Cason–Merenda v. Detroit Med. Ctr.

• Decision Date: 22 March 2012
• Docket Number: Case No. 06–15601.
• Citation: 862 F.Supp.2d 603
• Parties: Pat CASON–MERENDA and Jeffrey A. Suhre, on behalf of themselves and others similarly situated, Plaintiffs, v. DETROIT MEDICAL CENTER, Henry Ford Health System, Mount Clemens General Hospital, Inc., St. John Health, Oakwood Healthcare Inc., Bon Secours Cottage Health Services, William Beaumont Hospital, and Trinity Health Corp., Defendants.
• Court: U.S. District Court — Eastern District of Michigan

862 F.Supp.2d 603

Pat CASON–MERENDA and Jeffrey A. Suhre, on behalf of themselves and others similarly situated, Plaintiffs,

v.DETROIT MEDICAL CENTER, Henry Ford Health System, Mount Clemens General Hospital, Inc., St. John Health, Oakwood Healthcare Inc., Bon Secours Cottage Health Services, William Beaumont Hospital, and Trinity Health Corp., Defendants.

Case No. 06–15601.

United States District Court,

E.D. Michigan,

Southern Division.

March 22, 2012.

Stephen F. Wasinger, Stephen F. Wasinger PLC, Royal Oak, MI, Daniel Cohen, Cuneo, Gilbert, David P. Dean, James and Hoffman, Washington, DC, Mark A. Griffin, Raymond J. Farrow, Tana Lin, Keller Rohrback, Seattle, WA, for Plaintiffs.

Alethea A. Wilson, Charles N. Raimi, David A. Ettinger, Honigman, Miller, Schwartz and Cohn LLP, Terrence J. Miglio, Gouri G. Sashital, Keller Thoma, PC, David A. Hardesty, Thomas M. J. Hathaway, Clark Hill, Fred K. Herrmann, Kerr, Russell, Detroit, MI, David Marx, Jr., Amy J. Carletti, David L. Hanselman, Jr., Stephen Y. Wu, McDermott, Will, Margo Weinstein, Snr Denton U.S. LLP, Chicago, IL, Michael R. Shumaker, Jones Day, Shari Ross Lahlou, Crowell & Moring, Washington, DC, Howard B. Iwrey, Dykema Gossett, Sheldon H. Klein, Butzel Long, Bloomfield Hills, MI, Mark T. Nelson, Butzel Long, Ann Arbor, MI, William B. Slowey, Butzel Long, Detroit, MI, Cathrine F. Wenger, Trinity Health, Novi, MI, Corey M. Shapiro, David B. Gunsberg, Birmingham, MI, Sandra D. Hauser, Snr

Denton U.S. LLP, New York, NY, for Defendants.

OPINION AND ORDER REGARDING DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT

GERALD E. ROSEN, Chief Judge.

I. INTRODUCTION

In this case, the Plaintiff registered nurses (“RNs”), Pat Cason–Merenda and Jeffrey A. Suhre, seek to recover on behalf of themselves and a class of RNs against eight Detroit-area hospitals, alleging that the Defendant health care providers have violated § 1 of the federal Sherman Act, 15 U.S.C. § 1, by (i) conspiring among themselves and with other local hospitals to hold down the wages of RNs employed by these institutions, and (ii) exchanging compensation-related information among themselves in a manner that has reduced competition among Detroit-area hospitals in the wages paid to RNs. This Court's subject matter jurisdiction rests upon Plaintiffs' assertion of claims arising under federal law. See28 U.S.C. § 1331.

Through the motions presently before the Court, the five remaining Defendants seek awards of summary judgment in their favor on each of Plaintiffs' claims against them.¹ In separate motions brought by Defendant Detroit Medical Center and the four other Defendant hospitals—specifically, Defendants Henry Ford Health System, Mount Clemens General Hospital, Inc., William Beaumont Hospital, and Trinity Health Corp.—Defendants argue that Plaintiffs have failed to produce either direct or circumstantial evidence of any agreement among Detroit-area hospitals to fix RN compensation, and that the evidence, to the contrary, reflects independent decisionmaking by each of the Defendant health care institutions. The five moving Defendants further contend that the record fails to establish any anticompetitive effects resulting from the exchange of compensation-related information among Detroit-area hospitals. ²

These two summary judgment motions have been fully and thoroughly briefed by the parties.³ In addition, the Court held an August 11, 2011 hearing on these motions, at which counsel offered extensive and skillful argument in support of their respective positions. Having reviewed the parties' briefs and the accompanying, voluminous record, and having carefully considered the arguments of counsel at the August 11 hearing, the Court now is prepared to rule on Defendants' motions for summary judgment. This opinion and order sets forth the Court's rulings on these motions.

