and develop treatment plans, request and 22 review additional information from the patient, if necessary or advisable 23 as determined by the Treating Doctor, prescribe treatment if appropriate, 24 track the performance of the treatment through completion, and document 25 communication with a patient. 26 43. SmileDirect helps Treating Doctors provide affordable care to 27 populations underserved by traditional dentists and orthodontists 28 13 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:14 1 operating in brick-and-mortar offices. By leveraging proprietary, cutting- 2 edge technology, and providing non-clinical DSO Services, Treating 3 Doctors can use the SmileCheck tele-dentistry platform to provide care to 4 patients who could not otherwise afford or have access to clear-aligner 5 therapy. 6 A. Lack of Access to Orthodontic Treatment 7 44. SmileDirect has developed a solution to one of the most 8 significant challenges in dental care. Prior to SmileDirect's development of 9 SmileCheck, only one percent of the global population received orthodontic 10 treatment each year, yet nearly 85 percent of the global population could 11 benefit from it. 12 45. Patient access to orthodontists has been one of the largest 13 problems in expanding availability of orthodontic treatment. 14 Approximately 60 percent of counties in the United States do not have an 15 orthodontist office. Patients with mild or moderate malocclusion cannot 16 obtain the treatment they need without traveling great distances to find a 17 licensed professional, only to repeat that lengthy journey for treatment and 18 check-ins at a brick-and-mortar office. 19 46. Cost is another significant impediment to patients receiving 20 orthodontic treatment. The average cost of orthodontic treatment for 21 patients with mild or moderate malocclusion in a brick-and-mortar office 22 is approximately $5,000 to $8,000. That price tag is simply too much for 23 many consumers, even those who would benefit greatly from treatment of 24 their mild-to-moderate malocclusion. As a result, these consumers do not 25 receive any treatment whatsoever. 26 /// 27 /// 28 14 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:15 1 B. Solving the Problem by Connecting Treating Doctors 2 with Patients 3 47. SmileDirect has helped solve the problem of access and cost by 4 developing SmileCheck, a web-based platform which allows Treating 5 Doctors to diagnose, evaluate, and treat patients remotely with clear 6 aligner therapy for mild to moderate malocclusion. As a result, clear 7 aligner treatment through SmileDirect's platform costs $1895. 8 SmileDirect's model changed the way that Treating Doctors can interact 9 with their patients and made treatment for mild and moderate 10 malocclusion available to millions who were previously untreated, 11 including tens of thousands of customers in California who have already 12 used the SDC tele-dentistry platform to achieve a smile they love. 13 SmileDirect's model also provides more convenient and affordable options 14 to consumers who otherwise may have sought orthodontic treatment 15 through traditional delivery channels. 16 1. Step One: Patients Contact SmileDirect 17 48. Consumers start their clear-aligner therapy process in one of 18 two ways. A consumer can visit SmileDirect's website and order an 19 impression kit. Pursuant to a prescription from a state-licensed Treating 20 Doctor at an Affiliated Dental Practice, an impression kit is then sent to 21 the consumer. In addition, the consumer is required to complete medical 22 and dental history forms, provide a chief complaint, and upload traditional 23 photographs of the teeth and gums so that the Treating Doctor—who is 24 licensed in the consumer's state, and who, through the Affiliated Dental 25 Practice, has engaged SmileDirect to utilize SmileDirect's DSO Services, 26 including the SmileCheck platform—has the initial information necessary 27 to make his or her clinical evaluation. Once the consumer completes the 28 15 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:16 1 impression kit, the consumer returns it to a dental lab to be reviewed by 2 highly trained lab technicians and transformed into a 3D image of the 3 teeth and gums for subsequent review by the Treating Doctor. 4 49. Alternatively, consumers can start the process by visiting one 5 of SmileDirect's or the Affiliated Dental Practice's SMILESHOP stores, or a 6 SmileBus, to have traditional and sophisticated photos taken of the teeth 7 and gums. In California, the employees of SMILESHOP stores and the 8 SmileBus are employed by Sulitzer P.C. At the SMILESHOP stores and 9 onboard a SmileBus, consumers have both traditional photos taken of 10 their teeth and gums with digital cameras, as well as a series of photos 11 using a sophisticated camera (called an iTero) that takes up to 6,000 12 frames per second. The photos taken using the sophisticated camera are 13 stored digitally and then fed into a computer program that generates a 3D 14 image of the consumer's teeth and gums. At the SMILESHOP stores and 15 on a SmileBus, consumers can also complete their dental and health 16 histories and identify their chief complaint, all of which are uploaded into 17 SmileCheck for review by the Treating Doctor. 18 2. Step Two: Creation of a Draft Treatment Plan 19 50. The 3D image, and the photos from which the 3D image was 20 created, are sent to highly trained lab technicians at a dental lab, along 21 with the other relevant information collected from the consumer, to create 22 a draft treatment plan using sophisticated and proprietary software. These 23 draft treatment plans undergo a quality assurance check by licensed 24 dentists and orthodontists who are on staff at the dental lab, which 25 provides an additional layer of quality assurance and consumer protection 26 that other dental labs do not offer. Once the draft treatment plan is 27 28 16 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:17 1 complete, it is uploaded into SmileCheck for review by the Treating Doctor, 2 along with all of the other information collected from the consumer. 3 3. Step Three: Dentists or Orthodontists Evaluate 4 Patients 5 51. After receiving information from consumers, SmileDirect loads 6 that information onto the SmileCheck system so that the Treating Doctor, 7 licensed to practice in the state of the consumer, can review it. The 8 Treating Doctor has the ability, at all times, to request additional 9 information if necessary or desirable (including but not limited to an x-ray 10 or periodontal clearance). With this information, the Treating Doctor 11 determines (a) whether the consumer has mild-to-moderate malocclusion; 12 (b) if so, whether the consumer can be treated with clear-aligner therapy; 13 and, (c) if so, whether the consumer is a candidate for the clear-aligner 14 therapy utilizing remote tele-dentistry, which is directed by the Treating 15 Doctor. 16 52. If the Treating Doctor determines, in his or her independent 17 professional judgment, that the answer to each of the above inquiries is 18 "yes," then the Treating Doctor reviews and modifies, if necessary, the draft 19 treatment plan. Once the treatment plan is finalized and approved by the 20 Treating Doctor, the consumer is provided with a detailed explanation of 21 the treatment plan, including 3D images depicting anticipated teeth 22 movement. If the consumer elects to move forward with the treatment, the 23 Treating Doctor submits a prescription for manufacturing of the aligners. 24 SmileDirect then fulfills the prescription by arranging for the manufacture 25 and shipment of the aligners from an FDA-approved and licensed 26 manufacturing facility. 27 28 17 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:18 1 53. None of the Affiliated Dental Practices or Treating Doctors are 2 under any obligation (1) to prescribe treatment for customers who have 3 been connected to them through SmileCheck; (2) to use SmileDirect's tele- 4 dentistry platform; or (3) to use the clear aligners that SmileDirect can 5 source for them. 6 4. Step Four: Patient Treatment Prescribed by the 7 Treating Doctor 8 54. The consumer then receives the number of aligners prescribed 9 by the Treating Doctor as well as detailed instructions on use and care. 10 The consumer uses SmileCheck to consult with the Treating Doctor when 11 the consumer begins treatment to ensure the proper fitting of the aligners. 12 The consumer continues to use SmileCheck for periodic treatment check- 13 ins at least every 90 days (or more if requested or desired by the Treating 14 Doctor or the patient). Following the use of all aligners, the Treating Doctor 15 reviews the patient's progress and determines whether treatment is 16 complete. 