Marrese v. American Academy of Orthopaedic Surgeons

Decision Date25 January 1983
Docket NumberNo. 81-2671,81-2671
Citation692 F.2d 1083
Parties1982-83 Trade Cases 65,020, 1982-83 Trade Cases 65,214 R. Anthony MARRESE, M.D. and Michael R. Treister, M.D., Plaintiffs-Appellees, v. AMERICAN ACADEMY OF ORTHOPAEDIC SURGEONS, Defendant-Appellant.
CourtU.S. Court of Appeals — Seventh Circuit

D. Kendall Griffith, argued, Thomas M. Crisham, Robert E. Nord, Pamela S. Hollis, on the brief, Hinshaw, Culbertson, Moelmann, Hoban & Fuller, Chicago, Ill., for defendant-appellant.

Michael T. Sawyier, Foss, Schuman & Drake, John J. Casey, Chicago, Ill., for plaintiffs-appellees.

Before PELL, Circuit Judge, STEWART, Justice (Retired), and POSNER, * Circuit Judge.

POSNER, Circuit Judge.

This appeal from a judgment of criminal contempt brings up to us issues of res judicata, pretrial discovery under Rules 26(c) and (d) of the Federal Rules of Civil Procedure, and the application of the Sherman Act's 'Rule of Reason' to denial of membership in a professional association.

The defendant-appellant in this case is the American Academy of Orthopaedic Surgeons, a private association to which most orthopaedic surgeons in the United States belong. The plaintiffs are two orthopaedic surgeons who practice in Evansville, Indiana, and Chicago, respectively, and were denied membership in the Academy without a hearing or a statement of reasons. Membership is alleged to confer certain professional advantages, but it is not a prerequisite either to being certified to practice as an orthopaedic surgeon or to obtaining hospital staff privileges. Each of the plaintiffs is certified to practice orthopaedic surgery and has staff privileges at several hospitals.

After being refused membership the plaintiffs brought suit against the Academy in an Illinois state court. They claimed a right under Illinois law to a hearing on their application and to reasonable standards for membership. The Illinois Appellate Court held that the complaint failed to state a claim because membership in the Academy is not an 'economic necessity.' Treister v. American Academy of Orthopaedic Surgeons, 78 Ill.App.3d 746, 755-56, 33 Ill.Dec. 501, 508, 396 N.E.2d 1225, 1232 (1979). Having lost in state court the plaintiffs then sued the Academy in federal district court for injunctive relief and damages under section 1 of the Sherman Act, 15 U.S.C. Sec. 1, charging an illegal boycott. The complaint alleged that the Academy is 'a monopoly in its field, possessed of substantial power to control the market for orthopaedic surgical services,' and that the plaintiffs, though fully qualified for membership under the announced criteria of the Academy, were excluded for 'extraneous' reasons, which in the case of Dr. Treister (no particulars were given for Dr. Marrese) included '(a) his supposed willingness to offer expert testimony against other orthopaedic surgeons in medical malpractice cases; (b) his known willingness to consult surgical out-patients on a relatively high-volume basis; and (c) his nonconformity of personality and personal attitudes with those of most established orthopaedic surgeons and in particular those who were already members of the academy.' The complaint alleged that the Academy had refused to explain its actions and that the effect of those actions was 'to limit competition and enforce conformity with current business practices' and to injure the plaintiffs in the practice of their profession.

The Academy moved to dismiss the complaint on two grounds: the judgment dismissing the plaintiffs' state court action was res judicata in the federal proceeding; the complaint failed to state a claim under the Sherman Act. The motion was denied, 496 F.Supp. 236 (N.D.Ill.1980), and discovery began. The plaintiffs asked the Academy to produce all of its correspondence and other documents relating both to the denial of the plaintiffs' application for membership and to all other denials of membership applications between 1970 and 1980. The Academy refused. It persisted in its refusal even after the district court issued a protective order limiting access to the discovered materials to the plaintiffs and their counsel, and even after the court ordered the Academy to produce the requested documents. The court held the Academy in criminal contempt of its order and fined it $10,000. The Academy appeals from that judgment.

The Academy asks us to hold that the discovery order was an abuse of the district court's discretion under Rule 26(c) of the Federal Rules of Civil Procedure. The plaintiffs point out that it is not a final order and argue that we cannot review it because the district court has not certified it for an immediate appeal under 28 U.S.C. Sec. 1292(b). But the contempt judgment is a final order, reviewable by us; and a party who is willing to pay the price of being punished for contempt (or suffering an equivalent sanction such as dismissal of the complaint) if the validity of the order he has disobeyed is ultimately upheld may by that means get immediate review of the order. Many cases hold this. See, e.g., United States v. Ryan, 402 U.S. 530, 532-33, 91 S.Ct. 1580, 1581-82, 29 L.Ed.2d 85 (1971); Ryan v. Commissioner of Internal Revenue, 517 F.2d 13, 19-20 (7th Cir.1975); Hanley v. McHugh Constr. Co., 419 F.2d 955, 957 (7th Cir.1969); National Util. Serv., Inc. v. Northwestern Steel & Wire Serv., Inc., 426 F.2d 222 (7th Cir.1970); Hastings v. North East Independent School Dist., 615 F.2d 628, 631 (5th Cir.1980). But these cases coexist uneasily with another line of cases which holds that where as in this case the judgment is for criminal rather than civil contempt, the validity of the underlying order may not be questioned on appeal from the contempt judgment. See, e.g., United States v. United Mine Workers of America, 330 U.S. 258, 291-94, 67 S.Ct. 677, 694-96, 91 L.Ed. 884 (1947); ITT Community Development Corp. v. Barton, 569 F.2d 1351, 1356 (5th Cir.1978). Yet our decision in Hanley, for example, involved criminal contempt.

