Kreuzer v. American Academy of Periodontology, 83-1394

• Decision Date: 26 June 1984
• Docket Number: No. 83-1394,83-1394
• Citation: 735 F.2d 1479
• Parties: , 1984-1 Trade Cases 66,029 Donald W. KREUZER, D.M.D., Appellant, v. AMERICAN ACADEMY OF PERIODONTOLOGY, et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1479

735 F.2d 1479

237 U.S.App.D.C. 43, 1984-1 Trade Cases 66,029

Donald W. KREUZER, D.M.D., Appellant, v. AMERICAN ACADEMY OF PERIODONTOLOGY, et al.

No. 83-1394.

United States Court of Appeals, District of Columbia Circuit.

Argued Jan. 10, 1984.

Decided June 1, 1984.

As Amended June 26, 1984.

Appeal from the United States District Court for the District of columbia.

John F. Dienelt, Washington, D.C., with whom Arthur I. Cantor and Warren Josephson, Washington, D.C., were on the brief for appellant.

Peter M. Sfikas, Chicago, Ill., with whom Robert L. Green, Washington, D.C., was on the brief for appellees, American Dental Ass'n James W. Hathaway, Chicago, Ill., a member of the Bar of the Supreme Court of Ill. pro hac vice, by special leave of the court with whom Mark W. Foster, Washington, D.C., was on the brief for appellees, American Academy of Periodontology.

Barry Grossman and Stephen F. Ross, Dept. of Justice, Washington, D.C., were on the brief of amicus curiae urging reversal.

Before TAMM and GINSBURG ^*, Circuit Judges, and MacKINNON, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge MacKINNON.

MacKINNON, Senior Circuit Judge:

This private antitrust action challenges the legality of one of the American Academy of Periodontology's ("AAP" and "Periodontists") requirements for active membership, specifically the "limited practice requirement". The plaintiff-appellant is Donald W. Kreuzer, D.M.D., a periodontist who practices in the District of Columbia. The defendant-appellees are the AAP and the American Dental Association ("ADA"). Dr. Kreuzer contends that the limited practice requirement is an unreasonable restraint of trade in violation of Section 1 of the Sherman Antitrust Act. ¹

On motions of the Periodontists and the ADA, the District Court held that Dr. Kreuzer had failed to establish that a conspiracy existed between the Periodontists and the ADA to restrain trade and granted summary judgment in favor of the ADA. ² In addition, the District Court held that the limited practice requirement, tested under the rule of reason, was a reasonable restraint of trade because "there is no evidence of anticompetitive intent" and granted summary judgment in favor of the Periodontists. ³

Dr. Kreuzer has appealed presenting four issues for resolution by this court: (1) whether the District Court applied the correct standard in assessing the complicity of the ADA; (2) whether the District Court should have held the limited practice requirement illegal per se; (3) whether the District Court correctly applied the rule of reason analysis; (4) whether summary judgment was appropriate given the record. We affirm in part, reverse in part, and remand.

I. BACKGROUND

The dental profession is composed of general dentistry and eight dental specialties. ⁴ Periodontics is that recognized dental specialty concerned with the treatment of diseases of the tissues surrounding the teeth. To practice periodontics or any dental specialty, one need only be a graduate of an approved dental school and licensed as a dentist. ⁵ A licensed dentist may perform any dental process. Thus, many general dentists become proficient in one or more dental specialties by virtue of continuing education or practical experience. Brief of AAP 6.

Dr. Kreuzer is a licensed dentist. In addition, he holds a certificate in periodontology from the graduate program at the University of Pennsylvania, an ADA accredited dental school. Dr. Kreuzer also obtained special training at the University of Pennsylvania in periodontal prosthesis. ⁶ Periodontal prosthesis involves the restoration and prosthetic treatment of advanced periodontal disease. Periodontal prosthesis developed as a subfield of periodontology concerned with saving teeth that might otherwise be extracted due to advanced periodontal disease. Periodontal prosthesis is not recognized by the ADA as a dental specialty. Holmquist Deposition Exhibit ("Dep.Ex.") 2, Record Excerpts ("R.E.") 203.

The ADA is the most prominent national organization for dentists. Among the many activities of the ADA are promulgation of its Principles of Ethics, definition of dental specialists, accreditation of dental schools and graduate programs and recognition of specialty organizations such as the AAP. Swanson Dep.Ex. 2, R.E. 261-62; 3-4, 6-7, 9, R.E. 265-66. Because of its role in defining and recognizing dental specialties, the ADA also serves as a mediator and arbiter of the scope of dental specialties. Coady Dep.Ex. 4, R.E. 126-131.