II. FACTUAL AND PROCEDURAL BACKGROUND

According to Plaintiffs' third corrected class action complaint, Plaintiff Pat Cason–Merenda is a registered nurse (“RN”) who has been employed by the Defendant Detroit Medical Center (“DMC”) since November of 2002. During this same time frame, Plaintiff Jeffrey A. Suhre has worked as an RN at Providence Hospital, a health care facility owned and operated by Defendant St. John Health. In their complaint, Plaintiffs allege that the eight Defendant hospitals, along with other hospitals in the Detroit metropolitan area, have conspired among themselves to depress the level of compensation paid to their RN workforces, and that they have implemented a scheme of exchanging compensation-related information that has reduced competition among Detroit-area hospitals in the compensation of their RN employees. In bringing these claims under federal antitrust law, Plaintiffs seek to represent a class of individuals who were employed as RNs by any of the Defendant hospitals at any time from December 12, 2002 through the present.⁴

A. The Exchange of Compensation–Related Information Among the Defendant Hospitals

Although Plaintiffs have accused the Defendant hospitals of committing two distinct violations of federal antitrust law, these two theories of recovery rest upon a common factual predicate—namely, that Defendants have routinely engaged in substantial exchanges of information about how they compensate their RN workforces. Accordingly, the Court finds it appropriate to recount in considerable detail the evidence in the record reflecting these exchanges of wage-related information. In particular, Plaintiffs have identified three principal mechanisms through which this information has been shared among Detroit-area hospitals: (i) direct contacts between employees of the various hospitals who were involved in the process of determining RN compensation at their respective institutions; (ii) health care industry organizations and meetings that addressed nursing issues, including compensation; and (iii) third-party surveys of RN compensation sponsored by the Defendant hospitals. The Court reviews each of these mechanisms in turn.

1. Direct Exchanges of Wage–Related Information Among Employees of Detroit–Area Hospitals

The record reveals that it was not uncommon—particularly in the early days of the relevant time period from December of 2002 forward—for an employee of one of the Defendant hospitals to contact his or her counterpart at another Detroit-area hospital and obtain information relating to the compensation of RNs. Indeed, as Plaintiffs observe, each of the Defendant hospitals has acknowledged in the course of this litigation that its employees communicated with employees of other hospitals during the pertinent time period regarding RN compensation. ( See Plaintiffs' Consolidated Response Br. at 14 (citing Defendants' answers and interrogatory responses).) As detailed below, these direct contacts took a variety of forms.

First, from 1989 until October of 2003, Thomas Dabrowski of Defendant William Beaumont Hospital conducted quarterly surveys of the compensation paid to nurses and other employees at a number of Detroit-area hospitals. ( See Plaintiffs' Response, Ex. 12, compilation of survey results for October 2002, January 2003, April 2003, and July 2003.) Each of the Defendant hospitals other than Bon Secours participated in at least one of these surveys.⁵ The participant hospitals then were provided with aggregated survey results, ⁶ which disclosed, among other information, the average minimum and maximum pay ranges and actual pay rates for a number of positions. As Plaintiffs observe, the information provided by the participant hospitals typically reflected current (as opposed to historical) pay rates and ranges, ( see, e.g., Plaintiffs' Response, Exs. 13, 30), and on at least one occasion, one of the survey participants, Defendant Trinity, disclosed its plan for a future merit increase, ( see Plaintiffs' Response, Ex. 14).⁷

In addition to these regular Beaumont surveys, the Defendant hospitals requested and provided RN compensation-related informationon an ad hoc basis. Plaintiffs have produced, for example, a number of documents exchanged among the Defendant hospitals in 2001—before the commencement of the class period in December of 2002—disclosing various aspects of their respective RN compensation packages. ( See Plaintiffs' Response, Ex. 5 (Henry Ford providing information to Bon Secours); Ex. 6 (summary of information obtained by Oakwood from a number of the Defendant hospitals); Ex. 7 (Oakwood providing nurse wage information to Trinity); Ex. 8 (Henry Ford disclosing information it obtained about retention bonus practices of several Defendant hospitals); Ex. 9 (Oakwood advising Beaumont of its practices regarding shift differential pay).) These ad hoc information exchanges continued into 2002, ( see, e.g., Plaintiffs' Response, Ex. 17 (February 2002 e-mail in which Trinity human resources employee states that she spoke to a Mount Clemens employee about nurse technician rates and “in exchange” obtained the latter hospital's physician assistant rates); Ex. 21 (Beaumont responding in July 2002 to Oakwood request for information); Ex. 22 (March 2002 fax from Trinity to Oakwood providing a copy of Trinity's “Salaried Employee Merit” policy); Ex. 26 (Henry Ford document dated May 2002 disclosing information learned in survey of signing bonuses paid by other Defendant hospitals); Ex. 27 (November 2002 chart summarizing information obtained by Henry Ford regarding other Defendant hospitals' projected merit increases for 2003); Ex. 31 (Oakwood providing current wage information in mid–2002 in response to survey by Trinity)), and also extended into the post-December 2002 class period, ( see, e.g., Plaintiffs' Response, Ex. 15 (May 2003 e-mail exchange between DMC and St. John employees disclosing nurse pay rates); Ex. 19 (September 2004 e-mail exchange between DMC and Beaumont employees disclosing the two hospitals' most recent bedside nurse pay increases); Ex. 23 (April 2003 e-mail from St....