Marrese v. American Academy of Orthopaedic Surgeons

Decision Date10 January 1984
Docket Number83-2683,Nos. 81-2671,s. 81-2671
Parties1984-1 Trade Cases 65,797, 14 Fed. R. Evid. Serv. 1185 R. Anthony MARRESE and Michael R. Treister, Plaintiffs-Appellees, v. AMERICAN ACADEMY OF ORTHOPAEDIC SURGEONS, Defendant-Appellant.
CourtU.S. Court of Appeals — Seventh Circuit

D. Kendall Griffith, Hinshaw, Culbertson, Moelmann, Hoban & Fuller, Chicago, Ill., for defendant-appellant.

Michael T. Sawyier, Foss, Schuman & Drake, John J. Casey, Chicago, Ill., for plaintiffs-appellees.


POSNER, Circuit Judge.

These consolidated appeals present important questions relating to the scope of the doctrine of res judicata in our system of dual state and federal courts, and to the responsibilities of federal district judges in controlling pretrial discovery.

In 1976 the American Academy of Orthopaedic Surgeons, a private association, rejected the plaintiffs' applications for membership, without a hearing or a statement of reasons. The plaintiffs sued the Academy in an Illinois state court, claiming among other things that the common law of Illinois and the Illinois constitution required the Academy to grant a hearing on their applications and to use reasonable standards in deciding whether to accept the applications. The plaintiffs made no claim under Illinois antitrust law; nor did they, at that time, bring a federal antitrust suit.

The Illinois Appellate Court ordered Dr. Treister's complaint dismissed for failure to state a claim, noting that membership in the Academy is not an "economic necessity," Treister v. American Academy of Orthopaedic Surgeons, 78 Ill.App.3d 746, 755-56, 33 Ill.Dec. 501, 508, 396 N.E.2d 1225, 1232 (1979), and the Illinois Supreme Court denied leave to appeal, 79 Ill.2d 630 (1980). Though alleged to confer professional advantages, membership in the Academy is not required for practicing as an orthopaedic surgeon or obtaining hospital staff privileges. Both plaintiffs are certified to practice orthopaedic surgery and have staff privileges at several hospitals.

Dr. Marrese was not a party to the appeal, but his suit was stayed pending Treister's appeal and was dismissed after Treister lost his appeal.

After losing in the Illinois Appellate Court, Dr. Treister (joined by Dr. Marrese) brought this suit in federal district court for damages and injunctive relief under section 1 of the Sherman Act, 15 U.S.C. Sec. 1. The complaint alleged that the Academy is "a monopoly in its field, possessed of substantial power to control the market for orthopaedic surgical services," and that the plaintiffs were refused membership because they compete too vigorously with existing members of the Academy. The Academy moved to dismiss the complaint on the ground that the judgment in the plaintiffs' state-court action against the Academy was res judicata in the present suit. The motion was denied. 496 F.Supp. 236 (N.D.Ill.1980), on reconsideration, 524 F.Supp. 389 (N.D.Ill.1981). The Academy asked the district judge to certify his denial for an immediate appeal under 28 U.S.C. Sec. 1292(b), arguing that whether the suit was barred by res judicata was a controlling question of law. The judge refused and pretrial discovery began. The plaintiffs asked the Academy to produce its files relating to all denials of membership applications between 1970 and 1980. The Academy refused. When it persisted in its refusal after the district judge issued an order to produce, the judge held the Academy in criminal contempt and fined it $10,000. See Fed.R.Civ.P. 37(a)(2), 37(b)(2)(D).

No. 81-2671 is the Academy's appeal from the contempt judgment. A panel of this court reversed the judgment more than a year ago, 692 F.2d 1083 (1982), but rehearing en banc was granted and the panel decision was vacated (the practice in this circuit when rehearing en banc is ordered, see Circuit Operating Procedure 5(f)). However, the order granting rehearing en banc was later vacated and the original panel issued a new decision, again reversing the judgment of contempt, but on a narrower ground. 706 F.2d 1488, 1489 (1983). Rehearing en banc was again sought and granted, and the second panel decision was vacated. Shortly before the rehearing, Judge Plunkett, to whom the case in the district court had been reassigned from Judge Shadur, certified Judge Shadur's order denying the Academy's motion to dismiss the complaint on the ground of res judicata for immediate appeal under section 1292(b). The plaintiffs questioned Judge Plunkett's jurisdiction to issue such a certification in light of the pendency of the appeal from the contempt judgment. But a motions panel of this court held that he had jurisdiction, authorized the appeal (which is No. 83-2683), and ordered it consolidated with No. 81-2671 for the en banc hearing.

