AYA Healthcare Servs., Inc. v. AMN Healthcare, Inc.

• Citation: 9 F.4th 1102
• Decision Date: 19 August 2021
• Docket Number: No. 20-55679,20-55679
• Parties: AYA HEALTHCARE SERVICES, INC. ; Aya Healthcare, Inc., Plaintiffs-Appellants, v. AMN HEALTHCARE, INC. ; AMN Healthcare Services, Inc.; AMN Services, LLC; Medefis, Inc.; Shiftwise, Inc., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

9 F.4th 1102

AYA HEALTHCARE SERVICES, INC. ; Aya Healthcare, Inc., Plaintiffs-Appellants,

v.AMN HEALTHCARE, INC. ; AMN Healthcare Services, Inc.; AMN Services, LLC; Medefis, Inc.; Shiftwise, Inc., Defendants-Appellees.

No. 20-55679

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 26, 2021 Pasadena, California

Filed August 19, 2021

William A. Markham (argued), Dorn G. Bishop, and Jason Eliaser, Law Offices of William Markham P.C., San Diego, California, for Plaintiffs-Appellants.

David H. Bamberger (argued), DLA Piper LLP (US), Washington, D.C.; Noah A. Katsell, DLA Piper LLP (US), San Diego, California; for Defendants-Appellees.

Mary Helen Wimberly (argued) and Daniel E. Haar, Attorneys; Elyse Dorsey, Counsel to the Assistant Attorney General; Michael F. Murray, Deputy Assistant Attorney General; Makan Delrahim, Assistant Attorney General; Antitrust Division, United States Department of Justice, Washington, D.C.; for Amicus Curiae United States of America.

Before: MILAN D. SMITH, JR. and JOHN B. OWENS, Circuit Judges, and EDUARDO C. ROBRENO,^* District Judge.

M. SMITH, Circuit Judge:

In 2010, Appellee AMN Healthcare, Inc. (AMN) contracted with Appellant Aya Healthcare Services, Inc. (Aya) to provide travel nursing services to hospitals and other healthcare facilities. This case involves the non-solicitation provision within that contract. We conclude that this provision is both ancillary to the parties' broader agreement to collaborate, and a reasonable, pro-competitive restraint. We therefore affirm the judgment of the district court granting summary judgment to AMN.

FACTUAL AND PROCEDURAL BACKGROUND

Both parties are healthcare staffing agencies that "place the travel nurses on temporary assignments." Aya Healthcare Servs., Inc. v. AMN Healthcare, Inc. , ––– F. Supp. 3d ––––, ––––, 2020 WL 2553181, at *1 (S.D. Cal. May 20, 2020). "Travel nurses are nurses and nurse technicians who perform temporary, medium-term assignments in understaffed hospitals and other healthcare facilities [ ] that cannot have the assignments performed by their own nurses." Id . "[A]gencies place the travel nurses at hospitals several ways: by directly placing the travel nurses at the agencies' hospital accounts and by indirectly placing the travel nurses at hospitals through either an agency that manages the hospitals' travel nurse needs (managed service provider or MSP) or electronic platforms that facilitate the placements." Id.

"AMN has been a leader in the healthcare staffing industry for over thirty years." Id. at ––––, 2020 WL 2553181, at *2. In 2009, AMN became "the MSP of an increasing number of hospitals," "in addition to providing travel nurses to hospitals on direct placements." Id. That same year, Alan Braynin founded Aya, which places "nurses directly in hospitals" and "indirectly through MSP programs, such as those of AMN." Id .

As AMN grew, it became unable to "fulfill the demand of its hospital customers for travel nurse assignments." Id. AMN began referring "these ‘spillover assignments’ to its network of subcontractors, or ‘associate vendors’ (AVs), which were other healthcare staffing agencies," including Aya. Id. To receive such spillover assignments, Aya contracted with AMN. Included in that contract was a provision prohibiting Aya from soliciting AMN's employees.¹ Aya signed its first AV agreement in 2010 and began "provid[ing] travel nurses to AMN's customers." Id. Aya eventually "became AMN's largest AV." Id.

"Around May 2015, Aya began actively soliciting AMN's travel nurse recruiters." Id. This caused "the parties' business relationship [to] sour[ ]," and in September 2015, "AMN temporarily terminated Aya's access to AMN's platform." Id. The parties ultimately ended their relationship, permanently terminating their prior AV agreements in December 2015.

