Cole's Wexford Hotel, Inc. v. UPMC

• Decision Date: 01 September 2015
• Docket Number: Case No. 10–1609.
• Citation: 127 F.Supp.3d 387
• Parties: COLE'S WEXFORD HOTEL, INC., on its own behalf and on behalf of all others similarly situated, Plaintiffs, v. UPMC and Highmark, Inc., Defendants.
• Court: U.S. District Court — Western District of Pennsylvania

127 F.Supp.3d 387

COLE'S WEXFORD HOTEL, INC., on its own behalf and on behalf of all others similarly situated, Plaintiffs,

v.UPMC and Highmark, Inc., Defendants.

Case No. 10–1609.

United States District Court, W.D. Pennsylvania.

Signed Sept. 1, 2015.

Andrew M. Stone, Stone Law Firm, LLC, Arthur H. Stroyd, Jr., Stephen J. Del Sole, Del Sole Cavanaugh Stroyd LLC, Patrick K. Cavanaugh, Del Sole Cavanaugh, Scott Michael Hare, Pittsburgh, PA, Kathleen S. Kiernan, Evan E. North, Hamish Hume, Melissa Felder Zappala, Boies, Schiller & Flexner LLP, Washington, DC, David B. Harrison, David S. Stone, Jason C. Spiro, Stone & Magnanini LLP, Short Hills, NJ, for Plaintiffs.

Keith E. Whitson, Emily Ayoub Spanovich, George E. McGrann, Paul H. Titus, Schnader, Harrison, Segal & Lewis, Paul M. Pohl, Rebekah B. Kcehowski, Jones Day, John K. Gisleson, Leon F. Dejulius, Morgan, Lewis & Bockius LLP, Alexander W. Saksen, John G. Ebken, Gordon & Rees, LLP, Pittsburgh, PA, Joe Sims, Kathryn M. Fenton, Jones Day, Jennifer L. Giordano, Margaret M. Zwisler, Latham & Watkins LLP, Washington, DC, Alfred C. Pfeiffer, Latham & Watkins LLP, San Francisco, CA, for Defendants.

OPINION

CONTI, Chief Judge.

I. Introduction

Pending before the court in this antitrust action is a motion to dismiss the third amended complaint filed by defendant Highmark, Inc. ("Highmark") (ECF No. 288) and a motion to dismiss the third amended complaint filed by defendant UPMC (ECF No. 290). UPMC and Highmark argue, among other things, that the third amended complaint filed by plaintiff Cole's Wexford Hotel, Inc. ("Cole's Wexford")¹ fails to state any claim for relief and the class action allegations contained in the third amended complaint are insufficient as a matter of law under Federal Rule of Civil Procedure 23. Based upon the court's review of the parties' submissions and for the reasons set forth in this opinion, the motion to dismiss filed by Highmark (ECF No. 288) will be denied, and the motion to dismiss filed by UPMC (ECF No. 290) will be granted in part and denied in part.

II. Procedural History

On December 2, 2010, Royal Mile Company, Inc., Royal Mile Asset Management, LLC, and Pamela Lang initiated this case by filing a complaint alleging (1) UPMC and Highmark engaged in anticompetitive conduct in violation of the Sherman Act, 15 U.S.C. §§ 1, 2, and (2) UPMC tortuously interfered with plaintiffs' existing and prospective business relations in violation of Pennsylvania common law. (ECF No. 1.) On August 16, 2012, plaintiffs filed an amended complaint against UPMC and Highmark. (ECF No. 77.) On September 17, 2012, UPMC and Highmark each filed a motion to dismiss the amended complaint and briefs in support of their motions alleging plaintiffs failed to state a claim for relief. (ECF Nos. 77, 78, 80, 81.)

On October 4, 2012, plaintiffs filed a motion seeking preliminary approval of a settlement with Highmark, certification of class, and appointment of class counsel (the "motion for preliminary approval of class settlement"). (ECF No. 88.)

On October 9, 2012, plaintiffs filed the second amended complaint against UPMC and Highmark alleging UPMC and Highmark violated §§ 1 and 2 of the Sherman Act and UPMC committed tortious interference with existing and prospective business relations under Pennsylvania law. (ECF No. 90 at 55–62.) On October 23, 2012, UPMC filed a motion to dismiss the second amended complaint. (ECF No. 95.) On October 26, 2012, Highmark filed a motion to dismiss the second amended complaint. (ECF No. 98.) On November 15, 2012, Highmark filed a motion to withdraw its motion to dismiss in light of the pending motion for preliminary approval of class settlement. (ECF No. 104.) On November 16, 2012, the court granted Highmark's motion to withdraw its motion to dismiss. (ECF No. 105.)

On May 17, 2013, after a failed settlement attempt between plaintiffs and Highmark, and plaintiffs' withdrawal of their motion for preliminary approval of class settlement and certification of the class, Highmark filed a renewed motion to dismiss the second amended complaint for failure to state a claim. (ECF No. 188.) On June 7, 2013, plaintiffs filed a response in opposition to Highmark's motion to dismiss for failure to state a claim. (ECF No. 195.) On June 26, 2013, Highmark with leave of court filed a reply in support of its motion to dismiss. (ECF No. 207.)