17 55. SmileDirect does not engage in the practice of dentistry; that is 18 the province of the Treating Doctors exercising their independent, 19 professional judgment. Instead, SmileDirect provides the non-clinical DSO 20 Services, including its innovative delivery channel to connect Treating 21 Doctors with their patients. 22 56. The Treating Doctor maintains sole responsibility for all aspects 23 of the patient's care as directed by the Treating Doctor's independent, 24 professional judgment, including conducting evaluations, making 25 diagnoses, and if appropriate, prescribing and monitoring clear-aligner 26 therapy treatment for the patient's condition. 27 /// 28 18 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:19 1 C. SmileDirect Disrupts the Dental Industry 2 57. SmileDirect's rapid growth since its founding in 2014 validates 3 its value proposition to many consumers and its compelling tele-dentistry 4 model. For example, on a global scale, SmileDirect and its Affiliated Dental 5 Practices have helped over 750,000 consumers achieve a smile they love, 6 and together with its Affiliated Dental Practices has opened over 300 7 SMILESHOP stores. 8 58. On a national scale, SmileDirect and its Affiliated Dental 9 Practices have collected information, including traditional and iTero 10 photographs, from hundreds of thousands of individuals without any 11 incident or complaint of physical injury, infection, or other adverse patient 12 outcome associated with the collection of information and taking of 13 photographs. 14 59. SmileDirect started doing business in California in March 2017, 15 and since that time SmileDirect and its Affiliated Dental Practices— 16 through at-home impression kits, or at SMILESHOP stores or 17 SmileBuses—have collected information, including taking traditional and 18 iTero photographs, from over 100,000 consumers in California (without a 19 single incident or complaint arising from collecting the information and 20 taking the photographs). Of those, tens of thousands of Californians have 21 been approved for, prescribed, and ordered clear aligner therapy 22 treatment. SmileDirect has generated millions of dollars in revenue from 23 its California operations. 24 60. Many in the public and dental communities have embraced 25 SmileDirect's entry into the market, enabling access to top-notch, low-cost 26 clear-aligner therapy. By remotely connecting state-licensed Treating 27 Doctors with consumers through SmileDirect's SmileCheck platform, in 28 19 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:20 1 combination with the other DSO Services SmileDirect provides, 2 SmileDirect has drastically reduced the cost of clear-aligner treatment and 3 increased access for many unreached segments of the population, all while 4 ensuring that consumers receive treatment from, and are closely 5 monitored by, state-licensed Treating Doctors with at least four years of 6 experience providing clear-aligner therapy in traditional brick-and-mortar 7 offices. Indeed, over 90% of the Treating Doctors affiliated with SmileDirect 8 maintain their traditional offices in addition to providing treatment to 9 patients using SmileDirect's tele-dentistry platform. 10 61. In the end, the clinical care that consumers receive through 11 SmileCheck is directed, evaluated, prescribed and monitored by Treating 12 Doctors. The clinical treatment that consumers receive from SmileDirect's 13 contractually affiliated Treating Doctors using SmileCheck is more 14 affordable, accessible, and efficient than traditional methods of in-office 15 orthodontic treatment. 16 62. At the same time, SmileDirect's innovative SmileCheck platform 17 is also disruptive to the traditional models of orthodontic delivery and 18 threatens the dental professionals who provide traditional orthodontia. 19 The "affordable" and "accessible" tenets of SmileDirect's model challenge 20 the business interests entrenched in the more traditional and more costly 21 orthodontic-delivery models. 22 II. The Board Only Has Authority to Regulate the Practice of 23 Dentistry and Not the Services Provided in the SMILESHOP 24 Stores, on the SmileBus, or by SmileDirect 25 63. The Board, acting through its Members, regulates and enforces 26 the standards of the practice of dentistry in California, and regulates and 27 enforces the standards governing those who practice dentistry in the State. 28 20 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:21 1 Under the California Dental Practice Act ("Act") (Cal. Bus. & Prof. Code § 2 1600, et seq.), the Board must: 3 A. "carry out the purposes and enforce the provisions of [the 4 Act]"; 5 B. "examine all applicants for a license or permit to practice 6 dentistry and dental assisting"; 7 C. "issue licenses and permits to practice dentistry and 8 dental assisting in this state to such applicants as 9 successfully pass all applicable licensing and permitting 10 examinations administered by the Board, or any regional 11 or national testing entity designated to administer 12 licensing or permitting examinations"; and 13 D. "collect and apply all fees." Id., at § 1611. 14 64. The Board's authority is limited to the practice of dentistry. The 15 Act makes it unlawful for any person to engage in the practice of dentistry 16 in California without a valid, unexpired license, or special permit from the 17 Board. Id. at § 1625. The Act defines the practice of dentistry as: 18 the diagnosis or treatment, by surgery or other method, of diseases and lesions and the correction of 19 malpositions of the human teeth, alveolar process, gums, jaws, or associated structures; and such 20 diagnosis or treatment may include all necessary related procedures as well as the use of drugs, 21 anesthetic agents, and physical evaluation. Without limiting the foregoing, a person practices dentistry 22 within the meaning of this chapter who does any one or more of the following: 23 (a) By card, circular, pamphlet, newspaper or in 24 any other way advertises himself or represents himself to be a dentist. 25 (b) Performs, or offers to perform, an operation or 26 diagnosis of any kind, or treats diseases or lesions of the human teeth, alveolar process, 27 gums, jaws, or associated structures, or corrects malposed positions thereof. 28 21 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:22 1 (c) In any way indicates that he will perform by 2 himself or his agents or servants any operation upon the human teeth, alveolar process, gums, 3 jaws, or associated structures, or in any way indicates that he will construct, alter, repair, or 4 sell any bridge, crown, denture or other prosthetic appliance or orthodontic appliance. 5 (d) Makes, or offers to make, an examination of, 6 with the intent to perform or cause to be performed any operation on the human teeth, 7 alveolar process, gums, jaws, or associated structures. 8 (e) Manages or conducts as manager, proprietor, 9 conductor, lessor, or otherwise, a place where dental operations are performed. Id. at § 1625. 10 65. The Act further regulates (1) any "mobile dental unit," which is 11 a "self-contained facility, which may include a trailer or van, in which 12 dentistry is practiced that may be moved, towed, or transported from one 13 location to another"; and (2) any "portable dental unit," which is a "self- 14 contained unit housing equipment used for providing dental treatment 15 that is transported to, and used on a temporary basis at, non-dental office 16 locations." Id. at § 1657(a)(1) – (2). 17 66. The Act contains no regulations pertaining to DSOs (like 18 SmileDirect) and the non-clinical support services they provide. Under the 19 Act the Board and its Members have no authority over SmileDirect because 20 it provides only non-clinical support services to Affiliated Dental Practices 21 and Treating Doctors. The Board and its Members also have no authority 22 over the activities in SMILESHOP stores, or the activities on a SmileBus, 23 because the activities do not constitute the practice of dentistry, as defined 24 in the Act. 25 67. The SMILESHOP and SmileBus employees do not examine, 26 evaluate, diagnose, operate, monitor, direct, prescribe, or otherwise treat 27 any consumer. The employees provide only a subset of non-clinical 28 22 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:23 1 support services to Affiliated Dental Practices and Treating Doctors. As a 2 result, the SmileBus does not qualify as a "mobile dental unit" or "portable 3 dental unit" regulated under the Act. 4 68. The Board has not undertaken any rulemaking to expand the 5 definition of the "practice of dentistry" to include the non-clinical support 6 services provided by DSOs like SmileDirect, or by the employees in 7 SMILESHOP stores or SmileBuses who do not perform any clinical 8 services. Even if the Board and its Members had undertaken such 9 rulemaking, that rulemaking would be invalid under the Act and other 10 state and federal laws. 11 III. Harassment of SmileDirect, Sulitzer P.C., and Dr. Sulitzer 12 69. Although the Board lacks any authority to regulate SmileDirect 13 or the services in SMILESHOP stores and on the SmileBuses, the Members 14 have sought to use the Board's regulatory weapons in a no-holds-barred 15 attack against SmileDirect's new tele-dentistry model in a misguided 16 attempt to protect traditional local, brick-and-mortar dental practices from 17 competition (such as where 11 of the 15 Members on the Board practice 18 dentistry or provide other dental-related services). 