Askew v. DCH Regional Health Care Authority

• Decision Date: 19 July 1993
• Docket Number: No. 92-6880,92-6880
• Parties: 1993-2 Trade Cases P 70,317 James D. ASKEW, Ginger Buck, Phillip Mahan, Plaintiffs-Appellees, v. DCH REGIONAL HEALTH CARE AUTHORITY, West Alabama General Hospital, Inc., Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1033

995 F.2d 1033

1993-2 Trade Cases P 70,317

James D. ASKEW, Ginger Buck, Phillip Mahan, Plaintiffs-Appellees, v. DCH REGIONAL HEALTH CARE AUTHORITY, West Alabama General Hospital, Inc., Defendants-Appellants.

No. 92-6880.

United States Court of Appeals Eleventh Circuit.

July 19, 1993.

Thad G. Long, Michael R. Pennington, John E. Goodman, Bradley Arant Rose & White, and Frank S. James, III, Lee H. Zell and Susan S. Wagner, Berkowitz Lefkovits Isom & Kishner, Birmingham, AL, for defendants-appellants.

Jeffery M. Cross, Barbara C. Baran, Julie L. Helenbrook, and Mary L. Smith, Ross & Hardies, Chicago, IL, Michael K.K. Choy, Cooper Mitch Crawford Kuykendall & Whatley, Birmingham, AL, for Askew, Buck, Mahan and the City of Northport, Ala.

Appeal from the United States District Court for the Northern District of Alabama.

Before KRAVITCH and HATCHETT, Circuit Judges, and ATKINS ^*, Senior District Judge.

KRAVITCH, Circuit Judge:

James Askew, Ginger Buck and Phillip Mahan (together, "the plaintiffs") brought this antitrust action against DCH Health Care Authority ("DCH") and West Alabama General Hospital, Inc. (now known as AMI West Alabama, Inc.) ("AMI") to prevent DCH from completing its acquisition of AMI. Plaintiffs alleged that through this purchase, DCH would capture "substantial market power in the market for inpatient services by acute care hospitals and become the dominant provider of such hospital services to the five county area comprising the northwest Alabama region." ¹ This case requires us to determine the scope of the state action immunity doctrine enunciated in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), and Town of Hallie v. City of Eau Claire, 471 U.S. 34, 105 S.Ct. 1713, 85 L.Ed.2d 24 (1985).

I.

In 1982 the Alabama state legislature enacted the Health Care Authorities Act of 1982, Ala.Code § 22-21-310 et seq. ("the Act"). The Act confers broad and explicit powers upon "health care authorities" to own, operate and manage health care facilities. In enacting the statute, the legislature aimed to address the needs of indigent and reduced-care patients by providing for new and different financing mechanisms for publicly-owned hospitals and other health care facilities. See Ala.Code § 22-21-312.

DCH was incorporated as a health care authority in 1982 pursuant to resolutions adopted by the governing bodies of Tuscaloosa County, the City of Tuscaloosa and the City of Northport. The Act defines "health care authority" as "[a] public corporation organized, and any public hospital corporation reincorporated, pursuant to the provisions hereof." Ala.Code § 22-21-311(a)(2). DCH's certificate of incorporation adopts all the power and authority provided by the Act. ² At issue here is DCH's authority to acquire health care facilities. See Ala.Code § 22-21-318(a)(5). ³

DCH owns and operates a public hospital in Tuscaloosa, Alabama known as Druid City Hospital; it provides inpatient acute care hospital services to the general public. Before the proposed transaction, AMI was a privately-owned hospital located in the City of Northport. AMI also provided, and continues to provide, inpatient acute care hospital services to the general public.

After filing their initial complaint, plaintiffs sought a Temporary Restraining Order ("TRO") to stop the sale of AMI to DCH. ⁴ The district court denied plaintiffs' motion, holding that plaintiffs had failed "to carry their burden of irreparable injury ... and to show a substantial likelihood of success on the merits of their claim that the activities complained of are not immune from the operation of the antitrust laws." ⁵ After the TRO was denied, DCH and AMI moved to dismiss the case with prejudice or for summary judgment, arguing that, as a matter of law, they were immune from antitrust liability for the alleged conduct. At this point, the district court stayed all discovery except as to the immunity issue. Before arguments were heard on DCH/AMI's motion for summary judgment, plaintiffs filed for leave to amend the complaint to add the City of Northport as a party plaintiff and to include allegations that DCH should not receive immunity because it was acting pursuant to "private interests." After arguments were heard on the motion to dismiss or for summary judgment, plaintiffs moved for an extension to conduct discovery on the immunity issue, having failed to conduct any discovery up to that point. The district court denied the extension. Then, without written order, the district court denied DCH/AMI's motion to dismiss or for summary judgment, simply by stamping the motion "DENIED." DCH/AMI sought, and received, an expedited appeal. ⁶

II.

