American Council of Certified Pod. v. American Bd.

• Decision Date: 11 March 2003
• Docket Number: No. 01-1578.,01-1578.
• Citation: 323 F.3d 366
• Parties: AMERICAN COUNCIL OF CERTIFIED PODIATRIC PHYSICIANS AND SURGEONS, Plaintiff-Appellant, v. AMERICAN BOARD OF PODIATRIC SURGERY, INC., Defendant-Appellee, American Podiatric Medical Association, Defendant.
• Court: U.S. Court of Appeals — Sixth Circuit

323 F.3d 366

AMERICAN COUNCIL OF CERTIFIED PODIATRIC PHYSICIANS AND SURGEONS, Plaintiff-Appellant, v. AMERICAN BOARD OF PODIATRIC SURGERY, INC., Defendant-Appellee, American Podiatric Medical Association, Defendant.

No. 01-1578.

United States Court of Appeals, Sixth Circuit.

Argued: December 10, 2002.

Decided and Filed: March 11, 2003.

COPYRIGHT MATERIAL OMITTED

H. Laddie Montague, Jr. (argued and briefed), Berger & Montague, Philadelphia, PA, Alan M. Sandals (briefed), Sandals & Langer, Philadelphia, PA, for Plaintiff-Appellant.

Philip J. Kessler (argued and briefed), Laurie J. Michelson (briefed), Butzel Long, Detroit, MI, Gordon J. Walker (briefed), Butzel Long, Bloomfield Hills, MI, for Defendant-Appellee.

Before NORRIS and GILMAN, Circuit Judges; McKEAGUE, District Judge.^*

OPINION

ALAN E. NORRIS, Circuit Judge.

The plaintiff and defendant in this antitrust and tortious interference action are both professional associations of podiatrists that provide certification services. The American Council of Certified Podiatric Physicians and Surgeons ("ACCPPS"), the plaintiff, was formed by dissatisfied podiatrists as an alternative to the American Board of Podiatric Surgery ("ABPS"), the defendant, and began certification of podiatrists in competition with the ABPS in 1987. In a previous appeal, this court affirmed in part and reversed in part the district court's grant of summary judgment in favor of ABPS. Am. Council of Certified Podiatric Physicians & Surgeons v. Am. Bd. of Podiatric Surgery, Inc., 185 F.3d 606 (6th Cir.1999). The case is before this court again after the district court on remand granted summary judgment on all remaining claims. The remaining issue on remand involved whether the ABPS, by sending out mass mailings extolling its virtues and criticizing its rivals, violated section 2 of the Sherman Anti-Trust Act ("Sherman Act"), corresponding sections of the Michigan Antitrust Reform Act, and Michigan common law.

I.

This action has a lengthy history. In 1993, plaintiff filed suit against defendant and the American Podiatric Medical Association, an organization closely related to defendant. The factual basis of the complaint relied primarily on three mass mailings sent out by defendant over several years to between 7,000 and 8,000 hospitals and insurance companies. Plaintiff claimed that these mailings were false and misleading in violation of the Lanham Act, 15 U.S.C. § 1125. In addition, plaintiff alleged that the mailings were part of a conspiracy to preserve and extend the monopoly power of defendant in violation of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1-2, corresponding sections of the Michigan Antitrust Reform Act, M.C.L. § 445.772-3, and the common law prohibition on intentional interference with prospective business advantage.¹

The relationships and history of the two parties and the main conduct at issue were discussed in the prior opinion by this court. Certified Podiatric Physicians, 185 F.3d at 611-12. In that appeal, this court upheld a grant of judgment as a matter of law on the Lanham Act claims and upheld summary judgment on Sherman Act section 1 claims, but reversed summary judgment on Sherman Act section 2 and Michigan common law claims. Section 1 claims were dismissed because plaintiff could not allege a conspiracy as a matter of law.² Id. at 621-22. With regard to the Lanham Act claims, this court held as follows:

[T]he intended audience [of the statements at issue] is comprised of hospital administrators, insurance companies, and managed care organizations, a sophisticated group of professionals who presumably have familiarity with the issues involved in board certification. Because we conclude that this intended audience would find all of the challenged statements to be, at worst, either ambiguous or true but misleading, the district court correctly reasoned that plaintiff had to present evidence of actual deception in order to survive the ABPS's renewed motion for judgment as a matter of law and collect damages [under the Lanham Act].

