Kiepfer v. Beller

• Decision Date: 21 October 1991
• Docket Number: No. 90-5538,90-5538
• Parties: Richard F. KIEPFER, M.D., Plaintiff-Appellant, v. Barry M. BELLER, Etc., et al., Defendants, American Physicians Insurance Exchange, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1213

944 F.2d 1213

Richard F. KIEPFER, M.D., Plaintiff-Appellant, v. Barry M. BELLER, Etc., et al., Defendants, American Physicians Insurance Exchange, Defendant-Appellee.

No. 90-5538.

United States Court of Appeals, Fifth Circuit.

Oct. 21, 1991.

John N. Mastin, Jack N. Price, San Antonio, Tex., for plaintiff-appellant.

Kenneth L. Malone, Emerson Banack, Jr., Foster, Lewis, Langley, Frederick C. Shannon, Jr., Shannon & Weidenbach, San Antonio, Tex., for defendant-appellee.

Appeal from the United States District Court for the Western District of Texas.

Before JOHNSON, WILLIAMS and HIGGINBOTHAM, Circuit Judges.

JOHNSON, Circuit Judge.

Richard Kiepfer, M.D., sued the American Physicians Insurance Exchange (APIE) and three other doctors for retaliating against him for testifying on behalf of a plaintiff in a medical malpractice action. The case was submitted to the jury on two theories: tortious interference with business relations and violations of the antitrust laws. The jury found in favor of Dr. Kiepfer on both theories and awarded him over $4 million in damages. The trial judge entered judgment on the verdict as to the doctors, but set the verdict aside as to APIE. Dr. Kiepfer appeals, arguing that there was sufficient evidence to support the jury's verdict against APIE. After a thorough and careful review of the record, this Court concludes that Dr. Kiepfer is at least partly correct. The judgment of the district court must be reversed in part, and certain aspects of the jury's verdict reinstated.

I. Facts and Procedural History

The evidence presented at trial tended to show the following facts. In 1979 Dr. Thomas Eades, a cardiologist practicing in San Antonio, Texas, joined the American Physicians Insurance Exchange (APIE). APIE is what is known in Texas law as a reciprocal insurance exchange, meaning that it is an insurance company cooperatively owned by those it insures--some 5,000 doctors in Texas and Arkansas. APIE provides medical malpractice insurance to its member doctors. The exchange is governed by a board of directors elected annually; that board, however, does not attend to the day to day business of providing insurance or investigating, settling, or defending claims. Rather, as provided by Texas statute, see Tex.Ins.Code Ann. art. 19.02 (Vernon 1980), APIE entrusts the day to day operations of its insurance business to an attorney in fact. APIE employs APS Facilities Management, Inc. (APS), to carry out its daily business affairs. The APIE board of directors meets quarterly to review the business and to direct APS to implement any changes in policy the board decides are necessary. Dr. Eades joined APIE in 1979, and was elected chairman of the board of APIE in 1985.

Dr. Eades was a cardiologist in San Antonio, Texas. He and another cardiologist, Dr. Barry Beller, conducted their practice through a professional association which they owned, called Cardiovascular Associates (CVA). In 1979 CVA hired Dr. Kiepfer as a consulting physician. Dr. Kiepfer specialized in nuclear medicine, which allowed him to perform certain tests or scans of heart patients using radioactive isotopes. Dr. Kiepfer conducted his work on CVA's premises but was not an owner of CVA. In addition to his work for CVA, Dr. Kiepfer also accepted referrals from, and performed scans for, other cardiologists. While there was some conflict in the evidence as to whether Dr. Kiepfer performed his work for CVA satisfactorily, he continued to be employed by CVA until the summer of 1985.

In the summer of 1985 Dr. Eades and Dr. Beller learned that Dr. Kiepfer was testifying for the plaintiff in a medical malpractice action being tried in Texas state court. Dr. Eades went to the courthouse and observed some portion of Dr. Kiepfer's testimony. Dr. Eades and Dr. Beller were angered by Dr. Kiepfer's testimony; the reason for their anger, however, is disputed. Drs. Eades and Beller contended that they were angered because Dr. Kiepfer lied on the witness stand. Dr. Kiepfer contended that their anger was due solely to the fact that he was testifying against another member of the medical profession. In any case, almost immediately after his testimony was concluded, Drs. Eades and Beller fired Dr. Kiepfer from his position at CVA. Again there was some conflict in the evidence: Drs. Eades and Beller contended that they fired Dr. Kiepfer for a variety of reasons--among others, that his work had been unsatisfactory and that he had engaged in some unauthorized use of CVA's premises and equipment.