19 70. Under the authority of the Board, one of the investigators in the 20 Board's Enforcement Unit—Tippins—has undertaken a continuing course 21 of conduct designed to harass and intimidate SmileDirect and its Affiliated 22 Dental Practices in order to squelch the competition they pose to the more 23 costly clear aligner therapy that dentists and orthodontists prescribe in 24 their traditional brick-and-mortar offices. 25 71. The Board and Tippins began this increasingly harassing 26 campaign in late 2017. On information and belief, Tippins and one or 27 more other investigators first posed as customers in SmileShop stores. 28 23 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:24 1 Then on December 8, 2017, Tippins requested information from 2 SmileDirect based on an alleged "active investigation" into SmileDirect. 3 SmileDirect responded to Tippins' requests in late December 2017. Tippins 4 then requested more information in early March 2018, this time seeking 5 information related to a specific dentist affiliated with SmileDirect. Less 6 than two weeks later, SmileDirect responded, confirming that the dentist 7 was not an employee of SmileDirect. Tippins thereafter changed course 8 and began sending requests for patient records in late March 2018. 9 SmileDirect, the Treating Doctors, and Affiliated Dental Practices 10 answered each request, with no findings of wrongdoing by the state. 11 Tippins—on information and belief, with the Board and Board Members' 12 knowledge, agreement, and acquiescence, if not approval—then escalated 13 the harassment against SmileDirect, the Treating Doctors, and Affiliated 14 Dental Practices. 15 A. State-wide Raid of SMILESHOP Stores 16 72. On May 31, 2018, the Board, Members of the Board, and 17 Tippins coordinated an unannounced, simultaneous state-wide raid of 18 SMILESHOP stores in Oakland, San Francisco, and Hollywood, California. 19 Even though the Board lacked any regulatory authority over the non- 20 clinical services provided by SmileDirect, the Board's enforcement teams 21 descended on these SMILESHOP stores on the same day to question 22 SMILESHOP store employees and to demand information and files at the 23 locations, which occurred during hours of regular operation, no doubt so 24 as to cause the most amount of interference and disruption. 25 73. The SMILESHOP store employees who witnessed the raids were 26 frightened and intimidated by the Board's enforcement teams undertaking 27 the raids. The teams subjected employees to aggressive behavior, including 28 24 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:25 1 unreasonable demands for information and documents, as well as threats 2 of initiating an "investigation" of SmileDirect by the Board—contradicting 3 Tippins' prior claims of an existing investigation. 4 74. Consumers at the SMILESHOP stores were likewise 5 intimidated, and some of the consumers fled the stores, on information 6 and belief, as a result of the Board raids. As a result, the raids seriously 7 harmed SmileDirect's business, revenue, goodwill, employee relations, and 8 reputation in the marketplace. 9 75. The Board lacked any legitimate basis for the raids. Neither the 10 Board, its Members, nor its Enforcement Unit (including Tippins) issued 11 even a single finding of wrongdoing with respect to any of the SMILESHOP 12 stores or any conduct by SmileDirect or its Affiliated Dental Practices. 13 76. Dr. Sulitzer, Sulitzer P.C., and SmileDirect requested a meeting 14 with the Board and demanded the basis for the raids targeting 15 SMILESHOP stores. Instead of engaging in dialogue, the Board and its 16 Members refused to meet with Dr. Sulitzer, Sulitzer P.C., and SmileDirect, 17 vaguely citing an unresolved "pending matter." SmileDirect and its lawyers 18 offered to meet with the Board and Tippins to discuss the nature of any 19 purported pending matters, but Tippins and the Members ignored these 20 requests. 21 77. Neither the Board nor any of the Members responded to 22 SmileDirect's objections to the continued campaign against SmileDirect 23 and its Affiliated Dental Practices; nor, on information and belief, did they 24 otherwise take any actions to investigate the misconduct, to reprimand or 25 punish those involved, or to prevent similar misconduct in the future. 26 78. On the contrary, after the raids, Tippins continued to contact 27 SMILESHOP stores directly. In an effort to protect the SMILESHOP 28 25 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:26 1 employees from repeated harassment, lawyers retained by SmileDirect 2 repeatedly informed Tippins to direct all communications to them rather 3 than to store employees in 2018 and early 2019. 4 B. The Board Continues To Target Affiliated Dental 5 Practices 6 79. After the raids, the Board, its Members, and Tippins shifted 7 their harassment campaign from SmileDirect itself to its Affiliated Dental 8 Practices. Tippins began sending repeated—sometimes daily—demands 9 for records from SmileDirect's Affiliated Dental Practices, including Dr. 10 Sulitzer and Sulitzer P.C. These efforts were intended to harass and 11 intimidate those Affiliated Dental Practices and Treating Doctors who 12 contracted with SmileDirect by subjecting them to the time, expense, 13 distraction and embarrassment of ongoing "investigations" into violations 14 of the Act. 15 80. As with the raids, these "investigations" were entirely meritless. 16 None of the Board's repeated fishing expeditions have turned up a single 17 violation of the Act. 18 81. In fact, as recently as June 20, 2019, the Board, through 19 Tippins, closed an "investigation" against a Treating Doctor and his 20 Affiliated Dental Practice, finding "no evidence of a violation of the Dental 21 Practice Act to substantiate filing formal charges. . . ." 22 C. Tippins Invades a SmileBus 23 82. Despite having just formally closed its investigation days earlier, 24 the Board, its Members, and Tippins continued their targeted campaign 25 against SmileDirect and its Affiliated Dental Practices, this time focusing 26 on a SmileBus owned by Sulitzer P.C. 27 28 26 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:27 1 83. The Board and Tippins lacked any authority to enter the 2 SmileBus, given that neither SmileDirect nor the employees on the bus 3 provided or advertised any dental services on the SmileBus. 4 84. Nonetheless, on July 1, 2019, the SmileBus was legally parked 5 at the Sacramento Arden Fair with consumers visiting the SmileBus for 6 pre-booked appointments. Between 9:30 and 10:00 a.m., without any 7 prior warning, Tippins entered the SmileBus without permission, 8 authorization, a search warrant or any other legal process permitting him 9 to do so. Upon information and belief, another investigator accompanied 10 Tippins on the SmileBus. 11 85. Tippins entered the SmileBus, flashed his "Dental Board 12 Investigator" badge to the female manager, and demanded to know who 13 was in charge. At the time, consumers were waiting on board the SmileBus 14 and undergoing appointments to have their teeth photographed. One 15 alarmed consumer asked why the "police" were there. Tippins did not 16 make any effort to correct the consumer. He instead told the consumer 17 that there was a complaint against SmileDirect, that an active 18 investigation by the Board existed, and that his inspection was "routine." 19 86. This behavior was hardly "routine." Tippins treated the female 20 SmileBus manager in a rude, intimidating, and harassing manner, in front 21 of the consumers on the SmileBus: 22 A. Tippins yelled at and interrogated the SmileBus manager, 23 asking her for whom she worked and who owned the 24 SmileBus. When the manager truthfully responded that 25 Sulitzer P.C. owned the SmileBus and employed her, 26 Tippins accused the manager of lying. 