Daniel v. American Bd. of Emergency Medicine

• Decision Date: 20 June 2003
• Docket Number: No. 90-CV-1086A.,90-CV-1086A.
• Citation: 269 F.Supp.2d 159
• Parties: Gregory F. DANIEL, M.D., et al., Plaintiffs, v. AMERICAN BOARD OF EMERGENCY MEDICINE, Henry A. Thiede, M.D., Frank A. Disney, M.D., Council of Emergency Medicine Residency Directors, Children's Hospital (San Diego), Children's Hospital of Michigan, Detroit Receiving Hospital and University Health Center, Forsyth Medical Center, the Johns Hopkins Hospital, Part of the Johns Hopkins Health System, Kettering Medical Center, Lincoln Medical & Mental Health Center, Loma Linda University Medical Center, Lutheran General Hospital, Medical College of Pennsylvania and Hospital, Mercy Catholic Medical Center—Misericordia Division, Mercy Hospital and Medical Center, Methodist Hospital of Indiana, Ohio State University Hospital, Oregon Health Sciences University Hospital, Our Lady of Mercy Medical Center, Riverside Methodist Hospitals, Saint Francis Medical Center, St. Anthony Hospital, Tri-City Medical Center, University of California Medical Centers at Los Angeles, Irvine and San Diego, University Hospital at State University of New York at Stony Brook, University Hospital at the University of New Mexico School of Medicine, University of Massachusetts Medical Center, and University Medical Center (Tucson), Defendants.
• Court: U.S. District Court — Western District of New York

269 F.Supp.2d 159

Gregory F. DANIEL, M.D., et al., Plaintiffs, v. AMERICAN BOARD OF EMERGENCY MEDICINE, Henry A. Thiede, M.D., Frank A. Disney, M.D., Council of Emergency Medicine Residency Directors, Children's Hospital (San Diego), Children's Hospital of Michigan, Detroit Receiving Hospital and University Health Center, Forsyth Medical Center, the Johns Hopkins Hospital, Part of the Johns Hopkins Health System, Kettering Medical Center, Lincoln Medical & Mental Health Center, Loma Linda University Medical Center, Lutheran General Hospital, Medical College of Pennsylvania and Hospital, Mercy Catholic Medical Center—Misericordia Division, Mercy Hospital and Medical Center, Methodist Hospital of Indiana, Ohio State University Hospital, Oregon Health Sciences University Hospital, Our Lady of Mercy Medical Center, Riverside Methodist Hospitals, Saint Francis Medical Center, St. Anthony Hospital, Tri-City Medical Center, University of California Medical Centers at Los Angeles, Irvine and San Diego, University Hospital at State University of New York at Stony Brook, University Hospital at the University of New Mexico School of Medicine, University of Massachusetts Medical Center, and University Medical Center (Tucson), Defendants.

No. 90-CV-1086A.

United States District Court, W.D. New York.

June 20, 2003.

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Jaeckle, Fleischmann & Mugel, LLP (Ralph L. Halpern, Mitchell J. Banas, Jr., and Mary C. Fitzgerald, of Counsel), Buffalo, NY, Shearman & Sterling, (George J. Wade, Kathleen M. Comfrey, of Counsel), New York City, for Plaintiffs.

Jones, Day, Reavis & Pogue (Robert A. Rawson, Jr., Jeffery D. Ubersax, Elizabeth A. Grove, and Jeffery Saks, of Counsel), Cleveland, OH, for Defendants American

Board of Emergency Medicine, Henry A. Theide, M.D. and Frank A. Disney, M.D.

Phillips, Lytle, Hitchcock, Blaine & Huber (Robert E. Glanville, of Counsel), Buffalo, NY, for Defendants American Board of Emergency Medicine, Council of Emergency Medicine Residency Directors and as Liaison Counsel for all Defendants.

ORDER

ARCARA, District Judge.

This antitrust case was referred to Magistrate Judge Leslie G. Foschio, pursuant to 28 U.S.C. § 636(b)(1), on April 24, 1991.¹ On February 24, 1994, plaintiffs filed a motion for class certification. On May 4, 2000, defendants filed a cross-motion to dismiss the Second Amended Complaint. On January 3, 2003, Magistrate Judge Foschio filed an Amended Report and Recommendation, recommending, inter alia, that defendants' cross-motion to dismiss the Second Amended Complaint be granted because plaintiffs lack antitrust standing. Magistrate Judge Foschio found that plaintiffs lack antitrust standing because: (1) they have failed to allege a cognizable antitrust injury; and (2) they are not "efficient enforcers" of the antitrust laws. In the event that this Court were to reject his recommendation that the case be dismissed, Magistrate Judge Foschio also recommended, in the alternative, that plaintiffs' motion for class certification be granted under Federal Rule of Civil Procedure 23(b)(3) and denied under Federal Rule of Civil Procedure 23(b)(2).

Plaintiffs and defendants both filed objections to the Report and Recommendation on February 14, 2003. They both filed responses to the objections on March 14, 2003, and replies thereto on March 28, 2003. Oral argument on the objections was held on May 23, 2003.

