Blue Cross and Blue Shield United of Wisconsin v. Marshfield Clinic, s. 97-3219

• Decision Date: 30 July 1998
• Docket Number: Nos. 97-3219,97-3847,s. 97-3219
• Citation: 152 F.3d 588
• Parties: 1998-2 Trade Cases P 72,220 BLUE CROSS AND BLUE SHIELD UNITED OF WISCONSIN and Compcare Health Services Insurance Corporation, Plaintiffs-Appellants, v. MARSHFIELD CLINIC, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 588

152 F.3d 588

1998-2 Trade Cases P 72,220

BLUE CROSS AND BLUE SHIELD UNITED OF WISCONSIN and Compcare Health Services Insurance Corporation, Plaintiffs-Appellants, v. MARSHFIELD CLINIC, et al., Defendants-Appellees.

Nos. 97-3219, 97-3847.

United States Court of Appeals Seventh Circuit.

Argued June 5, 1998.

Decided July 30, 1998.

Stephen E. Bablitch, Milwaukee, WI, Jon G. Furlow, James R. Troupie (argued), John E. Flanagan, Eric M. McLeod, Michael , Best & Friedrich, Madison, WI, for Plaintiffs-Appellants.

Stephen J. Caulum, Bell, Metzner, Gierhart & Moore, Madison, WI, Kevin D. McDonald, Thomas F. Cullen, Jr. (argued), Edwin L. Fountain, Gregory G. Katsas, Jones, Day, Reavis & Pogue, Washington, DC, for Defendants-Appellees.

Before POSNER, Chief Judge, and BAUER and KANNE, Circuit Judges.

POSNER, Chief Judge.

This is the second round of appeals in an antitrust case brought by a health insurer against a medical clinic. See 65 F.3d 1406 (7th Cir.1995). The defendant, the Marshfield Clinic in rural Wisconsin, is the dominant provider of medical services in the north-central part of that state; indeed, despite its remote location, it is one of the largest medical clinics in the nation, comparable in size to the Mayo and Cleveland clinics. Blue Cross of Wisconsin (together with its HMO) sued the Marshfield Clinic (and its HMO), alleging a variety of antitrust violations centered on the contention that the Clinic had illegally monopolized the provision of certain medical services in its region, enabling it to jack up its prices for those services above competitive levels to the detriment of Blue Cross, which pays the Clinic to treat patients insured by Blue Cross. The plaintiffs won a $20 million damages judgment (most of it in favor of Blue Cross's HMO rather than Blue Cross itself) and an injunction. The Clinic appealed, and we threw out all but one of the charges. That was the charge that the Clinic had divided markets with some of its competitors, that is, had agreed with them to keep out of each other's service areas. Id. at 1415-16. The evidence in support of this charge was sufficient for us to "conclude that the jury verdict on liability must stand insofar as the charge of a division of markets is concerned," to direct that the district court revise the injunction to confine it to that practice, and to order "a new trial limited to damages for dividing markets." Id. at 1416. (Neither HMO is involved in the division of markets charge, so we shall not refer to them any more.) We explained that at the new trial the "burden will be on Blue Cross to show how much less it would have paid the Clinic had the Clinic refrained from that illegal practice." Id.

On remand, following additional discovery, the district judge granted summary judgment for the Clinic on the ground that Blue Cross had produced no evidence that it had suffered any injury as a result of the division of markets. 980 F.Supp. 1298 (W.D.Wis.1997). In the same order she ruled that Blue Cross was not entitled to an award of attorneys' fees, since it was not the prevailing party; and later she awarded the Clinic its court costs of some $220,000. So this time Blue Cross has appealed. It argues that it is entitled to an injunction even if it cannot prove damages; that it can prove damages; and that it should be adjudged a prevailing plaintiff and hence awarded a reasonable attorney's fee and court costs (see Clayton Act, § 4, 15 U.S.C. § 15(a)) and not have to pay its opponent's costs.

Blue Cross is clearly right with regard to the injunction. We held when this case was last before us that the jury's finding on liability for dividing up the market with its competitors must be upheld and that Blue Cross was entitled to an injunction against that practice. This holding established the law of the case, binding the district judge on remand and us on this subsequent appeal unless we have good reasons to depart from the previous decision. Agostini v. Felton, 521 U.S. 203, ----, 117 S.Ct. 1997, 2017, 138 L.Ed.2d 391 (1997); Messenger v. Anderson, 225 U.S. 436, 444, 32 S.Ct. 739, 56 L.Ed. 1152 (1912) (Holmes, J.); Best v. Shell Oil Co., 107 F.3d 544, 546 (7th Cir.1997). We don't. Even though, as we shall see, the district judge was correct that Blue Cross has failed to come up with evidence that would authorize an award of damages for the division of markets, this does not justify withholding an injunction--rather the contrary. Inadequacy of a plaintiff's remedy at law, that is, his damages remedy, is normally (and so under section 16 of the Clayton Act, see 15 U.S.C. § 26, which authorizes an injunction in a private antitrust suit "when and under the same conditions" in which it would be granted by "courts of equity") a prerequisite to the entry of an injunction. Walgreen Co. v. Sara Creek Property Co., 966 F.2d 273, 274 (7th Cir.1992). And a common reason why the damages remedy is inadequate is that the plaintiff is unable to quantify the harm that the defendant's practice has inflicted or will inflict on him. Miller v. LeSea Broadcasting, Inc., 87 F.3d 224, 230 (7th Cir.1996); Roland Machinery Co. v. Dresser Industries, Inc., 749 F.2d 380, 383 (7th Cir.1984).