27 28 27 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:28 1 B. Tippins made false statements that the marketing 2 materials on the SmileBus were misleading and wrong. 3 C. Tippins demanded to inspect the entire SmileBus. 4 D. Tippins asked the manager if she was a Registered Dental 5 Assistant. The manager replied that she was not, but that 6 certain employees on the bus were Registered Dental 7 Assistants. Tippins yelled orders at the manager, 8 demanding "proof" and "credentials" supporting this 9 statement, but then Tippins refused to let the manager 10 retrieve the documentation from her computer. 11 E. Because the employees on the SmileBus were not engaging 12 in the practice of dentistry, the SmileBus was not required 13 to have any mobile dentistry certification or registration. 14 Yet, Tippins ordered the SmileBus manager to produce a 15 mobile dentistry document or certification. Tippins, 16 however, then prohibited the SmileBus manager from 17 contacting Dr. Sulitzer at her employer, Sulitzer P.C., to 18 obtain guidance on the request. Tippins demanded she 19 hang up the phone when she tried to call him. 20 F. Tippins continued to yell loudly at the manager and 21 accused her of the illegal practice of dentistry, claiming 22 that merely photographing teeth constituted the practice 23 of dentistry. 24 87. Despite Tippins' bullying behavior, the manager attempted to 25 answer his questions and demands. Then, as abruptly as he had arrived, 26 Tippins left, claiming that there was nothing she could do and that he 27 would "be following up later." 28 28 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:29 1 D. SmileDirect Demands that the Board Investigate 2 Tippins to No Avail 3 88. That same day, after learning of the improper and unauthorized 4 raid, SmileDirect's lawyers sent a letter to Fischer, the Board's Executive 5 Director, outlining the Board's and Tippins' unlawful harassment and 6 demanding Tippins cease his harassing behavior. 7 89. The Board and Tippins did nothing to abate the campaign of 8 targeted harassment, but instead reinvigorated their efforts. On 9 September 16 through 27, 2019, the Board and Tippins issued at least six 10 letters to various Affiliated Dental Practices and SmileDirect. Each letter 11 requested patient dental records, including all photo diagnostic x-rays, 12 photos, 3D "scans," models, and the entire dental chart; exam results; 13 additional treatment plan and estimates; billing records; payment records; 14 medical history; signed consent forms; and insurance authorizations. The 15 Board and Tippins made these demands under threats of fines for non- 16 compliance. 17 90. The letters also included an authorization form purportedly 18 signed by each patient approving the release of the records to Tippins, 19 evidencing that Tippins has been directly communicating with consumers 20 regarding SmileDirect and its Affiliated Dental Practices. 21 91. On September 30, 2019, SmileDirect's retained counsel 22 responded to a recent patient records request, reiterating its objection to 23 the Board, Members of the Board, and Tippins' pattern of anticompetitive 24 behavior. Letter September 30, 2019, attached as Ex. A (redacted to 25 remove protected health information). 26 /// 27 /// 28 29 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:30 1 IV. This Conduct Was Intended to Stifle Competition as Opposed to 2 Protect Any Legitimate Public Interest. 3 92. The Board's and Tippins' campaign against SmileDirect and its 4 Affiliated Dental Practices is not intended to protect any legitimate public 5 interest. Instead, the campaign is designed to prevent Affiliated Dental 6 Practices and their Treating Doctors who utilize the SmileDirect tele- 7 dentistry platform and other DSO Services from competing with the 8 Board's own market participants and constituent dentists and 9 orthodontists who treat mild to moderate malocclusion using the 10 traditional, in-office delivery model. 11 93. The Federal Trade Commission ("FTC") has recognized the 12 potential for conflict between federal antitrust laws and state regulatory 13 boards dominated by active members of their respective industries. In 14 2015, after the United States Supreme Court decision North Carolina State 15 Board of Dental Examiners v. FTC, 135 S. Ct. 1101, the FTC issued 16 guidance entitled "FTC Staff Guidance on Active Supervision of State 17 Regulatory Boards Controlled by Market Participants," attached as Ex. B. 18 That guidance made clear the special scrutiny applied to actions by state 19 regulatory boards controlled by market participants and laid out specific 20 guidance relevant to restraints imposed by such boards. 21 94. In two pending antitrust cases filed by SmileDirect and its 22 Affiliated Dental Practices and Treating Doctors against state dental board 23 members, the DOJ and the FTC filed joint amicus briefs in the Eleventh 24 Circuit in support of SmileDirect's position. See SmileDirectClub, LLC v. 25 Battle, et al., Brief for the United States and the Federal Trade Commission 26 as Amici Curiae Supporting Plaintiff – Appellee [SmileDirectClub, LLC] No. 27 19-12227 (11th Circuit, filed 9/25/2019), attached as Ex. C; Leeds, et al. 28 30 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:31 1 v. Jackson, et al., Brief for the United States and the Federal Trade 2 Commission as Amici Curiae Supporting Plaintiff – Appellee 3 [SmileDirectClub, LLC] No. 19-11502 (11th Circuit, filed 9/11/2019), 4 attached as Ex. D. In each case, a state dental board took actions aimed 5 at restricting SmileDirect's tele-dentistry model. In each case, the DOJ and 6 FTC reiterated that "[c]ompetition is 'the fundamental principle governing 7 commerce in this country'". (Ex. C, p. 15; Ex. D, p. 16). The DOJ and FTC 8 also reinforced the importance of applying "rigorous" tests applied to 9 "allegedly anticompetitive decisions by licensing boards that are controlled 10 by active market participants." (Ex. D, p. 18, 23; see also Ex. C, p. _17) 11 95. Here, the Board and its Members have failed to heed the 12 government's warnings or to follow any of the FTC's guidance based on 13 their actions towards SmileDirect, Dr. Sulitzer, or Sulitzer P.C. The Board 14 and its Members are not acting under any clearly articulated and 15 affirmatively stated policy or legislation. There is no regulation authorizing 16 the Board and its Members' attempt to extend their reach to the provision 17 of non-clinical support services to state-licensed dentists. Nor has a non- 18 market participant outside of the Board actively and substantively 19 supervised the Board's and Tippins' activities with respect to SmileDirect, 20 Dr. Sulitzer, and Sulitzer P.C. Instead, the Board and its Members are 21 expanding their reach only to stifle competition from the Affiliated Dental 22 Practices that utilize SmileDirect's revolutionary tele-dentistry model. 23 96. The Board's economic protectionism will harm consumers in 24 the State of California and elsewhere. The restriction or elimination from 25 the market of Affiliated Dental Practices utilizing SmileDirect's model as a 26 competitor will prevent the Affiliated Dental Practices from providing care 27 28 31 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:32 1 to previously underserved populations. It also will substantially increase 2 the cost of treatment and eliminate choices for consumers. 3 97. While the Board Members and Tippins have used their offices 4 to perpetrate their misconduct under color of state law, they in fact do not 5 have any actual authority to regulate the services provided by SmileDirect. 6 SmileDirect provides only non-clinical support services; it does not 7 examine, diagnose, or treat any malady. The same is true for SMILESHOP 8 stores and SmileBus employees. 9 98. The Board's and Tippins' campaign also unlawfully and unfairly 10 burdens and discriminates against out-of-state companies like 11 SmileDirect, as well as dentists like Dr. Sulitzer who may practice dentistry 12 in more than one State and greatly benefit from SmileDirect's tele-dentistry 13 platform to connect with patients in other States without the 14 inconvenience of having to travel back-and-forth to brick-and-mortar 15 offices. Severely restricting or prohibiting Dr. Sulitzer and other Treating 16 Doctors who are licensed in California from providing certain services and 17 related orthodontic treatment to California patients unless they are 18 physically present in a SMILESHOP retail location or onboard the 19 SmileBus would severely restrict, if not eliminate, interstate commerce in 20 this market. 