Assoc. of WA. Pub. Hosp. Dist. v. Philip Morris Corp.
| Decision Date | 22 February 2001 |
| Docket Number | A-,D,No. 1 and S,No. 304,No. 00-35117,1 and S,304,00-35117 |
| Citation | 241 F.3d 696 |
| Parties | (9th Cir. 2001) ASSOCIATION OF WASHINGTON PUBLIC HOSPITAL DISTRICTS, a Washington unincorporated association; ADAMS COUNTY PUBLIC HOSPITAL DISTRICT NO. 2; ADAMS COUNTY PUBLIC HOSPITAL DISTRICT NO. 3; AFFILIATED HEALTH SERVICES, a general partnership of Skagit County Public Hospital Districtkagit & Whatcom Counties Public Hospital District; CHELAN COUNTY PUBLIC HOSPITAL DISTRICT NO. 2; CLALLAM COUNTY PUBLIC HOSPITAL DISTRICT NO. 1; CLALLAM COUNTY PUBLIC HOSPITAL DISTRICT NO. 2; DOUGLAS, GRANT, LINCOLN, OKANOGAN COUNTIES PUBLIC HOSPITAL DISTRICT NO. 6; FERRY COUNTY PUBLIC HOSPITAL DISTRICT NO. 1, GARFIELD COUNTY PUBLIC HOSPITAL DISTRICT; GRANT COUNTY PUBLIC HOSPITAL DISTRICT NO. 1; GRANT COUNTY PUBLIC HOSPITAL DISTRICT NO. 2; GRANT COUNTY PUBLIC HOSPITAL DISTRICT NO. 3; GRAYS HARBOR COUNTY PUBLIC HOSPITAL DISTRICT NO. 1; JEFFERSON COUNTY PUBLIC HOSPITAL DISTRICT NO. 2; KENNEWICK PUBLIC HOSPITAL DISTRICT; KING COUNTY PUBLIC HOSPITAL DISTRICT NO. 1; KING COUNTY PUBLIC HOSPITAL DISTRICT NO. 2; KITTITAS COUNTY PUBLIC HOSPITAL DISTRICT NO. 1; LEWIS COUNTY PUBLIC HOSPITAL DISTRICT NO. 1; MASON COUNTY PUBLIC HOSPITAL DISTRICT NO. 1; OKANOGAN AND DOUGLAS COUNTIES PUBLIC HOSPITAL DISTRICT NO. 1; OKANOGAN COUNTY PUBLIC HOSPITAL DISTRICT NO. 3; OKANOGAN COUNTY PUBLIC HOSPITAL DISTRICT NO. 4; PACIFIC COUNTY PUBLIC HOSPITAL DISTRICT NO. 2; PACIFIC COUNTY PUBLIC HOSPITAL DISTRICT NO. 3; PEND OREILLE COUNTY PUBLIC HOSPITAL DISTRICT NO. 1; PROSSER PUBLIC HOSPITAL DISTRICT; SKAGIT COUNTY PUBLIC HOSPITAL DISTRICT NO. 1; SKAGIT COUNTY PUBLIC HOSPITAL DISTRICT NO. 2; SKAGIT AND WHATCOM COUNTIES PUBLIC HOSPITAL DISTRICT NO. 304; SNOHOMISH COUNTY PUBLIC HOSPITAL DISTRICT NO. 1; SNOHOMISH COUNTY PUBLIC HOSPITAL DISTRICT NO. 2; SNOHOMISH COUNTY PUBLIC HOSPITAL DISTRICT NO. 3; WHITMAN COUNTY PUBLIC HOSPITAL DISTRICT NO. 1-A; WHITMAN COUNTY PUBLIC HOSPITAL DISTRICT NO. 3, Plaintiffs-Appellants, v. PHILIP MORRIS INCORPORATED; RJ REYNOLDS TOBACCO COMPANY; BROWN & WILLIAMSON TOBACCO CORPORATION; |
| Court | U.S. Court of Appeals — Ninth Circuit |
[Copyrighted Material Omitted]
[Copyrighted Material Omitted] Michael K. Vaska (argued), Bradley J. Berg, Steven G. Jones, and Chryssa V. Deliganis, Foster Pepper & Shefelman PLLC, Seattle, Washington, for the plaintiffs-appellants.
