Kochert v. Greater Lafayette Health Services, Inc.

• Citation: 463 F.3d 710
• Decision Date: 12 September 2006
• Docket Number: No. 05-1196.,05-1196.
• Parties: Carolyn G. KOCHERT, Plaintiff-Appellant, v. GREATER LAFAYETTE HEALTH SERVICES, INC., et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

463 F.3d 710

Carolyn G. KOCHERT, Plaintiff-Appellant, v. GREATER LAFAYETTE HEALTH SERVICES, INC., et al., Defendants-Appellees.

No. 05-1196.

United States Court of Appeals, Seventh Circuit.

Argued February 13, 2006.

Decided September 12, 2006.

Miles J. Zaremski (argued), Kamensky Rubinstein Hochman & Delott, LLP, Lincolnwood, IL, for Plaintiff-Appellant.

Larry R. Fisher, Stephen R. Pennell (argued), Stuart & Branigin LLP, Lafayette, IN, Judy L. Woods (argued), Bose McKinney & Evans LLP, Indianapolis, IN, for Defendants-Appellees.

Before KANNE, EVANS, and WILLIAMS, Circuit Judges.

WILLIAMS, Circuit Judge.

In this appeal, Carolyn Kochert challenges the district court's grant of summary judgment for the defendants on Kochert's claims alleging violations of Sections 1 and 2 of the Sherman Antitrust Act. Mindful of the Supreme Court's admonition that the purpose of federal antitrust law "is not to protect businesses from the working of the market; it is to protect the public from the failure of the market," see Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 458, 113 S.Ct. 884, 122 L.Ed.2d 247 (1993), we conclude that Kochert does not have antitrust standing, and so we affirm the judgment of the district court.

I. BACKGROUND

Carolyn Kochert, M.D., began practicing anesthesiology in Lafayette, Indiana in 1985. From 1985 to 1994, Kochert practiced at both of the hospitals in Lafayette, Home Hospital and St. Elizabeth's Medical Center ("SEMC"). In 1994, Home Hospital and defendant Anesthesia Associates entered into a contract granting Anesthesia Associates, an anesthesiology practice group, exclusive rights to provide anesthesia services at Home Hospital. It is undisputed that exclusive services arrangements between anesthesiology practice groups and hospitals are commonplace in this industry and do not inherently raise anticompetitive concerns. After being offered the contract for anesthesia services at Home Hospital, Anesthesia Associates offered anesthesiologists with privileges at Home Hospital subcontracts to provide anesthesia services at Home Hospital. Kochert received a subcontract, which was eventually extended to 1998. Although Kochert's Home Hospital subcontract was not renewed in 1998, she continued to provide anesthesia services at SEMC.

In 1998, Home Hospital and SEMC merged to form defendant Greater Lafayette Health Services ("GLHS"), which administered both hospitals. Soon thereafter, Lafayette Anesthesiologists, a practice group of which Kochert was a member, obtained an exclusive three-year anesthesiology contract at SEMC, in which Kochert participated. When this contract expired in 2001, GLHS did not renew its ties with Lafayette Anesthesiologists and instead contracted with Anesthesia Associates to provide exclusive anesthesia services at SEMC. Anesthesia Associates's contract to provide exclusive anesthesia services at both Home Hospital and SEMC has been extended several times and the current extension terminates October 14, 2006.

Kochert claims that Lafayette Anesthesiologists was the only group "within an hour of Lafayette" that could provide a competitive check on Anesthesia Associates. Due to Anesthesia Associates's exclusive contracts, Kochert alleges that she has been unable to practice anesthesiology at Home Hospital since March 1998 and at SEMC since 2001. Kochert claims that consumer welfare decreased because of the exclusive contracts with Anesthesia Associates. For instance, she states that before Home Hospital awarded the exclusive contract to Anesthesia Associates in 1994, there were no reported problems with anesthesiologists leaving operating rooms or otherwise failing to monitor patients undergoing surgery, while such problems became commonplace after the grant of the exclusive contract to Anesthesia Associates in 1994. She also claims that the exclusive contracts increased anesthesia services prices and increased delayed surgeries due to the unavailability of Anesthesia Associates anesthesiologists. Defendants counter that short absences of anesthesiologists during surgical procedures is commonplace, and they cite a 1997 report by the American Society of Anesthesiologists that determined the "quality of anesthesia care at Home Hospital to be good."