The jurisdictional ruling was correct. The Academy's appeal from the contempt judgment did not bring the whole case up to this court but just the contempt proceeding, a collateral branch of the case. The rest of the case remained (and remains) pending in the district court before Judge Plunkett. The contempt judgment itself was appealable under 28 U.S.C. Sec. 1291. Bray v. United States, 423 U.S. 73, 96 S.Ct. 307, 46 L.Ed.2d 215 (1975).

We begin with No. 83-2683. As the main purpose of the doctrine of res judicata is to protect a defendant from being worn down by a plaintiff who sues him over and over again for the same allegedly wrongful conduct, a plaintiff may not sue the defendant on one theory and having lost try again on a different one. E.g., Federated Department Stores v. Moitie, 452 U.S. 394, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981); Mandarino v. Pollard, 718 F.2d 845, 849-50 (7th Cir.1983); Bunker Ramo Corp. v. United Business Forms, Inc., 713 F.2d 1272, 1277 (7th Cir.1983); Lee v. City of Peoria, 685 F.2d 196, 198 (7th Cir.1982); Harper Plastics, Inc. v. Amoco Chemicals Corp., 657 F.2d 939, 945 (7th Cir.1981). But that is what the plaintiffs have been doing in this case. After being denied membership in the Academy almost eight years ago, they sued the Academy in state court under a variety of theories. Although they could have alleged a violation of the Illinois Antitrust Act, Sec. 3(2), Ill.Rev.Stat.1981, ch. 38, Sec. 60-3(2), they did not; and although they could have brought a federal antitrust suit in federal court at the same time and joined their state law claims as pendent claims, they did not do that either. They waited till they had lost their state lawsuits and only then--after four years of litigating in state court the lawfulness of the denial of their membership applications--did they bring suit. No reason has been given or appears why they did not bring an antitrust suit, state or federal or both, at the time of their initial suits. The plaintiffs assert that the Academy's antitrust liability is clearly established by Klor's, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d 741 (1959)--a case that had been on the books for 17 years when the initial suits were filed.

But we are told that there is a technical obstacle to applying the doctrine of res judicata here: the plaintiffs could not have joined a Sherman Act claim with their state law claims in a suit brought in state court because federal courts have exclusive jurisdiction to enforce the federal antitrust laws. This proposition can be questioned. No statute purports to make the federal courts' jurisdiction over federal antitrust suits exclusive; compare 28 U.S.C. Sec. 1338(a), which makes the jurisdiction of the federal courts in patent and copyright cases "exclusive of the courts of the states," with 15 U.S.C. Secs. 15, 26. And it is hard to understand why state courts should be thought less competent to enforce the federal antitrust laws than the federal civil rights laws--which they have jurisdiction concurrently with the federal courts to enforce, Martinez v. California, 444 U.S. 277, 283 n. 7, 100 S.Ct. 553, 558 n. 7, 62 L.Ed.2d 481 (1980)--particularly when state courts can adjudicate federal antitrust defenses with preclusive effect on questions of fact under the doctrine of collateral estoppel in a subsequent federal antitrust suit. Lyons v. Westinghouse Elec. Corp., 222 F.2d 184, 188, 189 (2d Cir.1955); RX Data Corp. v. Department of Social Services, 684 F.2d 192, 196-97 and n. 4 (2d Cir.1982); Calvert Fire Ins. Co. v. American Mutual Reinsurance Co., 600 F.2d 1228, 1236 n. 18 (7th Cir.1979) (dictum). We nevertheless accept, as settled law that only the Supreme Court can at this late date reconsider, that the plaintiffs could not have brought their Sherman Act suit in an Illinois state court. See Blumenstock Bros. Advertising Agency v. Curtis Publishing Co., 252 U.S. 436, 440-41, 40 S.Ct. 385, 386-87, 64 L.Ed. 649 (1920); General Investment Co. v. Lake Shore & Mich. S. Ry., 260 U.S. 261, 287, 43 S.Ct. 106, 117, 67 L.Ed. 244 (1922); Kurek v. Pleasure Driveway & Park Dist., 583 F.2d 378, 379 (7th Cir.1978) (per curiam). But see Note, Exclusive Jurisdiction of the Federal Courts in Private Civil Actions, 70 Harv.L.Rev. 509, 510 n. 13 (1957).

The plaintiffs could, however, have joined with their other state claims a claim under the Illinois Antitrust Act, and if that Act is materially identical to the Sherman Act their failure to do so bars this suit under Nash County Bd. of Educ. v. Biltmore Co., 640 F.2d 484, 487-93 (4th Cir.1981). The Attorney General of North Carolina had brought a state antitrust suit against a number of dairy companies. After final judgment was entered in that suit, a local board of education (held to be in privity with the state attorney general) brought a federal antitrust suit against the same defendants. The federal suit involved the identical facts and was brought...

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