Before reaching the merits of this appeal, we address whether this court properly has jurisdiction under 28 U.S.C. § 1291. ⁷ Under Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), district court orders constitute final decisions and are immediately reviewable if they (1) are effectively unreviewable on appeal after trial; (2) conclusively determine the disputed question; and (3) resolve an important issue completely separate from the merits. Id. at 546-47, 69 S.Ct. at 1225-26. In Mitchell v. Forsyth, 472 U.S. 511, 530, 105 S.Ct. 2806, 2817, 86 L.Ed.2d 411 (1985), the Supreme Court specifically applied the rule of Cohen, known as the collateral order doctrine, to a decision by the district court to deny summary judgment on the grounds of qualified immunity. ⁸ This court then extended the holding in Mitchell to a decision by the district court to deny state action immunity from antitrust liability, reasoning that because Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, "provide[s] 'immunity from suit rather than a mere defense to liability,' ... the district court's decision ... is effectively unreviewable on appeal from a final judgment." Commuter Transp. Systems, Inc. v. Hillsborough County, 801 F.2d 1286, 1289 (11th Cir.1986) (quoting Mitchell, 472 U.S. at 526, 105 S.Ct. at 2815) (emphasis in Mitchell ).

Plaintiffs contend that the district court did not issue a "final and reviewable" order by stamping "DENIED" on DCH/AMI's motion to dismiss or for summary judgment. This argument is foreclosed by Hardin v. Hayes, 957 F.2d 845, 848 (11th Cir.1992), where this court ruled that the district court's denial of summary judgment "without explanation" was sufficient to constitute a final and appealable order. Plaintiffs also argue that the district court "may have concluded that there are fact questions" precluding summary judgment on the issue of immunity. ⁹ Commuter Transportation, however, following Mitchell, held that the decision to deny summary judgment on an immunity issue, "even if it is based on the existence of potential fact issues[,] ... conclusively determines the defendant's claim of right not to stand trial on the plaintiff's allegations." 801 F.2d at 1289. In addition, the Commuter Transportation court recognized that questions relating to immunity are " 'conceptually distinct from the merits of the plaintiff's claim.' " Id. at 1290 (quoting Mitchell, 472 U.S. at 528, 105 S.Ct. at 2816). Therefore, we conclude that the district court's denial of DCH/AMI's motion to dismiss or for summary judgment is a final and appealable order under 28 U.S.C. § 1291 and Cohen.

III.

In Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, the Supreme Court held that the Sherman Act does not apply to the anticompetitive conduct of states acting as sovereigns. "Rather it ruled that the Sherman Act was intended to prohibit private restraints on trade, and it refused to infer an intent to 'nullify a state's control over its officers and agents' in activities directed by the legislature." Town of Hallie, 471 U.S. at 38, 105 S.Ct. at 1716 (quoting Parker, 317 U.S. at 351, 63 S.Ct. at 313) (emphasis in original). "Although 'cities are not themselves sovereign,' states may sanction cities' anticompetitive conduct, enshrouding the cities within the protective cloak of Parker immunity." McCallum v. City of Athens, 976 F.2d 649, 652 (11th Cir.1992) (quoting Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 412-13, 98 S.Ct. 1123, 1136-37, 55 L.Ed.2d 364 (1978)).

A.

Ordinarily, when a local governmental entity seeks immunity from antitrust liability, it must show that it is a political subdivision of the state and that the challenged conduct is authorized under a "clearly articulated and affirmatively expressed" policy of the state. Town of Hallie, 471 U.S. at 41-47, 105 S.Ct. at 1717-20. Plaintiffs argue, however, that because DCH is not a city, town or village, the question of its immunity from antitrust liability should be analyzed under the two-prong test used to assess immunity for private parties acting pursuant to state regulation. This inquiry, developed in California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980), requires regulated private parties seeking antitrust immunity to show that (1) there is a "clearly articulated and affirmatively expressed" policy authorizing the challenged conduct; and (2) there is active state supervision of the private parties as part of the regulatory scheme. Id. at 105-06, 100 S.Ct. at 943.

Town of Hallie, as well as the case upon which it relied, Lafayette, 435 U.S. 389, 98 S.Ct. 1123, involved challenges to alleged anticompetitive conduct by municipalities. In holding "that the active state supervision requirement should not be imposed in cases in which the actor is a municipality," the Town of Hallie Court reasoned that "[w]here the actor is a municipality, there is little or no danger that it is involved in a private price-fixing arrangement." 471 U.S. at 46-47, 105 S.Ct. at 1720 (emphasis in original). Thus, as long as the municipality can prove that it is acting pursuant to state policy, "there is no need to require the State to supervise actively the municipality's...