Marrese v. American Academy of Orthopaedic Surgeons

• Decision Date: 19 July 1983
• Docket Number: No. 81-2671,81-2671
• Citation: 706 F.2d 1488
• Parties: 1983-1 Trade Cases 65,365 R. Anthony MARRESE, M.D. and Michael R. Treister, M.D., Plaintiffs- Appellees, v. AMERICAN ACADEMY OF ORTHOPAEDIC SURGEONS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1488

706 F.2d 1488

1983-1 Trade Cases 65,365

R. Anthony MARRESE, M.D. and Michael R. Treister, M.D. Plaintiffs- Appellees, v. AMERICAN ACADEMY OF ORTHOPAEDIC SURGEONS, Defendant-Appellant.

No. 81-2671.

United States Court of Appeals Seventh Circuit.

Argued Feb. 26, 1982.

Decided May 11, 1983.

Rehearing En Banc Granted and Opinion Vacated July 19, 1983.

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

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

Before PELL, Circuit Judge, STEWART, Justice (Retired), and POSNER, Circuit Judge. ^*

POSNER, Circuit Judge.

This is an appeal from a judgment for criminal contempt for disobeying a discovery order. The appeal was originally decided by this panel in an opinion published at 692 F.2d 1083 (7th Cir.1982), with Justice Stewart dissenting, id. at 1096. Rehearing en banc was granted, but shortly before argument was scheduled to be heard it became apparent that the reservations of the judges who had voted to rehear the case concerned the breadth of the panel's majority opinion, and that if the panel majority was willing (as it was) to write a more narrowly focused opinion, en banc consideration could be obviated. This is that opinion. It has been circulated to all the members of the court in regular active service so that the court could decide, not whether it wants to adopt this opinion as the opinion of the court en banc, but whether it wants to go ahead with the scheduled en banc rehearing of the prior opinion; and the court by majority vote has decided to vacate the order granting rehearing en banc.

The American Academy of Orthopaedic Surgeons is a private association to which most orthopaedic surgeons in the United States belong. The plaintiffs, two orthopaedic surgeons practicing in Evansville, Indiana, and Chicago, respectively, were denied membership in the Academy without a hearing or a statement of reasons. Although membership in the Academy is alleged to confer certain professional advantages, it is not a prerequisite either to being certified to practice as an orthopaedic surgeon or to obtaining hospital staff privileges; each of the plaintiffs is certified to practice orthopaedic surgery, and has staff privileges at several hospitals.

The plaintiffs first sued the Academy in an Illinois state court, claiming a right under Illinois law to a hearing on their application and to reasonable standards for membership. They lost; the Illinois Appellate Court held that the complaint failed to state a claim because 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). They then sued the Academy in federal district court, seeking injunctive relief and damages 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, though fully qualified for membership under the announced criteria of the Academy, were denied membership for "extraneous" reasons, which in the case of Dr. Treister (no particulars were given for Dr. Marrese) included "(a) his supposed willingness to offer expert testimony against other orthopaedic surgeons in medical malpractice cases; (b) his known willingness to consult surgical out-patients on a relatively high-volume basis; and (c) his nonconformity of personality and personal attitudes with those of most established orthopaedic surgeons and in particular those who were already members of the academy." The complaint alleged that the effect of denying the plaintiffs' applications for membership had been "to limit competition and enforce conformity with current business practices" and to injure the plaintiffs in the practice of their profession.

Discovery began. The plaintiffs asked the Academy to produce all of its correspondence and other documents relating to the denial of the plaintiffs' applications for membership and to all other denials of membership applications between 1970 and 1980. The Academy refused, even after the court ordered it to produce the requested documents. The court held the Academy in criminal contempt and fined it $10,000, and this appeal followed.