21 99. In their attempt to restrict consumer choice and interstate 22 commerce, the Board Members' and Tippins' misconduct also fails to 23 protect the public in any manner. The Board's and Tippins' efforts to 24 harass and attempt to intimidate SmileDirect and its Affiliated Dental 25 Practices (1) was not done in compliance with any rulemaking authority or 26 procedures; (2) reduces California consumers' access to care; (3) increases 27 the cost of tele-dentistry, the provision of DSO Services to tele-dentists, and 28 32 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:33 1 overall orthodontic care; (4) does not protect the public; (5) deprives 2 SmileDirect of the full value of its authorization to conduct business in 3 California; and (6) deprives SmileDirect's Affiliated Dental Practices in 4 California, including Dr. Sulitzer and Sulitzer P.C., of the full value of their 5 dental licenses in the state of California and their constitutionally protected 6 liberty and property interests. 7 V. Harm to SmileDirect, Dr. Sulitzer, Sulitzer P.C., and the Public 8 100. In the absence of tele-dentistry competition from Affiliated 9 Dental Practices using SmileDirect's model, other dentists and 10 orthodontists will continue to be able to charge their higher prices to 11 consumers for clear aligner products. This practice drives up costs, which 12 are borne by consumers in addition to already increased costs for 13 consumers required to travel to and pay for a visit to a traditional brick- 14 and-mortar office to see a dentist or orthodontist in person (particularly if 15 the visit is not covered by insurance). 16 101. SmileDirect, Dr. Sulitzer and Sulitzer P.C. will suffer significant 17 economic injury and damage as a result of the Board's, its Members' and 18 Tippins' acts and omissions. They will suffer lost business that they would 19 have otherwise obtained (1) through their offering of clear aligner therapy 20 treatment at significantly lower prices than the more traditional treatments 21 offered by other dentists and orthodontists; and (2) through their use of 22 tele-dentistry and the SmileCheck platform to connect with consumers in 23 areas lacking orthodontists. 24 /// 25 /// 26 /// 27 /// 28 33 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:34 1 FIRST CAUSE OF ACTION 2 3 Violations of Federal Sherman Antitrust Act 4 (15 U.S.C. § 1, et seq.) 5 (By All Plaintiffs against All Defendants) 6 102. SmileDirect, Dr. Sulitzer, and Sulitzer P.C. incorporate by 7 reference each and every allegation of the preceding paragraphs as though 8 fully set forth herein. 9 103. The "relevant market" in which to evaluate the anti-competitive 10 effect of the conduct of the Members and Tippins is the market for tooth 11 alignment treatment for mild to moderate malocclusion in California, and 12 the method of delivering that treatment to consumers. 13 A. The relevant products in this market are tooth alignment 14 therapy treatments for mild and moderate malocclusion 15 and the method of delivering the treatments to consumers. 16 B. The relevant geographic market is properly limited to 17 California. Upon information and belief, consumers in 18 California generally seek tooth alignment therapy 19 treatment from local providers in the State, and as a result 20 do not travel outside the State in any appreciable numbers 21 to obtain tooth alignment therapy treatment. 22 C. Thus, if the price of tooth alignment therapy treatment for 23 mild to moderate malocclusion in California increases as 24 a result of the campaign by the Board, its Members, and 25 Tippins against SmileDirect and its Affiliated Dental 26 Practices (including Dr. Sulitzer and Sulitzer, P.C.), 27 consumers will have to pay the higher prices for tooth 28 34 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:35 1 alignment therapy treatment within California, and 2 perhaps travel longer distances within the State to seek 3 such services. 4 104. The majority of the Members who are dentists or orthodontists 5 (or work in the dental industry) are actual or potential participants in the 6 Relevant Market and have incentives to restrict competition in the Relevant 7 Market to prevent the delivery of orthodontic services and the provision of 8 tooth alignment therapy through the innovative model provided by 9 SmileDirect. 10 105. The Members and Tippins, through their anti-competitive 11 actions and omissions, knowingly formed, joined, and entered into an 12 agreement, contract, combination, or conspiracy in restraint of trade and 13 commerce to burden, restrict, or prevent SmileDirect from providing non- 14 clinical, administrative support services in the Relevant Market. 15 106. The Members and Tippins, through their anti-competitive 16 actions and omissions, entered into an agreement, contract, combination, 17 or conspiracy in restraint of trade and commerce to burden, restrict, or 18 prevent Dr. Sulitzer and Sulitzer P.C. from practicing tele-dentistry in the 19 Relevant Market. 20 107. As is evidenced by the Members' failure to take any remedial 21 action whatsoever in response to Tippins' harassing and intimidating 22 conduct (and, on information and belief their acquiescence, direction, 23 approval, agreement, or ratification of that misconduct) the Members have 24 demonstrated a unity of purpose, as well as common design and 25 understanding, with Tippins to reduce or eliminate SmileDirect's ability to 26 provide non-clinical services to California-licensed Treating Doctors in the 27 Relevant Market, as well as the Treating Doctors' ability to practice tele- 28 35 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:36 1 dentistry in the Relevant Market despite being licensed to practice 2 dentistry in California. This in turn reduces competition in the Relevant 3 Market. The Members possessed, and still possess, a conscious 4 commitment to a common scheme designed to achieve an unlawful 5 objective. 6 108. The Members can enforce their output-restricting agreement by 7 using the power and authority of their office to preclude entrance of 8 competing providers, products, and platforms into the Relevant Market, or 9 to restrict the method of competition in the Relevant Market. 10 109. The Members' and Tippins' actions and omissions evidence a 11 predatory intent to deprive dentists and orthodontists of a new, more 12 efficient method to compete in the Relevant Market. Through their actions, 13 the Members and Tippins intend to reduce in the Relevant Market (1) the 14 number of dental providers who prescribe certain clear aligner treatment 15 in California; (2) the number and type of clear aligners prescribed to 16 consumers; and (3) the output of such services. These actions and 17 omissions do not enhance public health and safety in California and do 18 not serve any legitimate public purpose. 19 110. By engaging in an ongoing pattern of harassing or intimidating 20 acts as part of their monopolistic design, the Members and Tippins have 21 wrongfully, unlawfully, and unfairly (1) restricted California consumers' 22 access to affordable orthodontic treatment to straighten their teeth 23 (through SmileDirect's tele-dentistry platform); (2) harmed consumers due 24 to restricted options for such treatment; (3) stifled competition in favor of 25 established special interests; (4) deprived SmileDirect of the full value of its 26 authorization to conduct business in California; (5) deprived SmileDirect's 27 Affiliated Dental Practices in California, including Dr. Sulitzer and Sulitzer 28 36 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:37 1 P.C., of the full value of their dental licenses in California and their 2 constitutionally protected liberty and property interests; and (6) failed to 3 protect the public in any manner. 4 111. The Members' and Tippins' actions and omissions constitute a 5 per se violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. On their 6 face, the actions and omissions restrict, and are intended to restrict, the 7 method of competing in the Relevant Market, thereby restricting the 8 number of competitors and causing prices in the Relevant Market to rise, 9 maintain, or stabilize above competitive levels. 10 112. Alternatively, these actions and omissions constitute a violation 11 of Section 1 of the Sherman Act, 15 U.S.C. § 1, under the Rule of Reason; 12 therefore, the Members and Tippins have violated the Federal Sherman 13 Antitrust Act, 15 U.S.C. § 1. 14 113. As a direct, proximate, and foreseeable result of Tippins' and 15 the Members' actions and omissions, their conduct (or lack thereof) has or 16 will substantially affect interstate commerce or occur within the flow of 17 interstate commerce. 18 114. As a direct, proximate, and foreseeable result of Tippins' and 19 the Members' actions and omissions, SmileDirect, Dr. Sulitzer, and 20 Sulitzer P.C. have or will suffer damages and injury. 