The AAP is a non-profit corporation organized "to advance the art and science of periodontology, and by its application, maintain and improve the health of the public." Holmquist Affidavit ("Aff.") 2, R.E. 32. The AAP's principal functions are publication of the Journal of Periodontology and various consumer education materials, conduct of an annual scientific session, issuance of scholarships and grants, formation of standards for advancing training and formulation of procedures to facilitate reimbursement of practitioners by third-party payment plans. Holmquist Aff. 2 at p 5, R.E. 32. In addition, the Periodontist's association publishes an annual directory of its members.

The AAP has eight membership classifications. The "highest" degree of membership is active membership. 558 F.Supp. at 683. To qualify for active membership, an applicant must meet several criteria including being "[e]thically qualified as a specialist in periodontics according to the requirements of the American Dental Association." Bylaws of the AAP, Ch. I, Sec. 2(a)(i), R.E. 195. To meet this criterion, a dentist must be educationally qualified in the specialty of periodontics according to the ADA, and must "limit [...] his practice exclusively to the special areas approved by the American Dental Association" ("the limited practice requirement"). ADA Principles of Ethics, Sec. 18, R.E. 155 (emphasis added). The ADA's Council on Judicial Procedures, Constitution and Bylaws, whose responsibility it is to interpret that body's Principles of Ethics, has ruled that the practice of periodontal prosthesis is not within the definition of periodontics. Holmquist Dep.Ex. 2, R.E. 203. Therefore, a dentist who in part practices periodontal prothesis does not limit his practice to periodontics as required by the AAP and is ineligible for active membership in the AAP. ⁷

All members of the AAP are entitled to certain benefits. Active members, however, receive additional benefits. The economic value of these additional benefits has been a contested issue in this case.

An active member is entitled to the additional benefits of the right to vote, hold office, and serve on standing committees in the AAP. R.E. 313. These rights make possible opportunities for professional development which are likely to enhance a professional reputation and lead to a higher earning capacity. Cohen Dep. 136. In addition, active members are listed in the AAP membership directory as specialists. AAP members are listed in the directory alphabetically and by geographic region. Alongside each name appears a numerical code and a letter or letters. The numerical code denotes the membership category. Active members are designated by the code "00", while associate members are designated by the code "10". Plaintiff's Brief, Exhibit C (Excerpt from 1979 Directory of the Members of the AAP) 1, R.E. 317. The ADA takes no part in the publication of the directory.

The membership directory is used frequently to make referrals and generally persons who do not have a "00" code are automatically excluded from consideration. Mendelsohn Dep. 9-13; Cohen Dep. 133-34. This inability of dentists who in part practice periodontics to become active members and to obtain referrals allegedly has a particularly adverse impact on Dr. Kreuzer. The District Court noted that because of "the unusually transient nature of the Washington metropolitan population, referral business is of particular importance to those who practice here as does plaintiff." 558 F.Supp. at 685.

Dr. Kreuzer applied for active membership in the AAP in 1975. ⁸ A standing Membership Committee of the AAP screens membership applications and presents its recommendations to the annual General Assembly. The Membership Committee circulates a "confidential list" to all active members of the AAP in order to solicit any comments on the applicants. Bylaws of the AAP, Ch. I, Sec. 4, R.E. 196-97. See generally Formicola Dep. 16-31. Two active members who practice in the District of Columbia challenged Dr. Kreuzer's application on the grounds that he did not limit his practice to periodontics. Holen Dep. 40-41, Brief for Kreuzer, at 17; First Kreuzer Aff. p 7, R.E. 36-37. After receipt of these complaints and further inquiry, the Membership Committee determined that Dr. Kreuzer did not limit his practice and therefore his name was not recommended to the 1975 General Assembly for active membership. ⁹

Dr. Kreuzer objected to this decision and was granted a special hearing before the Membership Committee prior to the 1976 General Assembly meeting. Kreuzer Dep.Ex. 22-23, 26, R.E. 255-59. The Membership Committee decided after the hearing to recommend Dr. Kreuzer to the General Assembly for active membership. Formicola Dep. 90-91, 104-111; Holmquist Dep. Ex. 30, R.E. 239. The 1976 General Assembly, however, voted to refer the issue of those periodontists who also practice periodontal prosthesis to a special task force. Largely because the General Assembly had made this determination to defer further consideration of the role of those practicing periodontal prosthesis, it voted to deny Dr. Kreuzer active membership. Formicola Dep.Ex. 30, 120-121, R.E. 192-93.

Dr. Kreuzer requested his application remain pending. Before the special task force could present its recommendations on periodontal prosthesis to the 1977 General Assembly this suit was initiated. ¹⁰ No further action has...