The two lines of cases can be reconciled, see Hanley, supra, 419 F.2d at 957; United States v. Ryan, supra, 402 U.S. at 532 n. 4, 91 S.Ct. at 1582 n. 4; 13 Wright, Miller & Cooper, Federal Practice and Procedure Sec. 3537, at pp. 340-41 (1975), by noting that in cases where the validity of the underlying order has been held not to be reviewable on appeal from the judgment of contempt, the order could have been appealed directly, while discovery orders cannot be, other than through discretionary or extraordinary procedures, such as section 1292(b) appeals and mandamus proceedings. The right to have a discovery order reviewed on appeal from a contempt judgment for disobeying it is thus one of the safety valves in the final-judgment rule, 28 U.S.C. Sec. 1291. A discovery order may impose heavy and irrecoverable costs on a party; yet to make discovery orders appealable as of right would lead to intolerable delays in federal litigation. Confining the right to appellate review of discovery orders to cases where the party against whom the order was directed cared enough to incur a sanction for contempt is a crude but serviceable method of identifying really burdensome discovery orders, and waiving the finality rule only for them. The validity of the discovery order that the Academy disobeyed is therefore properly before us.

Rule 26(c) of the Federal Rules of Civil Procedure empowers the district court to 'make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including . . . that discovery not be had . . ..' The effective management of complex litigation requires that the district judge be allowed a broad discretion in guiding the discovery process, and therefore in exercising his powers under Rule 26(c). Chrysler Corp. v. Fedders Corp., 643 F.2d 1229, 1240 (6th Cir.1981). But his discretion is not unlimited and if he abuses it he commits reversible error. Silkwood v. Kerr-McGee Corp., 563 F.2d 433, 436 (10th Cir.1977).

In ruling on a motion under Rule 26(c) to limit discovery, the district court must compare the hardship to the party against whom discovery is sought, if discovery is allowed, with the hardship to the party seeking discovery if discovery is denied. Not only the magnitude of the hardship, but its nature, must be considered. Purely private interests should be given less weight than interests that are considered to have a special social value.

The Academy argues that the First Amendment immunizes from discovery its correspondence and other documents relating to denials of applications for membership. This is a way of saying that the interests it is asserting have a more than purely private value. But the Academy goes too far, as this court's recent decision in Memorial Hospital for McHenry Cty. v. Shadur, 664 F.2d 1058, 1063 (7th Cir.1981) (per curiam), which rejected a claim of privilege for a hospital's records of disciplinary proceedings against staff physicians, makes clear. Even if the Academy were engaged in advocating controversial views, and the publication of its internal files would expose members to retaliation for those views, it would not have an absolute privilege against discovery, though the plaintiffs would then have a heavy burden of showing that the information sought was vital to their case and unobtainable by means less likely to discourage such advocacy. See Hastings v. North East Independent School Dist., supra, 615 F.2d at 632; In re Petroleum Prods. Antitrust Litigation, 680 F.2d 5, 7 (2d Cir.1982).

Yet we cannot say that there is not lurking in this case if not a First Amendment right at least a First Amendment interest, which the discovery sought by the plaintiffs would impair and which differentiates this case from the usual antitrust case where discovery is sought of invoices or salesmen's reports or the...

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8 cases
  • Marrese v. American Academy of Orthopaedic Surgeons, s. 81-2671
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • January 10, 1984
    ...No. 81-2671 is the Academy's appeal from the contempt judgment. A panel of this court reversed the judgment more than a year ago, 692 F.2d 1083 (1982), but rehearing en banc was granted and the panel decision was vacated (the practice in this circuit when rehearing en banc is ordered, see C......
  • Marrese v. American Academy of Orthopaedic Surgeons
    • United States
    • United States Supreme Court
    • March 4, 1985
    ...files and also suggesting that the federal action was barred by claim preclusion and that the antitrust claims were groundless. 692 F.2d 1083 (CA 7 1982). This opinion was vacated by an en banc vote, and the original panel issued a narrower opinion that did not discuss claim pre- clusion. 7......
  • Marrese v. American Academy of Orthopaedic Surgeons, 81-2671
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • July 19, 1983
    ...for criminal contempt for disobeying a discovery order. The appeal was originally decided by this panel in an opinion published at 692 F.2d 1083 (7th Cir.1982), with Justice Stewart dissenting, id. at 1096. Rehearing en banc was granted, but shortly before argument was scheduled to be heard......
  • Koefoot v. American College of Surgeons, 81 C 4333.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • May 28, 1985
    ...necessity of having adequate surgical services. Citing the various opinions of the Seventh Circuit in Marrese v. American Academy of Orthopaedic Surgeons, 692 F.2d 1083 (7th Cir.1982), vacated, 706 F.2d 1488 (7th Cir.1983), vacated on other grounds, 726 F.2d 1150 (7th Cir.1984), reversed, _......
  • Request a trial to view additional results

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