21 115. SmileDirect, Dr. Sulitzer, and Sulitzer P.C. therefore seek 22 injunctive relief against the Members and Tippins in their official 23 capacities prohibiting the unlawful and anticompetitive behavior. 24 116. SmileDirect, Dr. Sulitzer, and Sulitzer P.C. also seek treble 25 damages and attorney's fees from the Members and Tippins in their 26 individual capacities. 27 /// 28 37 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:38 1 SECOND CAUSE OF ACTION 2 3 Violations of Dormant Commerce Clause 4 (U.S Const., art. I, sec. 8, cl. 3 and 28 U.S.C. § 1983) 5 (By All Plaintiffs Against All Defendants) 6 7 117. SmileDirect, Dr. Sulitzer, and Sulitzer P.C. incorporate by 8 reference each and every allegation of the preceding paragraphs as though 9 fully set forth herein. 10 118. This Count is brought pursuant to 42 U.S.C. § 1983 and the 11 Commerce Clause of the United States Constitution, Article I, Section 8, 12 Clause 3, which provides that "Congress shall have Power. . . [t]o regulate 13 Commerce with foreign Nations, and among the several States. . . ." 14 119. Pursuant to the Commerce Clause's dormant aspect, the Board 15 or its Members cannot take regulatory actions that benefit in-state 16 interests by burdening out-of-state competitors, as such regulatory 17 actions unreasonably or unduly interfere with interstate commerce. 18 120. The Board's and its Members' arbitrary and irrational attempts 19 through harassment, intimidation, and frivolous investigations to exercise 20 regulatory authority over activities in SMILESHOP stores and on 21 SmileBuses, and over SmileDirect's provision of non-clinical services to 22 Affiliated Dental Practices, disproportionately affect interstate operations 23 of SmileDirect, its Affiliated Dental Practices such as Sulitzer P.C., and its 24 California-licensed Treating Doctors. SmileDirect is an out-of-state 25 company that provides DSO Services including its tele-dentistry platform, 26 for offsite dentists or orthodontists to review information collected from the 27 consumers online and at SMILESHOP stores or onboard a SmileBus. In 28 38 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:39 1 practical operation and effect, the Board's and its Members' actions, 2 through Tippins' campaign against SmileDirect and its Affiliated Dental 3 Practices, discriminates against out-of-state businesses like SmileDirect 4 and protects domestic providers from lawful competition. This 5 discrimination against the interstate activities and operations of 6 SmileDirect, Sulitzer P.C., and Dr. Sulitzer violates their constitutional 7 rights. 8 121. There is no legitimate local purpose or public interest that 9 justifies substantially burdening SmileDirect, Sulitzer P.C., and Dr. 10 Sulitzer through harassment, intimidation, and frivolous investigations to 11 exercise where there is no regulatory authority over the activities in the 12 SMILESHOP stores, SmileBuses, or over SmileDirect's DSO Services, 13 including its tele-dentistry platform. 14 122. In the alternative, the Board's and its Members' attempts 15 through harassment, intimidation, and frivolous investigations to exercise 16 regulatory authority over activities in SMILESHOP stores and on 17 SmileBuses and SmileDirect's DSO Services discriminates against the 18 emerging technology and tele-dentistry platform offered by an out-of-state 19 company, SmileDirect, thus preventing it from pursuing its direct-to- 20 consumer model in California. Given that there are no benefits to the 21 public in the improper exercise of regulatory authority over activities in 22 SMILESHOP stores and on SmileBuses when such activity is inherently 23 safe, the burden imposed on commerce is clearly excessive in relation to 24 the putative local benefits. 25 123. These burdens substantially and adversely affect interstate 26 commerce because SmileDirect, Dr. Sulitzer, and Sulitzer P.C. provide 27 services in and through interstate commerce vis-à-vis SmileDirect's web- 28 39 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:40 1 based tele-dentistry platform, which remotely connects consumers with 2 state-licensed dentists or orthodontists for evaluation, diagnosis, and 3 possible prescription for clear aligner therapy treatment. They further 4 cause services to be provided in interstate commerce because a 5 prescription for clear aligner therapy treatment is sent to an FDA-approved 6 facility for fulfillment, where the clear aligners are created and then 7 shipped directly to patients. 8 124. In fact, since March 2017, when SmileDirect began conducting 9 business in California in conjunction with Affiliated Dental Practices (such 10 as Sulitzer P.C.) that are duly licensed to practice in California, tens of 11 thousands of California consumers have been able to receive doctor 12 directed, remote clear aligner therapy from the California-licensed Treating 13 Doctors who utilize the non-clinical services performed at SMILESHOP 14 retail locations, or through SmileBuses. 15 125. Upon information and belief, the Members who are licensed 16 California dentists also prescribe clear aligner therapy treatment using 17 products that are sold across state lines, are created in facilities outside 18 of California, and are then shipped into the State directly to consumers 19 and/or to their dentists or orthodontists. 20 126. By restraining competition for clear aligner therapy treatment 21 in California, the flow of interstate commerce is interrupted. The aligner 22 products offered by SmileDirect, Dr. Sulitzer, and Sulitzer P.C. are sent to 23 California consumers across state lines in the ordinary course of 24 commerce. Before the aligners are created and shipped, however, the 25 consumer must have photographs taken of his or her teeth and gums to 26 ensure a comfortable and accurately fitting product, and those 27 photographs and all other information gathered from the consumer online 28 40 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:41 1 and at the SMILESHOP location or SmileBus must also be evaluated by a 2 state-licensed Treating Doctor. The activities of the Board, its Members, 3 and Tippins, effectively bars the clear aligners prescribed by California- 4 licensed Treating Doctors using SmileDirect's tele-dentistry platform from 5 entering California—while still allowing other similar products to be sold 6 in the State. 7 127. Thus, the Board's, its Members', and Tippins' attempts through 8 harassment, intimidation, and frivolous investigations to exercise 9 regulatory authority over activities in SMILESHOP stores and on 10 SmileBuses and SmileDirect's DSO Services has the intended effect of 11 prohibiting the sale of clear aligners in California that are prescribed by 12 California-licensed Treating Doctors using SmileDirect's tele-dentistry 13 platform—including the clear aligners prescribed by Dr. Sulitzer through 14 Sulitzer P.C., which SmileDirect fulfills. This further results in reducing 15 the volume of interstate commerce occurring in California's markets, all to 16 the detriment of California consumers. As a result, the Board's, its 17 Members', and Tippins' attempts through harassment, intimidation, and 18 frivolous investigations to exercise regulatory authority over activities in 19 SMILESHOP stores and on SmileBuses and SmileDirect's DSO Services 20 are discriminatory both on their face and due to their effect or purpose on 21 interstate commerce. 22 128. Even if there were a legitimate local purpose or public interest 23 for Board's, its Members', and Tippins' attempts through harassment, 24 intimidation, and frivolous investigations to exercise regulatory authority 25 over activities in SMILESHOP stores and on SmileBuses and SmileDirect's 26 DSO Services, it would be adequately served by reasonable, 27 28 41 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:42 1 nondiscriminatory alternatives through the discussions that SmileDirect, 2 Sulitzer P.C., and Sultizer have offered to have with the Board. 3 129. Accordingly, this Court should grant declaratory and injunctive 4 relief restraining the Members' and Tippins' violation of the Commerce 5 Clause, and award SmileDirect, Dr. Sulitzer, and Sulitzer P.C. their 6 attorneys' fees and costs. 7 THIRD CAUSE OF ACTION 8 9 Violations of Equal Protection Clause 10 (U.S. Const., Am. XIV and 42 U.S.C. § 1983) 11 (By All Plaintiffs against All Defendants) 12 13 130. SmileDirect, Dr. Sulitzer, and Sulitzer P.C. incorporate by 14 reference each and every allegation of the preceding paragraphs as though 15 fully set forth herein. 