Marrese v. AMERICAN ACADEMY OF ORTH. SURGEONS

• Citation: 524 F. Supp. 389
• Decision Date: 14 October 1981
• Docket Number: No. 80 C 1405.,80 C 1405.
• Court: U.S. District Court — Northern District of Illinois
• Parties: R. Anthony MARRESE, M.D., et al., Plaintiffs, v. AMERICAN ACADEMY OF ORTHOPAEDIC SURGEONS, Defendants.

524 F. Supp. 389

R. Anthony MARRESE, M.D., et al., Plaintiffs, v. AMERICAN ACADEMY OF ORTHOPAEDIC SURGEONS, Defendants.

No. 80 C 1405.

United States District Court, N. D. Illinois, E. D.

August 17, 1981.

On Motion for Reconsideration October 5, 1981.

Supplemental Opinion October 14, 1981.

Glenn A. Schwartz, Charlotte W. Ziproyn, from the firm of Landesman, Schwartz & Auslander, Chicago, Ill., Stephen B. Cohen, William J. Stevens, Joseph Schuman and Michael T. Sawyier from the firm of Foss, Schuman & Drake, Chicago, Ill., for plaintiffs.

Thomas M. Crisham, Thomas S. White, Pamela S. Hollis and Robert E. Nord from the firm of Hinshaw, Culbertson, Chicago, Ill., for defendants.

MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

On August 13, 1981 our Court of Appeals dismissed the appeal of defendant American Academy of Orthopaedic Surgeons ("Academy") from this Court's order denying Academy's motion for a preliminary injunction seeking to bar discovery by plaintiffs R. Anthony Marrese and Michael R. Treister ("Drs. Marrese and Treister"). In note 1 of its unpublished order in No. 81-1570 (7th Cir. Aug. 13, 1981) the Court invited reconsideration of the prior order of this Court, 496 F.Supp. 236 (N.D.Ill.1980), which had been made a principal part of the oral argument on the aborted appeal:

1In its motion to dismiss, the Academy argued, inter alia, that this suit was barred by the doctrine of res judicata because of previous litigation brought by plaintiffs against the Academy in the Circuit Court of Cook County, Illinois. See Treister v. Academy of Orthopaedic Surgeons, 78 Ill.App.3d 746 33 Ill.Dec. 501 396 N.E.2d 1225 (1st Dist. 1979), leave to appeal denied, 79 Ill.2d 630. The district court held plaintiffs' antitrust claims were not barred by res judicata because they could not have been raised in state court. The propriety of this ruling is not before this Court. However, we presume that the motion to dismiss will be renewed and reconsidered in light of the Supreme Court's recent decision in Federated Department Stores, Inc. v. Moitie, ___ U.S. ___, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981).

This Court has sua sponte accepted the Court of Appeals' invitation as a directive. However it does not view Federated as calling for a different conclusion from that previously reached on the res judicata issue —and with all respect to the Court of Appeals' suggestion, this Court does not believe its adherence to its original position is simply a matter of "coming out the same door it went in."

Part I of the Federated opinion, its statement of facts ___ U.S. at ___ _ ___, 101 S.Ct. at 2426-2427, demonstrates graphically why that case presents the opposite side of the coin from this one, and why res judicata was properly applied there and does not apply here. We focus on Brown I and Brown II, the subject of the Supreme Court's decision.¹

Brown I was a federal antitrust action that "tracked almost verbatim the allegations of the Government's Sherman Act complaint" (___ U.S. at ___, 101 S.Ct. at 2426). Once the District Court for the Northern District of California had thus acquired jurisdiction of the parties it had the power to consider not only the federal antitrust action but also any essentially identical state claims that Brown may have had against Federated and its co-defendants. That being so the District Court's dismissal of Brown's action "in its entirety" on the merits, when it became final, foreclosed all claims that Brown had asserted or might have asserted before the federal court. As Justice Rehnquist put it for the Court in Federated, ___ U.S. at ___, 101 S.Ct. at 2427:

There is little to be added to the doctrine of res judicata as developed in the case law of this Court. A final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action. Commissioner v. Sunnen, 333 U.S. 591, 597 68 S.Ct. 715, 92 L.Ed. 898 (1948); Cromwell v. County of Sac, 94 U.S. 351, 352-353 24 L.Ed. 195 (1877).

It was therefore fitting and proper for the Supreme Court to reverse the Court of Appeals, which had "conceded that the `strict application of the doctrine of res judicata' required that Brown II be dismissed" but nonetheless out of equitable considerations had sought to create an unwarranted and "unprecedented departure from accepted principles of res judicata" (id.).