Aya filed its first amended complaint against AMN in February 2017, alleging four claims pursuant to Sections 1 and 2 of the Sherman Antitrust Act, 15 U.S.C. §§ 1, 2, and three California state law claims. The district court granted AMN's motion to dismiss without prejudice, holding that Aya did not sufficiently allege that it had suffered antitrust injuries, and deferred ruling on Aya's state law claims. Aya then filed a second amended complaint, again alleging three California state law claims and realleging three federal antitrust claims: a ‘per se ’ claim and a quick-look/rule-of-reason claim pursuant to Section 1 of the Sherman Act, and a claim for attempted monopolization pursuant to Section 2 of the Sherman Act. The district court granted in part and denied in part AMN's motion to dismiss the amended complaint, dismissing Aya's tortious interference claim with leave to amend, and allowing Aya's federal claims and other state law claims to proceed. Aya then amended its complaint for a third time, realleging its tortious interference claim and adding a Section 2 claim for monopolization. Aya claimed that "it suffered ‘exclusionary damages’ as a result of AMN's non-solicitation covenant in the parties' AV agreements and ‘retaliatory damages’ as a result of AMN's decision to terminate its AV relationship with Aya." Aya Healthcare , ––– F.Supp.3d at ––––, 2020 WL 2553181, at *3.

Discovery commenced. Aya offered expert economics testimony from Dr. Dov Rothman. Dr. Rothman attributed Aya's exclusionary damages to the non-solicitation provision in its AV agreement with AMN during a limited time period, between February 2013 and mid-2015. Dr. Rothman quantified Aya's retaliatory damages as its lost profits resulting from the termination of the parties' AV agreement in 2015.

AMN then moved for summary judgment. In May 2020, the district court granted the motion as to Aya's claims for retaliatory damages pursuant to Sections 1 and 2 of the Sherman Act. The court determined that there was "no evidence of a cartel of healthcare staffing agencies that all agreed to refrain from soliciting or hiring each other's employees or to retaliate against Aya for reneging on such an agreement." Id. at ––––, 2020 WL 2553181, at *18. The court further held that "Aya [ ] failed to proffer evidence that AMN ha[d] sufficient market power in the various markets identified for Aya's Section 2 claims, or that AMN's conduct ha[d] harmed competition." Id. The district court ordered the parties to submit supplemental briefing on whether it should grant AMN's motion for summary judgment as to Aya's claims for exclusionary damages.

In June 2020, after considering the supplemental briefing, the district court granted AMN's motion for summary judgment on Aya's claims for exclusionary damages, and declined to exercise supplemental jurisdiction over Aya's state law claims. The district court concluded that "Aya fail[ed] to raise a genuine issue of material fact regarding whether AMN has market power." In both orders granting summary judgment, the district court found Dr. Rothman's work deficient and his studies unreliable.

On appeal, Aya first requests that we recognize a per se rule against naked no-poaching restraints pursuant to Section 1 of the Sherman Act. Aya asserts that its evidence raises a triable dispute as to whether AMN's non-solicitation provision constitutes a naked no-poaching restraint. Aya then argues that its evidence establishes a triable dispute as to whether AMN's non-solicitation provision violates Section 1 under the quick-look standard and the rule-of-reason standard.² Aya contends that it is entitled to retaliatory damages under the Hammes doctrine because AMN effectively ‘cartelized’ the labor market and retaliated against Aya. Finally, Aya argues that it should have been allowed to introduce further evidence on new issues that the district court examined sua sponte .

In response, AMN argues that the district court correctly held that AMN was entitled to summary judgment on Aya's claims for exclusionary damages. AMN asserts that the relevant non-solicitation provision is not of the type that has been found per se unlawful. As such, the district court properly applied the rule-of-reason standard, and determined that the restriction was ancillary to a pro-competitive collaboration. AMN further argues that Aya failed to show a triable issue of fact as to whether the relevant provision harmed competition.

The United States has also weighed in on the matter, filing an amicus brief "to explain its views on the law applicable to non-solicitation agreements between competing employers." It takes no position concerning the appropriate disposition of this case.

STANDARD OF REVIEW

We review de novo a district court's decision to grant summary judgment. Lopez v. Smith , 203 F.3d 1122, 1131 (9th Cir. 2000) (en banc). We "must determine whether, viewing the evidence in the light most favorable to the nonmoving party, there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law." Id.

ANALYSIS

A.

Section 1 of the Sherman Act bars "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States." 15 U.S.C. § 1. The Supreme Court has interpreted this text "to outlaw only unreasonable restraints." State Oil v. Khan , 522 U.S. 3, 10, 118 S.Ct. 275, 139 L.Ed.2d 199 (1997) ; see also United States v. Joyce , 895 F.3d 673, 676 (9th Cir. 2018).

Restraints are generally categorized as horizontal or vertical. A horizontal restraint is "an agreement among competitors on the way in which they will compete with one another." NCAA v. Bd. of Regents , 468 U.S. 85, 99, 104 S.Ct. 2948, 82 L.Ed.2d 70 (1984). Vertical restraints are "restraints ‘imposed by agreement between firms at different levels of distribution.’ " Ohio v. Am. Express Co. , ––– U.S. ––––, 138 S. Ct. 2274, 2284, 201 L.Ed.2d 678 (2018) (quoting Bus. Elecs. Corp. v. Sharp Elecs. Corp. , 485 U.S. 717, 730, 108 S.Ct. 1515, 99 L.Ed.2d 808 (1988) ).

We employ two different standards to determine...