16 131. This Count is brought pursuant to 42 U.S.C. § 1983 and the 17 Equal Protection Clause of the United States Constitution, Fourteenth 18 Amendment, which prohibits states from denying "equal protection of the 19 laws" to any person within its jurisdiction. 20 132. Pursuant to the Equal Protection Clause, the Board cannot take 21 regulatory actions that benefit in-state interests by burdening out-of-state 22 competitors, without a rational relationship to a legitimate governmental 23 interest. 24 133. Upon information and belief, the Members who are licensed 25 California dentists also prescribe clear aligner therapy treatment using 26 products that are sold across state lines, are created in facilities outside 27 28 42 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:43 1 of California, and are then shipped into the State directly to consumers 2 and/or to their dentists or orthodontists. 3 134. By restraining competition for clear aligner therapy treatment 4 in California, the Defendants discriminated against Smile Direct, Dr. 5 Sulitzer, and Sulitzer P.C., and the flow of interstate commerce is 6 interrupted. The aligner products offered by SmileDirect, Dr. Sulitzer, and 7 Sulitzer P.C. are sent to California consumers across state lines in the 8 ordinary course of commerce. Before the aligners are created and shipped, 9 however, the consumer must have photographs taken of his or her teeth 10 and gums to ensure a comfortable and accurately fitting product, and 11 those photographs and all other information gathered from the consumer 12 online and at the SMILESHOP location or SmileBus must also be evaluated 13 by a state-licensed Treating Doctor. The Board's, its Members', and 14 Tippins' attempts through harassment, intimidation, and frivolous 15 investigations to exercise regulatory authority over activities in 16 SMILESHOP stores and on SmileBuses, and over SmileDirect's provision 17 of DSO Services effectively bars the clear aligners prescribed by California- 18 licensed Treating Doctors using SmileDirect's tele-dentistry platform from 19 entering California, while still allowing other similar products to be sold in 20 the State. 21 135. As detailed above there is no rational basis or legitimate 22 governmental interest that justifies discriminating against the emerging 23 technology and tele-dentistry platform offered by an out-of-state company, 24 SmileDirect, and the Affiliated Dental Practices and California-licensed 25 Treating Doctors who utilize SmileDirect's non-clinical services, thus 26 preventing SmileDirect and its Affiliated Dental Practices from pursuing 27 their direct-to-consumer model in California. There are also no benefits to 28 43 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:44 1 the public in the improper exercise of regulatory authority over activities 2 in SMILESHOP stores and on SmileBuses when such activity is inherently 3 safe. 4 136. Thus, the Board's, its Members', and Tippins' attempts through 5 harassment, intimidation, and frivolous investigations to exercise 6 regulatory authority over activities in SMILESHOP stores and on 7 SmileBuses has the intended effect of prohibiting the sale of clear aligners 8 in California, which are prescribed by California-licensed Treating Doctors 9 using SmileDirect's tele-dentistry platform—to the detriment of California 10 consumers. 11 137. Thus, the Board's, its Members', and Tippins' attempts through 12 harassment, intimidation, and frivolous investigations to exercise 13 regulatory authority over activities in SMILESHOP stores and on 14 SmileBuses has the intended effect of harming SmileDirect, Dr. Sulitzer 15 and Sulitzer P.C. by prohibiting their sale of clear aligners in California to 16 the detriment of California consumers. 17 138. Even if there were a legitimate local purpose or public interest 18 for Board's, its Members', and Tippins' attempts through harassment, 19 intimidation, and frivolous investigations to exercise regulatory authority 20 over activities in SMILESHOP stores and on SmileBuses and SmileDirect's 21 DSO Services, it would be adequately served by reasonable, 22 nondiscriminatory alternatives through the discussions that SmileDirect, 23 Sulitzer P.C., and Sultizer have offered to have with the Board. 24 139. Accordingly, this Court should grant injunctive relief 25 restraining the Members' and Tippins' violation of the Equal Protection 26 Clause, and award SmileDirect, Dr. Sulitzer, and Sulitzer P.C. their 27 attorneys' fees and costs. 28 44 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:45 1 FOURTH CAUSE OF ACTION 2 3 Violations of Substantive Due Process 4 (U.S. Const., Am. XIV and 42 U.S.C. § 1983) 5 (By All Plaintiffs against All Defendants) 6 7 140. SmileDirect, Dr. Sulitzer, and Sulitzer P.C. incorporate by 8 reference each and every allegation of the preceding paragraphs as though 9 fully set forth herein. 10 141. This Count is brought pursuant to 42 U.S.C. § 1983 and the 11 Due Process Clause of the United States Constitution's Fourteenth 12 Amendment, which prohibits states from depriving any person of "life, 13 liberty, or property, without due process of law" to any person within its 14 jurisdiction. 15 142. Dr. Sulitzer and Sulitzer P.C. each possess liberty and property 16 interests to pursue Dr. Sulitzer's chosen profession and Sulitzer P.C.'s 17 business, as a licensed out-of-state dentist providing tele-dentistry 18 services to California residents across state lines, subject only to 19 regulations that are rationally related to a legitimate government interest. 20 143. SmileDirect possesses liberty and property interests in the 21 ability to conduct a business that provides non-clinical support services 22 to Affiliated Dental Practices 23 144. The Board, its Members, and Tippins cannot take regulatory, 24 administrative, enforcement, or other actions that benefit in-state 25 interests by burdening out-of-state competitors, without a rational 26 relationship to a legitimate governmental interest. 27 145. Upon information and belief, the Members who are licensed 28 California dentists also prescribe clear aligner therapy treatment using 45 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:46 1 products that are sold across state lines, are created in facilities outside 2 of California, and are then shipped into the State directly to consumers 3 and/or to their dentists or orthodontists. 4 146. By restraining competition for clear aligner therapy treatment 5 in California, the flow of interstate commerce is interrupted. The aligner 6 products offered by SmileDirect, Dr. Sulitzer, and Sulitzer P.C. are sent to 7 California consumers across state lines in the ordinary course of 8 commerce. Before the aligners are created and shipped, however, the 9 consumer must have photographs taken of his or her teeth and gums to 10 ensure a comfortable and accurately fitting product, and those 11 photographs and all other information gathered from the consumer online 12 and at the SMILESHOP location or SmileBus must also be evaluated by a 13 state-licensed Treating Doctor. The Board's, its Members', and Tippins' 14 attempts through harassment, intimidation, and frivolous investigations 15 to exercise regulatory authority over activities in SMILESHOP stores and 16 on SmileBuses, and over SmileDirect's provision of DSO Services 17 effectively bars the clear aligners prescribed by California-licensed 18 Treating Doctors using SmileDirect's tele-dentistry platform from entering 19 California, while still allowing other similar products to be sold in the 20 State. 21 147. As detailed above there is no rational basis or legitimate 22 governmental interest that justifies discriminating against the emerging 23 technology and tele-dentistry platform offered by an out-of-state company, 24 SmileDirect, and the Affiliated Dental Practices and California-licensed 25 Treating Doctors who utilize SmileDirect's non-clinical services, thus 26 preventing SmileDirect and its Affiliated Dental Practices from pursuing 27 their direct-to-consumer model in California. There are also no benefits to 28 46 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:47 1 the public in the improper exercise of regulatory authority over activities 2 in SMILESHOP stores and on SmileBuses when such activity is inherently 3 safe. 4 148. Tippins, the Board, and its Members also received adequate 5 notice of the discriminatory effect of their expansive view of what 6 constitutes the practice of dentistry in California. However, they refused 7 to give SmileDirect and its Affiliated Dental practices the opportunity to be 8 heard. 