Herbert M. Wachtell (argued), Wachtell, Lipton, Rosen & Katz, New York, New York, and John W. Phillips, Leonard J. Feldman, and Judith H. Ramseyer, Heller Ehrman White & McAuliffe LLP, Seattle, Washington, for defendant-appellee Philip Morris Incorporated; Bradley S. Keller, Byrnes & Keller, LLP, Seattle, Washington, and H. Joseph Escher, III and Peter J. Busch, Howard Rice Nemerovski Canady Falk & Rabkin, San Francisco, California, for defendant-appellee R.J. Reynolds Tobacco; John A. Tondini, Byrnes & Keller, LLP, Seattle, Washington, and Jeffrey Davidson and Tony L. Richardson, Kirkland & Ellis, Los Angeles, California, for defendant-appellee Brown & Williamson Tobacco Corp.; Christopher W. Tompkins, Betts Patterson & Mines, P.S., Seattle, Washington, and Jeffrey S. Nelson and Tina M. Schaefer, Shook, Hardy & Bacon L.L.P., Kansas City, Missouri, for defendant-appellee Lorillard Tobacco Company; Thomas R. Merrick, Bullivant, Houser, Pendergrass & Hoffman, Seattle, Washington, for defendant-appellee British American Tobacco Co., Ltd.; Delber D. Miller and Heidi Bateman, Miller Bateman LLP, Seattle, Washington, for defendant-appellee United States Tobacco Company; John D. Wilson and David M. Jacobi, Wilson Smith Cochran & Dickerson, Seattle, Washington, for defendant-appellee Smokeless Tobacco Council, Inc.; James R. Murray and Franklin D. Cordell, Gordon Murray Tilden, Seattle, Washington, for defendant-appellee The Tobacco Institute, Inc.; James H. Jordan, Jr., Miller, Nash, Wiener, Hager & Carlsen, Seattle, Washington, for defendant-appellee The Council for Tobacco Research U.S.A., Inc.; Thomas J. Brewer and Steven T. Seward, Wickwire, Green, Crosby, Brewer & Seward, Seattle, Washington, for defendant-appellee Hill & Knowlton, Inc.
Appeal from the United States District Court for the Western District of Washington Thomas S. Zilly, District Judge, Presiding. D.C. No.CV-98-01675-TSZ
Before: Robert Boochever, Diarmuid F. O'Scannlain, and A. Wallace Tashima, Circuit Judges.
We must decide whether public hospital districts may bring federal and state claims against tobacco firms to recover their unreimbursed costs for treating patients suffering from tobacco-related illnesses.
The Association of Washington Public Hospital Districts, along with the Association's individual member districts (collectively, "Hospital Districts"), appeal from the district court's dismissal of their federal antitrust, Racketeer Influenced and Corrupt Organizations Act ("RICO"), and supplemental state law claims against a number of tobacco companies and tobacco industry organizations (collectively, "Tobacco Firms"). The Hospital Districts are political subdivisions of the State of Washington which are required by state and federal law to provide health care services to the general public regardless of their patients' ability to pay.
The Hospital Districts allege that the Tobacco Firms have engaged in a half-century conspiracy against the public generally and the health care industry in particular. According to the Hospital Districts, the Tobacco Firms have conspired to misrepresent and to conceal the addictive nature of nicotine and the health risks associated with tobacco use, promoting their alleged deception through propaganda disguised as independent scientific research while endeavoring to suppress legitimate scientific research that demonstrates the dangers of tobacco use. The Hospital Districts further claim that the Tobacco Firms have conspired to suppress competition to develop less harmful nicotine and tobacco products and have manipulated the levels of nicotine in their products to ensure continuing addiction. Finally, the Tobacco Firms have allegedly conspired to refrain from making any claims concerning the relative health superiority of specific tobacco products.
According to the Hospital Districts, the Tobacco Firms' unlawful conduct has caused them considerable financial harm. But for the Tobacco Firms' conspiracy to suppress competition, they allege, less harmful tobacco products would have been developed which would have garnered a substantial market share. The Hospital Districts maintain that they themselves were potential consumers of such products, as they could have purchased them for the use and treatment of their patients suffering from nicotine addiction. Patients who used these less harmful products presumably would have experienced fewer tobacco-related health illnesses, thereby reducing the Hospital Districts' costs for treating such illnesses. Further, the Tobacco Firms' alleged conspiracy to spread misinformation regarding the adverse health effects of tobacco use, the addictive nature of nicotine, and the Tobacco Firms' own manipulation of nicotine levels allegedly prevented the Hospital Districts from instituting more effective smoking cessation programs. Such misinformation also induced the Hospital Districts' patients to use tobacco products. Thus, but for the Tobacco Firms' alleged conspiracy to deceive the public, the Hospital Districts could have assisted more patients to overcome their addiction to nicotine products, again reducing their costs for treating tobacco-related illnesses.