Pursuant to 28 U.S.C. § 636(b)(1), this Court must make a de novo determination of those portions of the Report and Recommendation to which objections have been made. Upon a de novo review of the Report and Recommendation, and after reviewing the submissions and hearing argument from the parties, the Court adopts Magistrate Judge Foschio's recommendation that the Court grant defendants' motion to dismiss the Second Amended Complaint.²

As Magistrate Judge Foschio found in his thorough and well-reasoned Report and Recommendation, the plaintiffs, in their Second Amended Complaint, have failed to allege antitrust standing. Antitrust plaintiffs "must plead and prove that the injury they have suffered derives from some anticompetitive conduct and is the type the antitrust laws were intended to prevent." Todorov v. DCH Healthcare Autk, 921 F.2d 1438, 1450 (11th Cir. 1991). Here, plaintiffs seek as damages the loss of the higher income they allegedly would have received had they been able to become board certified through the practice track. However, as the Seventh Circuit held in the analogous case of Sanjuan v. American Bd. of Psychiatry & Neurology Inc., 40 F.3d 247, 251 (7th Cir. 1994), cert. denied, 516 U.S. 1159, 116 S.Ct. 1044, 134 L.Ed.2d 191 (1996), a plaintiff-doctor's inability to charge higher fees because he or she has been denied board certification does not constitute a cognizable form of injury under the antitrust laws. "[T]he claim that a practice reduces (particular) producers' incomes has nothing to do with the antitrust laws, which are designed to drive producers' prices down rather than up." Id. (citations omitted). "Plaintiffs, who want to obtain a credential that will help them charge higher prices, have pleaded themselves out of court on the[ir] antitrust claim." Id. at 252.

Moreover, as Magistrate Judge Foschio found, in addition to failing to allege an antitrust injury, this action must be dismissed because, under the facts and circumstances present here, plaintiffs are not "efficient enforcers" of the antitrust laws and therefore lack standing for that reason as well. The Supreme Court has held that for standing to sue under Section 4 or Section 16 of the Clayton Act, in addition to meeting the threshold requirement of having alleged an antitrust injury, a party seeking redress must also be a "proper plaintiff under the antitrust laws. Cargill, Inc. v. Monfort of Colorado, 479 U.S. 104, 110 n. 5, 107 S.Ct. 484, 93 L.Ed.2d 427 (1986); see also Todorov, 921 F.2d at 1450 (to have antitrust standing, a plaintiff must be "an efficient enforcer of the antitrust laws"). Here, plaintiffs' objective is to advance their own economic interests by obtaining access to the same higher levels of compensation created by the charged conspiracy. In other words, plaintiffs' economic incentive is to keep prices higher and to share in those higher prices with the members of the alleged conspiracy. Such a motivation is inimical to being an "efficient enforcer" of the antitrust laws.

In their objections, plaintiffs ask that the Court grant them a further opportunity to amend their complaint to state that they seek only to recover the difference between their actual earnings and the amount they would have earned in a competitive market absent the conspiracy. However, such an amendment would be futile because it would still not sufficiently plead an antitrust injury. The bottom line is that, even with the amendment, plaintiffs seek to increase the price they charge to consumers as compared to the price charged by other non-board certified emergency medicine physicians. As such, the amendment does not allege a cognizable antitrust injury. Sanjuan, 40 F.3d at 251-52. Furthermore, this case is already 13 years old. The amendment proposed by the plaintiffs would be inconsistent with the now-developed record. Throughout the case, plaintiffs have claimed that they are entitled to the same supercompetitive prices earned by board-certified physicians. They now want to change their entire theory of the case in order to avoid dismissal. Even now, however, they are unable to offer an expert report that would support their theory, despite having had years to secure such a report. For all these reasons, the Court denies plaintiffs' request to file another amended complaint.

In sum, for the reasons set forth both in Magistrate Judge Foschio's Report and Recommendation and herein, the Court grants defendants' motion to dismiss the Second Amended Complaint. The Clerk of Court is hereby ordered to take all steps necessary to close the case.

IT IS SO ORDERED.

AMENDED REPORT AND RECOMMENDATION

FOSCHIO, United States Magistrate Judge.

JURISDICTION

This matter was referred, pursuant to 28 U.S.C. § 636(b)(1)(A) & (B), to the undersigned on April 24, 1991 by Hon. Richard J. Arcara for all pretrial matters. The matter is presently before the court on Plaintiffs' motion for class certification, filed February 24, 1994 (Doc. No. 69) ("Plaintiffs' Motion"), and Defendants' cross motion to dismiss the Second Amended Complaint, pursuant to Fed. R.Civ.P. 16(b)(1) filed May 4, 2000 (Doc. No. 773) ("Defendants' Cross Motion").

BACKGROUND

In their Second Amended Complaint, brought pursuant to Sections 4 and 16 of the Clayton Act, 15 U.S.C. § 15 ("Section 4"), 15 U.S.C. § 26 ("Section 16"), Plaintiffs alleged violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and sought monetary damages and injunctive relief. Prior proceedings in this action include Daniel v. American Board of Emergency Medicine, et al, 802 F.Supp. 912 (W.D.N.Y. 1992) ("Daniel I") (sustaining Amended Complaint against motion to dismiss); Daniel v. American Board of Emergency Medicine, et al., 988 F.Supp. 112 (W.D.N.Y. 1997) ("Daniel II"); and, Daniel v. American Board of Emergency Medicine, et al., 988 F.Supp. 127 (W.D.N.Y. 1997) ("Daniel III"). Discovery on the merits of Plaintiffs' claims has been stayed pending resolution of the numerous motions filed by Defendants attacking the Second Amended Complaint and Defendants' opposition to Plaintiffs' instant motion for class certification.

In a Report and Recommendation filed on January 16, 1996 (Doc. No. 435), the undersigned recommended dismissal of ten Defendants, including Tri-City Medical Center, University of California Medical Centers at Los Angeles, Irvine and San Diego, University of Massachusetts Medical Center, University Hospital of University of New Mexico School of Medicine, Oregon Health Services University...