The Academy asks us to hold that the discovery order was improper, but the plaintiffs point out that it is not a final order and argue that we cannot review it because the district court has not certified it for an immediate appeal under 28 U.S.C. Sec. 1292(b). The contempt judgment, however is a final order, reviewable by us; and if a party is willing to pay the price of being punished for contempt or suffering an equivalent sanction such as dismissal of the complaint if the validity of the order he has disobeyed is ultimately upheld, he may get immediate review of that order by appealing from the contempt judgment. E.g., United States v. Ryan, 402 U.S. 530, 532-33, 91 S.Ct. 1580, 1581-1582, 29 L.Ed.2d 85 (1971); Ryan v. Commissioner of Internal Revenue, 517 F.2d 13, 19-20 (7th Cir.1975); Hanley v. McHugh Constr. Co., 419 F.2d 955, 957 (7th Cir.1969); National Util. Serv., Inc. v. Northwestern Steel & Wire Serv., Inc., 426 F.2d 222 (7th Cir.1970); Hastings v. North East Independent School Dist., 615 F.2d 628, 631 (5th Cir.1980).

True, some cases hold, in apparent contradiction to the above, that where as in this case the judgment is for criminal rather than civil contempt the validity of the underlying order may not be questioned on appeal from the contempt judgment. E.g., United States v. United Mine Workers of America, 330 U.S. 258, 291-94, 67 S.Ct. 677, 694-696, 91 L.Ed. 884 (1947); ITT Community Development Corp. v. Barton, 569 F.2d 1351, 1356 (5th Cir.1978). Yet our decision in Hanley, for example, involved criminal contempt; and the two lines of cases can be reconciled, see Hanley v. McHugh Constr. Co., supra, 419 F.2d at 957; United States v. Ryan, supra, 402 U.S. at 532 n. 4, 91 S.Ct. at 1582 n. 4; 13 Wright, Miller & Cooper, Federal Practice and Procedure Sec. 3537, at pp. 340-41 (1975), by noting that in the cases where the validity of the underlying order was held not to be reviewable on appeal from the judgment of contempt the order could have been appealed as of right directly, which discovery orders cannot be. The right to have a discovery order reviewed on appeal from a contempt judgment thus serves as a safety valve in the final-judgment rule of 28 U.S.C. Sec. 1291. Such an order may impose heavy and irrecoverable costs on a party; yet to make discovery orders appealable as of right would lead to unacceptable delays in federal litigation. Confining the right to get appellate review of discovery orders to cases where the party against whom the order was directed cared enough to incur a sanction for contempt is a crude but serviceable method of identifying the most burdensome discovery orders and waiving the finality rule only for them.

The validity of the discovery order that the Academy disobeyed is therefore properly before us. Rule 26(c) of the Federal Rules of Civil Procedure empowers the district court to "make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including ... that discovery not be had ...," and Rule 26(d) empowers the court, "upon motion, for the convenience of parties and witnesses and in the interests of justice," to control by order the sequence and timing of discovery. Although the effective management of complex litigation requires that the district judge be allowed broad discretion in guiding the discovery process and therefore in exercising his powers under Rules 26(c) and (d), Chrysler Corp. v. Fedders Corp., 643 F.2d 1229, 1240 (6th Cir.1981), his discretion is not unlimited, and if we have a firm conviction that he has made a mistake we must reverse, Silkwood v. Kerr-McGee Corp., 563 F.2d 433, 436 (10th Cir.1977).

In ruling on a motion to limit discovery the district judge must compare the hardship to the party against whom discovery is sought, if discovery is allowed, with the hardship to the party seeking discovery if discovery is denied. He must consider the nature of the hardship as well as its magnitude, and thus give more weight to interests that have a distinctively social value than to purely private interests. He must go through the same analysis under Rule 26(d) except that obviously an order merely postponing a particular discovery request should be granted more freely than an order denying the request altogether. The hardship to the party seeking discovery is less if he is just being told to complete his other discovery first (or just to let the other party have some discovery first) than if he is being told to do without forever.

In an effort to show that more than purely private interests are at stake, the Academy argues that its correspondence and other documents relating to denials of applications for membership are protected by the First Amendment. This argument, if meant to establish a complete immunity from discovery of these materials in a lawsuit, is untenable. See, e.g., Memorial Hospital for McHenry Cty. v. Shadur, 664 F.2d 1058, 1063 (7th Cir.1981) (per curiam), rejecting a claim of privilege for a hospital's records of disciplinary proceedings against staff physicians. Even if the Academy were engaged in advocating controversial views and the publication of its internal files would expose members to retaliation for those views, it would not have an absolute privilege against discovery, though the plaintiffs would then have the burden of showing that the information sought was essential to their case and unobtainable by other means that would be less likely to discourage such advocacy. See ...