But as this Court pointed out in its earlier opinion in this case, Drs. Marrese's and Treister's federal antitrust issues against Academy — which this Court is called on to adjudicate in this action — are not, as the Supreme Court put it in Federated, "issues that were or could have been raised in that action" — the state court action presented to the first forum that ruled on disputes between the parties. Had Drs. Marrese and Treister sought to insert their federal antitrust claim into their state court complaint they could not have done so, for "jurisdiction of federal antitrust suits is exclusively in the federal courts." Kurek v. Pleasure Driveway & Park District of Peoria, 583 F.2d 378, 379 (7th Cir. 1978). Therefore when the Illinois state courts dismissed Drs. Marrese's and Treister's lawsuits for failure to state a cause of action under Illinois law:

(1) They could not have been deciding that Drs. Marrese and Treister had failed to state a cause of action under the federal antitrust laws. Accordingly issue preclusion — collateral estoppel — does not bar the federal claim before this Court.

(2) They could not be deemed to have foreclosed a claim that Drs. Marrese and Treister by definition could not have asserted before then. Accordingly the doctrine of res judicata does not bar the federal claim before this Court.

For that reason the powerful logic of Judge Learned Hand in the seminal case of Lyons v. Westinghouse Electric Corp., 222 F.2d 184, 188-89 (2d Cir. 1955), which is an integral part of the "accepted principles of res judicata" to which the Supreme Court twice referred in Federated (___ U.S. at ___, 101 S.Ct. at 2427), retains its full force. Its inexorable logic and that of the other authorities (including the Restatement (Second) of the Law of Judgments) cited in this Court's earlier opinion (496 F.Supp. at 238-39) teach that res judicata does not bar the present action, and nothing in the Federated opinion teaches otherwise.

If Academy has other authority to advance in support of its position, not already submitted in its first presentation of the issues to this Court, the Court will welcome the opportunity to consider such authority. If not, it has complied with our Court of Appeals' suggestion for reconsideration.

ON MOTION FOR RECONSIDERATION

On August 13, 1981 our Court of Appeals dismissed the appeal of defendant American Academy of Orthopaedic Surgeons ("Academy") from an interlocutory order of this Court. In a footnote to its unpublished order the Court of Appeals invited reconsideration, in light of Federated Department Stores, Inc. v. Moitie, ___ U.S. ___, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981), of this Court's earlier opinion dealing with Academy's res judicata defense (the "First Res Judicata Opinion," 496 F.Supp. 236 (N.D.Ill. 1980)). This Court promptly issued an August 17 memorandum opinion and order (the "Second Res Judicata Opinion") analyzing Federated and concluding that it required no change in the Court's original conclusion on the subject.

Academy has now moved for reconsideration of the Second Res Judicata Opinion in light of Nash County Board of Education v. Biltmore Co., 640 F.2d 484 (4th Cir. 1981)¹ and Federated. For the reasons stated in this memorandum opinion and order Academy's motion is denied.

Because this Court has dealt fully with Federated in the Second Res Judicata Opinion it will not pause for further discussion here. For the reasons already expressed there the Court simply does not agree with Academy that "Federated reinforces the approach taken in Nash" — not in the context of the present case.

Nash dealt with the effect of an earlier antitrust action, brought under the North Carolina state statute identical in all relevant respects to the federal antitrust laws, on a subsequent federal antitrust action. Plaintiffs in the two actions were both agencies of state government, held for res judicata purposes to be in privity with each other (640 F.2d at 493-97). Each sought treble damages, provided for in the North Carolina statute as under federal law. Id. at 485. Thus the actions set the stage for consideration whether the two cases involved an "identity of causes of action" — essential for res judicata — given the identity of facts and legal theories involved (id. at 486):

The only differences between this action and the earlier action were (1) that this suit was based on the federal antitrust act and the earlier suit had based its legal claim on the state antitrust act and (2) the plaintiff in this later suit sought only treble damages but no injunctive relief.

As the Court put it (id. at 488):

The two suits allege the same wrongful act, the same illegal price-fixing conspiracy, the same operative facts in support of such conspiracy. The state and federal statutes upon which the two actions are based are identical in language except in the requirement of the federal statute, but not of the state statute, of a showing of interstate commerce. In both cases, the evidence will be identical and the damages recoverable and the relief available the same.

Under established precedent, the identity of two actions, as intimately tied together as these two, will not be destroyed in the res judicata context simply because the two suits are based on different statutes.

Here we deal not with res judicata but with claimed collateral estoppel. Plaintiffs' state court action was not an antitrust action. It claimed that denial of Academy membership followed fundamentally unfair procedures and was therefore void...