The Hospital Districts commenced this action against the Tobacco Firms to recover their increased costs for treating their patients' tobacco-related illnesses caused by the Tobacco Firms' unlawful conduct, alleging federal antitrust and RICO violations; state common law claims for fraudulent misrepresentation, fraudulent concealment breach of special duty, unjust enrichment, civil conspiracy, and public nuisance; and violations of the Washington Unfair Business Practices Act-Consumer Protection Act, Wash. Rev. Code Ann. SS 19.86.020-030. In a carefully reasoned decision, the district court dismissed all claims with prejudice for failure to state a claim, relying on Oregon Laborers-Employers Health & Welfare Trust Fund v. Philip Morris Inc., 185 F.3d 957 (9th Cir. 1999). The court held that the Hospital Districts did not have antitrust or RICO standing because their claimed damages were not proximately caused by the Tobacco Firms' unlawful conduct, but were instead derivative of the personal injuries of smokers afflicted by tobacco-related illnesses. Ass'n of Wash. Pub. Hosp. Dists. v. Philip Morris, Inc., 79 F. Supp. 2d 1219, 1224 (W.D. Wash. 1999). The court also held that the Hospital Districts' antitrust claims were barred for lack of antitrust injury under Am. Ad Mgmt Inc. v. GTE of Cal., 190 F.3d 1051, 1057 (9th Cir. 2000), because the Hospital Districts did not experience their injuries in the market where competition was being restrained. Ass'n of Wash. Pub. Hosp. Dists., 79 F. Supp. 2d at 1226. Finally, the district court dismissed the Hospital Districts' state common law claims for lack of proximate cause, id. at 1228-29, and dismissed their Consumer Protection Act claims under Wash. State Physi-cians Ins. Exch. & Ass'n. v. Fisons Corp., 858 P.2d 1054, 1060-61 (Wash. 1993), for failure to allege an injury to "business or property," Ass'n of Wash. Pub. Hosp. Dists., 79 F....
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Planned Parenthood Fed'n of Am., Inc. v. Ctr. for Med. Progress
...interest.Defendants reply that Scheidler has been limited by a subsequent Ninth Circuit case—Ass'n of Wash. Pub. Hosp. Dists. v. Philip Morris, Inc. , 241 F.3d 696, 700 (9th Cir. 2001) —such that the portion of Scheidler relied on by plaintiffs here is only relevant to Article III standing ......
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...12(b) (6) dismissal of complaint, including state law negligence claims, on remoteness grounds); Ass'n of Wash. Public Hosp. Dists. v. Philip Morris Inc., 241 F.3d 696, 707 (9th Cir.2001) (common law public nuisance claims under state law properly dismissed on Rule 12(b)(6) motion for lack ......
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...brought claims seeking damages for unreimbursed medical expenses related to tobacco use: Association of Washington Pub. Hosp. Districts v. Philip Morris Inc. , 241 F.3d 696, 702 (9th Cir. 2001), and Allegheny Gen. Hosp. v. Philip Morris, Inc., 228 F.3d 429, 435 (3d Cir. 2000). In both cases......
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Blue Cross & Blue Shield of N.J. v. Philip Morris
...moreover, these statutes so construed offer narrower protections than that available in New York. Compare Ass'n of Wash. Pub. Hosp. Dists. v. Philip Morris Inc., 241 F.3d 696, 705 (remote under Washington CPA because limited to federal interpretations of antitrust law); Or. Laborers Employe......
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Racketeer influenced and corrupt organizations.
...from the alleged cause, it is unadvisable to allow a case to proceed"); see also Ass'n of Wash. Pub. Hosp. Dists. v. Phillip Morris, Inc., 241 F.3d 696, 701-02 (9th Cir. 2001) (holding public hospital districts lacked standing on the grounds that the injury alleged was too remote because (i......
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Racketeer influenced and corrupt organizations.
...from the alleged cause, it is unadvisable to allow a case to proceed"); see also Ass'n of Wash. Pub. Hosp. Dists. v. Phillip Morris, Inc., 241 F.3d 696, 701-02 (9th Cir. 2001) (holding public hospital districts lacked standing on the grounds that the injury alleged was too remote because (i......
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Racketeer influenced and corrupt organizations.
...from the alleged cause, it is unadvisable to allow a case to proceed"); see also Ass'n of Wash. Pub. Hosp. Dists. v. Phillip Morris, Inc., 241 F.3d 696, 701-02 (9th Cir. 2001) (holding public hospital districts lacked standing on the grounds that the injury alleged was too remote because (i......
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Washington
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