The jury found on sufficient evidence that the Marshfield Clinic entered into agreements with competitors to stay out of each other's territories. The purpose was to enable each of the firms, prominently including the Clinic, to charge higher prices to its customers. It is true that a by-product of such an agreement might be to reduce the advertising and other marketing expenses of the conspirators, and the reduction might even be so great that the optimal monopoly price of each of the noncompetitors would be lower than the former competitive price, since a monopolist will charge a lower price the lower his costs are. The agreement would still be illegal; divisions of markets are per se illegal, just like price-fixing agreements, Timken Roller Bearing Co. v. United States, 341 U.S. 593, 71 S.Ct. 971, 95 L.Ed. 1199 (1951); but as it would be harmless, there would be no basis for a consumer's seeking an injunction. Indeed, a rational consumer would not seek an injunction that would lead to his having to pay higher prices.

Blue Cross was not, however, required to negate the remote possibility that the division of markets was a form of benign cartel (especially since the point was not argued by the defendant). And if this possibility is therefore set to one side, we have a major customer of the Clinic that is likely to have to pay higher prices unless the division of markets is enjoined. It is also possible, of course, that the defendant has abandoned the unlawful practice, perhaps induced to do so by the filing of the lawsuit; and in that event Blue Cross wouldn't need an injunction. But this possibility would not justify the withholding of the injunction without a degree of proof (of abandonment with no likelihood of resumption), see, e.g., United States v. Oregon State Medical Society, 343 U.S. 326, 333, 72 S.Ct. 690, 96 L.Ed. 978 (1952); Wilk v. American Medical Ass'n, 895 F.2d 352, 367 (7th Cir.1990), that the Clinic has not attempted.

What is true and misled the district judge is the principle that there is no tort without an injury. E.g., Janmark, Inc. v. Reidy, 132 F.3d 1200, 1202 (7th Cir.1997); Rozenfeld v. Medical Protective Co., 73 F.3d 154, 156 (7th Cir.1996). A private suit under the antitrust laws is a suit seeking relief against a statutory tort, and the principle that there is no tort without an injury is applicable to it. See Clayton Act, § 4, 15 U.S.C. § 15(a). But all that this implies, so far as equitable relief is concerned, is that a plaintiff has to prove that he is likely to be harmed by the defendant's wrongful conduct unless that conduct is enjoined. This is clear from the text of the Clayton Act, which, evoking traditional principles of equity, Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 130, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969), requires proof only of "threatened loss or damage." Clayton Act, § 16, 15 U.S.C. § 26 (emphasis added); see California v. American Stores Co., 495 U.S. 271, 282 n. 8, 110 S.Ct. 1853, 109 L.Ed.2d 240 (1990); Ohio-Sealy Mattress Mfg. Co. v. Sealy, Inc., 585 F.2d 821, 844 (7th Cir.1978). There is sufficient evidence of that here. Blue Cross bought services from a seller that had agreed with other sellers to refrain from competing for customers, and it is likely, whether or not provable with the degree of precision required to ground an award of damages, that unless the defendant is enjoined Blue Cross will have to pay Marshfield Clinic more than if the Clinic were not a member of an anticompetitive conspiracy directed in part against the plaintiff, the conspiracy that the suit seeks to destroy.

A more difficult question is whether the judge was right to conclude that Blue Cross could not prove what damages it had sustained as a result of the division of markets. The usual way to measure damages in such a case would be to compare the prices that the Marshfield Clinic charged Blue Cross before and during the conspiracy, or inside and outside the region covered by the conspiracy, or during the conspiracy and after it ended (if it has ended--the injunction issued by the district court before the first appeal was in effect for less than six weeks before we stayed it pending the appeal), correcting by various statistical techniques for any nonconspiratorial factors that might have caused the prices that are being compared to be different from each other. See Isaksen v. Vermont Castings, Inc., 825 F.2d 1158, 1165 (7th Cir.1987); New York v. Hendrickson Bros., Inc., 840 F.2d 1065, 1078 (2d Cir.1988); Home Placement Service, Inc. v. Providence Journal Co., 819 F.2d 1199, 1205 n. 7 (1st Cir.1987); Phillips v. Crown Central Petroleum Corp., 602 F.2d 616, 632 (4th Cir.1979); 1 American Bar Association Section of Antitrust...