Id. at 616. This court then affirmed the district court's conclusion that evidence of actual deception was lacking.

While we held that there were no viable Lanham Act and section 1 claims, we also held that plaintiff had presented enough evidence of the existence of monopoly power to warrant a trial on that prong of a section 2 monopolization claim.³ However, we specifically declined to reach the issue of whether the challenged statements could, as a matter of law, establish that defendant used illegal means to maintain or acquire its monopoly power. Id. at 623. Reasoning that a section 2 violation could constitute the "illegal or unethical conduct" required to make out a tortious interference claim under Michigan law, we remanded that claim as well. Id. at 624.

On remand, the district court granted summary judgment to defendant with respect to the Sherman Act section 2 claims, holding that the challenged statements could not constitute a section 2 violation, but declined to dismiss the tortious interference claims. Arguing that its statements were protected commercial speech under the First Amendment, defendant moved for reconsideration, and the district court granted summary judgment. The district court reasoned that the First Amendment affords protection to commercial speech that does not concern unlawful activity and is not inherently misleading.

II.

We review a grant of summary judgment de novo. See Pinney Dock &amp Transp. Co. v. Penn Cent. Corp., 838 F.2d 1445, 1472 (6th Cir.1988). A court may grant summary judgment only if there is no genuine issue of material fact. Fed.R.Civ.P. 56(c); see, e.g., Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In addition, the evidence must be viewed in the light most favorable to the non-moving party. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).

Section 2 of the Sherman Act makes it unlawful to "monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States...." 15 U.S.C. § 2. A section 2 monopolization claim has two components: "(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident." Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 481, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992) (quoting United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966)). To survive summary judgment on the second element, a plaintiff must allege facts sufficient for a jury to find that the defendant acquired, maintained, or attempted to acquire a monopoly through actions harmful to competition. We now address that issue.

A. The Mailings

An antitrust claim premised primarily on advertising or speech must overcome a presumption that such advertising or speech had a de minimis effect on competition.⁴ In so holding, we join the two other circuits that have adopted this de minimis presumption. In National Association of Pharmaceutical Manufacturers v. Ayerst Laboratories, 850 F.2d 904 (2d Cir.1988), the second circuit held that a "plaintiff asserting a monopolization claim based on misleading advertising `must overcome a presumption that the effect on competition of such a practice was de minimis.'" Id. at 916 (quoting Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 288 n. 41 (2d Cir.1979)). In Berkey Photo, the second circuit held as follows with regard to advertising:

[I]n its advertising, a producer is ordinarily permitted, much like an advocate at law, to bathe his cause in the best light possible. Advertising that emphasizes a product's strengths and minimizes its weaknesses does not, at least unless it amounts to deception, constitute anticompetitive conduct violative of § 2.

Id. at 287-288 (footnotes omitted).⁵

The ninth circuit, in American Professional Testing Service, Inc. v. Harcourt Brace Jovanovich Legal & Professional Publications, Inc., 108 F.3d 1147 (9th Cir.1997), also adopted a de minimus presumption and laid out a six-part test that a plaintiff must satisfy to rebut the presumption: the statements at issue must be (1) clearly false; (2) clearly material; (3) clearly likely to induce unreasonable reliance; (4) made to unsophisticated parties; (5) continued for long periods; and (6) not readily cured by rivals.⁶ American Professional Testing, 108 F.3d at 1152. See also In re Indep. Serv. Org. Antitrust Litig., 114 F.Supp.2d 1070, 1095 (D.Kan. 2000) (citing American Professional Testing and Ayerst Labs. in support of the de minimis presumption for "disparaging comments"). The ninth circuit also made clear that all of these factors must be met for the case to survive summary judgment. Id. The district court relied heavily on the test in American Professional Testing when it granted summary judgment.

We believe that all of the factors listed in American Professional Testing are relevant, but, given the facts before us on summary judgment, we decline to consider each element or hold that all elements must be satisfied to rebut the de minimis presumption. We do hold, however that a plaintiff must show a genuine issue of material fact regarding at least the following two elements to rebut the de minimus presumption: (1) the advertising was clearly false, and (2) it would be difficult or costly for the plaintiff to counter the false advertising.

False advertising cannot help consumers, and hence cannot be defended as beneficial to competition.⁷ Evidence on the second element is required because even false advertising would not damage competition and hence be a violation of the Sherman Act unless it was so difficult for the plaintiff...