9 149. Thus, the Board's, its Members', and Tippins' attempts through 10 harassment, intimidation, and frivolous investigations to exercise 11 regulatory authority over activities in SMILESHOP stores and on 12 SmileBuses has the intended effect of prohibiting the sale of clear aligners 13 in California, which are prescribed by California-licensed Treating Doctors 14 using SmileDirect's tele-dentistry platform—to the detriment of California 15 consumers. 16 150. Thus, the Board's, its Members', and Tippins' attempts through 17 harassment, intimidation, and frivolous investigations to exercise 18 regulatory authority over activities in SMILESHOP stores and on 19 SmileBuses has the intended effect of harming SmileDirect, Dr. Sulitzer, 20 and Sulitzer P.C. by prohibiting their sale of clear aligners in California to 21 the detriment of California consumers. 22 151. Even if there were a legitimate local purpose or public interest 23 for such conduct, it would be adequately served by reasonable, 24 nondiscriminatory alternatives. 25 152. Accordingly, this Court should grant injunctive relief 26 restraining the Members' and Tippins' violations of the Due Process 27 28 47 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:48 1 Clause, and award SmileDirect, Dr. Sulitzer, and Sulitzer P.C. their 2 attorneys' fees and costs. 3 FIFTH CAUSE OF ACTION 4 5 Violations of California's Unfair Competition Law 6 (Cal. Bus. & Prof. Code § 17200, et seq.) 7 (By All Plaintiffs Against All Defendants) 8 153. SmileDirect, Dr. Sulitzer, and Sulitzer P.C. incorporate by 9 reference each and every allegation of the preceding paragraphs as though 10 fully set forth herein. 11 154. The Board's, its Members', and Tippins' conduct, including the 12 unauthorized entry into the SmileBus without authority or jurisdiction, 13 the belligerent and harassing conduct and statements made to the 14 SmileBus manager in the presence of consumers, the failure to correct the 15 consumer's misimpressions about Tippins' position, and the statements 16 made to the consumer regarding an active investigation, all constitute 17 unlawful, unfair, or fraudulent business acts or practices within the 18 meaning of California Business and Professions Code sections 17200, et. 19 seq. 20 155. The Board, its Members, and Tippins committed and continue 21 to commit acts of unfair competition by engaging in the conduct as alleged 22 herein, including the history of frivolous investigations of SmileDirect; 23 investigators posing as fake customers, harassing employees and 24 intimidating customers; Tippins' failure to abide by SmileDirect's counsel's 25 instructions regarding correspondence and investigations; and Tippins' 26 apparent vendetta against SmileDirect. 27 28 48 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:49 1 156. The Board and its Members committed and continue to commit 2 acts of unfair competition by engaging in the conduct as alleged herein, 3 including providing direction to Tippins to engage in the above conduct, or 4 approving, ratifying, or acquiescing in such conduct; and in failing to take 5 remedial, corrective, disciplinary, or other appropriate action due to 6 Tippins' conduct. 7 157. The Board, its Members, and Tippins committed and continue 8 to commit acts of unlawful competition by engaging in the conduct as 9 alleged herein, and doing so in violation of the Constitution and laws of 10 the United States, as alleged herein. 11 158. The Board's, its Members', and Tippins' conduct has caused 12 SmileDirect, Dr. Sulitzer, and Sulitzer P.C. irreparable harm and 13 harassment, and SmileDirect, Dr. Sulitzer, and Sulitzer P.C. (as well as 14 their employees) will continue to suffer irreparable injury unless Tippins 15 and the Members, and anyone acting at their direction or under their 16 control, are enjoined from continuing these unlawful, unfair, and 17 fraudulent acts or practices, in their official and individual capacities. 18 159. SmileDirect, Dr. Sulitzer, and Sulitzer P.C. have also suffered 19 loss of money and property as a result of this conduct by Tippins and the 20 Members in their individual capacities, in an amount to be determined at 21 trial, which exceeds the jurisdictional minimum of this Court. 22 PRAYER FOR RELIEF 23 WHEREFORE, Plaintiffs Jeffrey Sulitzer, D.M.D.; Jeffrey Sulitzer, 24 D.M.D., a Professional Corporation; and SmileDirectClub, LLC, and each 25 of them, pray for judgment against Defendants Joseph Tippins; Karen M. 26 Fischer; Fran Burton; Steven Morrow; Steven Chan; Yvette Chappell- 27 Ingram; Ross Lai; Lilian Larin; Huong Le; Meredith McKenzie; Abigail 28 49 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:50 1 Medina; Rosalinda Olague; Joanne Pacheco; Thomas Stewart; Bruce L. 2 Whitcher; and James Yu, and each of them, jointly and severally, as 3 follows: 4 I. For equitable relief as appropriate for each cause of 5 action herein, including but not limited to: 6 A. An injunction preliminarily and permanently 7 enjoining Tippins from: 8 1. Engaging in, committing, or performing, 9 directly or indirectly, any conduct 10 designed to harass, annoy, or embarrass 11 Dr. Sulitzer; Sulitzer P.C.; and 12 SmileDirect, or any of them, or their 13 employees and customers; 14 2. Being assigned to, or in any way 15 participating in, directly or indirectly, an 16 investigation by the Board or its 17 Enforcement Unit, that may now exist or 18 may ever exist in the future, that pertains 19 to Dr. Sulitzer; Sulitzer P.C.; and 20 SmileDirect, or any of them; 21 3. Making any statements, implications, 22 inferences, references, or the like to the 23 public, whether directly or indirectly, 24 regarding any current or prior 25 investigation, or any future investigation, 26 related to Dr. Sulitzer; Sulitzer P.C.; and 27 SmileDirect, or any of them. 28 50 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:51 1 B. An injunction preliminarily and permanently 2 enjoining the Members named as Defendants 3 herein, including all successors, and anyone 4 acting under their direction or control, from: 5 1. Engaging in, committing, or performing, 6 directly or indirectly, any conduct 7 designed to or actually does harass, 8 annoy, or embarrass Dr. Sulitzer; Sulitzer 9 P.C.; and SmileDirect, or any of them, or 10 their employees and customers; 11 2. Engaging in, committing, or performing, 12 directly or indirectly, any conduct 13 designed to or actually does restrict 14 competition from Dr. Sulitzer, Sulitizer 15 P.C., and SmileDirect, or any of them; 16 3. Engaging in, committing, or performing, 17 directly or indirectly, any conduct 18 intended to or that actually does violate 19 the Dormant Commerce Clause, Equal 20 Protection Clause, or Due Process Clause 21 of the United States Constitution, 22 including equivalent provisions in any 23 State's constitution, with respect to Dr. 24 Sulitzer; Sulitizer P.C.; and SmileDirect, or 25 any of them; and 26 4 Making any statements, implications, 27 inferences, references, or the like to the 28 51 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:52 1 public regarding any current or prior 2 investigation, or any future investigation, 3 related to Dr. Sulitzer; Sulitzer P.C.; and 4 SmileDirect, or any of them. 5 II. For actual, direct, incidental, and consequential 6 damages according to proof and in such amounts as 7 will be proven at trial, as appropriate for each cause 8 of action alleged herein. 9 III. For treble damages. 10 IV. For exemplary and punitive damages. 11 V. For statutory damages. 12 VI. For pre- and post-judgment interest on all damages 13 awarded, as permitted by law; 14 VII. For costs of suit. 15 VIII. For attorney's fees as permitted by contract or law, 16 including but not limited to 15 U.S.C. § 15, 42 U.S.C. 17 § 1988, and Cal. Code Civ. Proc. § 1021.5. 18 IX. For such other and further relief as the Court deems 19 just and proper. 20 DATE: OCTOBER 16, 2019 FOLEY & LARDNER LLP 21 BYRON J. McLAIN 22 NICHOLAS J. FOX 23 24 BY: /S/ BYRON J. MCLAIN A BYRON J. McLAIN 25 Attorneys for Plaintiffs Jeffrey 26 Sulitzer, D.M.D.; Jeffrey Sulitzer, D.M.D., a Professional Corporation; 27 and SmileDirectClub, LLC 28 52 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26 3 Page ID #:53 1 DEMAND FOR JURY TRIAL 2 Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiffs 3 Jeffrey Sulitzer, D.M.D.; Jeffrey Sulitzer, D.M.D., a Professional 4 Corporation; and SmileDirectClub, LLC, and each of them, hereby demand 5 a jury trial on any and all claims or issues in this action so triable as of 6 right. 7 8 DATE: OCTOBER 16, 2019 FOLEY & LARDNER LLP 9 BYRON J. McLAIN NICHOLAS J. FOX 10 11 BY: /S/ BYRON J. MCLAIN A 12 BYRON J. McLAIN 13 Attorneys for Plaintiffs Jeffrey 14 Sulitzer, D.M.D.; Jeffrey Sulitzer, D.M.D., a Professional Corporation; 15 and SmileDirectClub, LLC 16 17 18 19 20 21 22 23 24 25 26 27 28 53 FIRST AMENDED COMPLAINT CASE NO. 2:19-CV-08902 4851-9408-9894.26