Allegedly because of the limitations on her anesthesiology practice, Kochert began considering a practice in pain management in 1998. She received board certification in pain management in 1999, and later that year opened a pain management practice (Advanced Pain Management). By August 1, 2000, Kochert was practicing pain management full time. Kochert claims that she did not enter that field voluntarily, but rather was forced into pain management practice due to the operation of the exclusive Anesthesia Associates contracts. She claims that she made written requests to exercise her privileges in anesthesiology at GLHS in 2002 and 2003. Kochert continues to practice pain management at Home Hospital and SEMC today.

In September 2001, Kochert brought this antitrust suit against GLHS, Anesthesia Associates, and John Walling (GLHS's CEO). She alleged that she suffered antitrust injury as a direct consequence of the defendants' actions excluding competition from the market and that the defendants exercised monopoly power in the market. To support her claims, Kochert attempted to introduce the testimony of several experts, including Dr. Bruce Seaman, an economist. Seaman opined that the relevant product market was "anesthesia services,"¹ and offered three versions of the relevant geographic market,² the broadest of which included Tippecanoe County and seven contiguous counties.

Defendants GLHS and Anesthesia Associates filed Daubert³ motions to exclude Seaman's testimony, arguing that Seaman had (1) incorrectly defined the relevant product market, (2) used incorrect methodology in defining the relevant geographic market and unreliable definitions, and (3) failed to do a dynamic analysis. After extensive hearings and oral arguments regarding the Daubert issue, the district court admitted Seaman's expert testimony, noting that the fact that the evidence passed muster under a Daubert relevance and reliability analysis did "not ensure or decide whether such evidence is ultimately persuasive." The question of the evidence's persuasiveness, the district court stated, would be decided "either during summary judgment or at trial."

A month later, the district court granted summary judgment to the defendants on all counts and claims. The district court found that Kochert had no antitrust standing and had not met her burden of proving an antitrust violation. The court ruled that Kochert could not withstand summary judgment on the antitrust violation in part because she could not show that the defendants' alleged practices had produced any anti-competitive effects in the relevant geographic market.⁴ Specifically, the district court held that Seaman's eight-county geographic market was too narrow for two reasons: the results of his analysis for this area did not yield results sufficient to accept his definition of the market, and Seaman's analysis ignored commercial realities of the area.

The district court also concluded that: (1) Kochert failed to demonstrate that the exclusive contract between GLHS and Anesthesia Associates constituted an unlawful tying arrangement; (2) the contract between Anesthesia Associates and GLHS did not constitute an illegal "group boycott" of Kochert; (3) no reasonable trier of fact could conclude that the defendants caused actual harm to competition, or that GLHS is able to restrain trade due to its market power; (4) the defendants lacked the requisite specific intent necessary for a conspiracy to monopolize in violation of the Sherman Act; (5) res judicata barred Kochert's Count V group boycott claim; (6) Kochert could not succeed on her "essential facility" claim because alternative facilities are available; and (7) Kochert's Indiana state antitrust claims could not survive summary judgment.

Kochert now appeals the grant of summary judgment.

II. ANALYSIS

We review the district court's grant of summary judgment de novo. In re Copper Antitrust Litigation, 436 F.3d 782, 788 (7th Cir.2006). All facts must be construed in the light most favorable to Kochert, the non-moving party. Id. The district court's grant of summary judgment was proper only if there was "no genuine issue as to any material fact and. . . the moving party [was] entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

A. Article III Standing

The defendants argue, for the first time on appeal, that Kochert lacks standing under Article III of the United States Constitution. Of course, defendants are not precluded from raising this claim because such a challenge to the court's jurisdiction may not be waived. See FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 230-31, 110 S.Ct. 596, 107 L.Ed.2d 603 (1990). Indeed, we "are under an independent obligation to examine [our] own jurisdiction, and standing `is perhaps the most important of the jurisdictional doctrines.'" Id. (quoting Allen v. Wright, 468 U.S. 737, 750, 104 S.Ct. 3315, 82 L.Ed.2d 556, (1984)) (brackets omitted). Generally, all that is required to demonstrate Article III standing is "injury in fact plus redressability." See U.S. Gypsum Co. v. Indiana Gas Co., Inc., 350 F.3d 623, 627 (7th Cir.2003); Sanner v. Bd. of Trade of City of Chicago, 62 F.3d 918, 922 (7th Cir.1995) (stating with more specificity that "(1) the party must personally have suffered an actual or threatened injury caused by the defendant's allegedly illegal conduct, (2) the injury must be fairly traceable to the defendant's challenged conduct, and (3) the injury must be one that is likely to be redressed through a favorable decision") (quoting Valley Forge Christian Coll. v. Americans United for Separation of Church...