On September 27, 2013, after consideration of the parties' submissions, which included supplemental briefing, and the oral argument presented to the court at a hearing held on July 1, 2013, the court issued an opinion and order granting UPMC's and Highmark's motions to dismiss the second amended complaint. (ECF Nos. 240, 241.) The court held the second amended complaint must be dismissed because the measure of damages set forth in the second amended complaint implicated the filed rate doctrine, and plaintiffs' claim for tortious interference with existing and prospective contractual relations was time barred. (ECF No. 240 at 1.) The second amended complaint was dismissed without prejudice to plaintiffs seeking leave to file a third amended complaint "to the extent they [were] able to plead, with respect to the antitrust claims, a measure of damages that does not require the court to interfere with the ratemaking authority of the ... [Pennsylvania Insurance Department (the "PID") ] and, with respect to the tortious interference claim against UPMC, a basis for fraudulent concealment." (Id. at 80.)

On October 28, 2013, plaintiffs filed a motion for leave to file a third amended complaint, a brief in support of the motion, and the proposed third amended complaint attached to the motion. (ECF No. 249.) On October 29, 2013, plaintiffs filed an erratum with respect to the motion for leave to file a third amended complaint and a brief in support of the motion. (ECF Nos. 250, 251.) On November 4, 2013, Highmark filed a brief in opposition to the motion for leave to file a third amended complaint. (ECF No 253.) On November 21, 2013, UPMC filed a brief in opposition to the motion for leave to file a third amended complaint. (ECF No. 254.) On November 27, 2013, Highmark with leave of court filed a supplemental opposition to the motion for leave to file a third amended complaint. (ECF No. 256.) On January 14, 2014, plaintiffs filed a reply brief. (ECF No. 262.) On January 27, 2014, Highmark with leave of court filed a sur-reply brief in opposition to the motion for leave to file a third amended complaint. (ECF No. 266.) On February 10, 2014, UPMC with leave of court filed a sur-reply brief in opposition to the motion for leave to file a third amended complaint. (ECF No. 269.)

On April 7, 2014, the court heard oral argument on the motion for leave to file a third amended complaint. (H.T. 4/7/14 (ECF No. 270).) The court ordered supplemental briefing. (H.T. 4/7/14 (ECF No. 270) at 9–10, 55–56.) On April 21, 2014, plaintiffs, Highmark, and UPMC each filed supplemental briefs. (ECF Nos. 271, 272, 273.) On May 5, 2014, Highmark and UPMC each filed a response to plaintiffs' supplemental brief. (ECF Nos. 277, 278.) On May 13, 2014, plaintiffs filed a reply brief to Highmark's and UPMC's supplemental briefs. (ECF No. 280.) On May 27, 2014, UPMC with leave of court filed a sur-reply brief in support of its opposition to plaintiffs' motion for leave to file a third amended complaint. (ECF No. 283.)

On August 21, 2014, the court granted in part and denied in part the motion for leave to file a third amended complaint. The court:

—denied the motion for leave with respect to the claims asserted by the individual plaintiffs because the measure of damages asserted by those plaintiffs in the proposed third amended complaint was barred by the filed rate doctrine;

—denied the motion for leave with respect to the claims asserted by the small group plaintiffs based upon damages measured by the difference between rates the small group plaintiffs paid to Highmark during the alleged UPMC–Highmark conspiracy and the rates the small group plaintiffs would have paid beginning on March 21, 2012, to Highmark's competitors but for the UPMC–Highmark conspiracy because that measure of damages was barred by the filed rate doctrine;

—granted plaintiffs leave to amend with respect to the small group plaintiffs' claims based upon damages measured by the difference between the rates Highmark charged the small group plaintiffs during the alleged UPMC–Highmark conspiracy and the rates Highmark's excluded and marginalized competitors who were not subject to the PID's rate-filing requirements prior to March 21, 2012, would have charged the small group plaintiffs prior to March 21, 2012, but for the UPMC–Highmark conspiracy;

—granted plaintiffs leave to amend with respect to the small group plaintiffs' claims based upon damages measured by the difference between the rates the small group plaintiffs paid to Highmark's subsidiary Highmark Health Insurance Company during the alleged UPMC–Highmark conspiracy and prior to March 21, 2012, and the rates it would have paid Highmark Health Insurance Company but for the UPMC–Highmark conspiracy;

—held that under the relation back doctrine, plaintiffs were not prohibited by the statute of limitations from filing the proposed third amended complaint;

—denied leave to amend with respect to plaintiffs' tortious interference with contractual relations claim against UPMC because the claim was barred by the two-year statute of limitations under Pennsylvania law, and plaintiffs did not set forth factual allegations sufficient to toll the statute of limitations with respect to fraudulent concealment;

—held plaintiffs could not recover for damages based upon their antitrust claims that were sustained prior to December 2, 2006, because recovery was barred by the four-year statute of limitations, and plaintiffs did not set forth factual allegations sufficient to toll the statute of limitations based upon fraudulent concealment; and

—struck the class

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