Dr. Kiepfer's evidence tended to show that he was fired primarily because he had testified against another doctor. Dr. Kiepfer further contended, and presented evidence that tended to show, that after he was fired Drs. Eades and Beller engaged in a campaign to persuade other doctors in the San Antonio area to stop referring cases to Dr. Kiepfer. This campaign was very successful. Over a period of sixty days following his firing from CVA, Dr. Kiepfer's referral practice dropped from a high of about $15,000 per month to zero. Finally, in late 1985 APIE notified Dr. Kiepfer that it would not renew his medical malpractice insurance.

In November 1985 Dr. Kiepfer brought this action against APIE, Dr. Eades, Dr. Beller, and Dr. Harold Felter, another cardiologist, alleging that these defendants had combined in restraint of interstate commerce, in violation of the Sherman Act. He also brought various pendent claims under Texas state law, alleging that these defendants had slandered him and that they had tortiously interfered with his contractual relations. The case proceeded to trial before a jury. The slander claim against APIE was dismissed at the close of the plaintiff's evidence. At the same time, and again at the close of all of the evidence, APIE moved for a directed verdict as to all claims against it, on the grounds that Dr. Kiepfer had failed to show that APIE had engaged in any wrongful conduct, or that any of Dr. Eades' actions were taken on behalf of APIE. The trial judge denied the motion, and submitted the case to the jury.

The jury returned verdicts against Dr. Eades, Dr. Beller, and APIE. By their answers to special interrogatories, the jury found that Dr. Eades, Dr. Beller, and APIE had 1) conspired to restrain interstate commerce in violation of the Sherman Act, and 2) had tortiously interfered with Dr. Kiepfer's ability to obtain referrals, in violation of Texas law. The jury awarded Dr. Kiepfer compensatory and punitive damages. Before judgment was entered on the verdict, Drs. Eades and Beller settled with Dr. Kiepfer, each paying him $950,000 in return for a release from all claims. APIE moved for a judgment notwithstanding the verdict on the same grounds it had urged in its motions for a directed verdict; the trial judge granted the motion. Dr. Kiepfer now appeals from that ruling.

II. Discussion

A. The Standard of Review

The standard of review of a judgment notwithstanding the verdict is well settled. When reviewing a trial judge's decision to grant a judgment notwithstanding the verdict, this Court asks whether the evidence before the jury and any reasonable inferences drawn from the evidence would have allowed a rational jury to reach the conclusion that it actually reached. If not, then it is proper for the trial court to grant judgment notwithstanding the verdict. Boeing Co. v. Shipman, 411 F.2d 365, 377 (5th Cir.1969) (en banc). It is for the jury to weigh the evidence before it, judge of the witnesses' credibility, and resolve conflicts. Id. Thus, if there is an evidentiary basis for the verdict, the jury's determination will be left undisturbed even if there is substantial contradicting evidence. Gibraltar Sav. v. LDBrinkman Corp., 860 F.2d 1275, 1297 (5th Cir.1988). At the same time, however, in considering the evidence the jury is confined only to those inferences which are reasonable; an inference is unreasonable if it allows the jury to rest its verdict on mere speculation and conjecture. Pregeant v. Pan American World Airways, Inc., 762 F.2d 1245, 1249 n. 5 (5th Cir.1985).

The jury found in favor of Dr. Kiepfer on two claims, one alleging that APIE and the other defendants had tortiously interfered with Dr. Kiepfer's business relations, and the other alleging that APIE and the other defendants had conspired to restrain interstate commerce, in violation of the Sherman Act, 15 U.S.C. § 1. The trial judge set aside the jury's verdict on both counts. He ruled that the only potential source of liability for APIE was vicarious liability for the actions of Dr. Eades, the chairman of APIE's board of directors, and that the evidence was insufficient to establish such liability. On appeal, Dr. Kiepfer argues that the evidence was sufficient to allow the jury to hold APIE liable for the actions of Dr. Eades.

B. APIE's Liability for Dr. Eades' Actions

The first question presented is whether Dr. Eades' actions against Dr. Kiepfer--firing him from CVA and conducting a campaign to choke off his referral practice--may be charged against APIE. Those actions might be charged to APIE if, for instance, Dr. Eades were the agent of APIE, or if APIE authorized or ratified Dr. Eades' actions. To determine the extent of APIE's liability for the actions of the chairman of its board of directors, this Court must look to Texas law.

The Texas Insurance Code does not contain any provision relating to whether the directors of a reciprocal insurance exchange are agents of the exchange. Accordingly, the question of Dr. Eades' agency must be resolved by resort to the provisions of the Texas Business Corporation Act. ¹ Those provisions and the cases interpreting them make clear that a single director of a corporation, even if he is the chairman of the board of directors, cannot by himself bind that corporation unless he is 1) acting within the course and scope of his duties as director, or 2) his actions are authorized or ratified by...