Potters Medical Center v. City Hosp. Ass'n

• Decision Date: 04 September 1986
• Docket Number: No. 85-3182,85-3182
• Citation: 800 F.2d 568
• Parties: , 1986-2 Trade Cases 67,260 POTTERS MEDICAL CENTER, a corporation; the Neurosurgical Clinic and Allied Health Specialties, Inc., a professional corporation; Beaver Creek Bio- Medical, Inc., a corporation, Plaintiffs-Appellants, v. The CITY HOSPITAL ASSOCIATION d/b/a East Liverpool City Hospital, a corporation; Jackman S. Vodrey; J.W. Schoolnic, M.D., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 568

800 F.2d 568

55 USLW 2165, 1986-2 Trade Cases 67,260

POTTERS MEDICAL CENTER, a corporation; the Neurosurgical Clinic and Allied Health Specialties, Inc., a professional corporation; Beaver Creek Bio- Medical, Inc., a corporation, Plaintiffs-Appellants, v. The CITY HOSPITAL ASSOCIATION d/b/a East Liverpool City Hospital, a corporation; Jackman S. Vodrey; J.W Schoolnic, M.D., Defendants-Appellees.

No. 85-3182.

United States Court of Appeals Sixth Circuit.

Argued Jan. 31, 1986.

Decided Sept. 4, 1986.

Douglas J. Colton (argued), Albert J. Angel, Wood, Lucksinger & Epstein, Washington, D.C., for plaintiffs-appellants.

Jackman S. Vodrey, East Liverpool, Ohio, David J. Young, Murphey, Young & Smith, Columbus, Ohio, Steven Tigges (argued), Steven E. Sigalow, Akron, Ohio, for defendants-appellees.

Before CONTIE, Circuit Judge, PECK, Senior Circuit Judge, and GIBSON ^*, District Judge.

JOHN W. PECK, Senior Circuit Judge.

Plaintiffs Potters Medical Center ("Potters"), Neurosurgical Clinic and Allied Health Specialties, Inc. ("NCA"), and Beaver Creek Bio-Medical, Inc. ("BCB") appeal the summary judgment entered in this antitrust action by the district court in favor of defendants East Liverpool City Hospital ("City Hospital"), Jackman Vodrey, and J.W. Schoolnic, M.D. ¹ Plaintiffs' complaint alleged that defendants violated Sections 1 and 2 of the Sherman Act, 15 U.S.C. Secs. 1, 2, and sought injunctive relief as well as treble damages under Sec. 4 of the Clayton Act, 15 U.S.C. Sec. 15. The complaint also alleged a pendent state claim for violation of Ohio's antitrust law, the Valentine Act, Ohio Rev.Code Sec. 1331.01 et seq. For the reasons stated below, we affirm the judgment of the district court in part, reverse in part, and remand this case for further proceedings consistent with this opinion.

I.

Potters is a 39-bed general acute care hospital in operation since 1977 in East Liverpool, Ohio. Potters also provides pathology services. NCA is a professional corporation which owns and operates a nearby diagnostic imaging facility. BCB is a corporation formed in connection with the construction of a physician office building and minor emergency clinic adjacent to Potters. Although NCA and BCB are separately incorporated, there are indications in the record that they are affiliated with Potters.

City Hospital, a 275-bed general acute care hospital, is the only other hospital in East Liverpool, Ohio, and is located one block away from Potters. City Hospital also provides pathology services and minor emergency care. Vodrey is an attorney for City Hospital and a member of its Board of Trustees. Schoolnic is a senior member of City Hospital's medical staff and serves as the chairman of City Hospital's Department of Internal Medicine.

In their complaint filed October 17, 1983, Potters, NCA, and BCB alleged Sherman Act violations with respect to four relevant markets. In Count One, they alleged that City Hospital had a monopoly in the provision of hospital inpatient services and violated Secs. 1 and 2 of the Sherman Act with respect to that market by: (1) refusing to grant staff privileges to doctors with Potters' privileges, thereby depriving Potters of admissions and referrals; (2) pressuring doctors with City Hospital staff privileges not to seek staff privileges at Potters, thus depriving Potters of admissions and referrals; (3) opposing Potters' efforts to obtain the certification under Sec. 1122 of the Social Security Act, 42 U.S.C. Sec. 1320a-1, necessary for reimbursement of certain capital expenditures; (4) conspiring with the Hospital Care Corporation to prevent Potters from obtaining a Blue Cross participating hospital contract, thereby depriving Potters of admissions and reimbursements; (5) engaging in sham proceedings against Potters regarding BCB's alleged lack of compliance with "certificate of need" laws prior to building an emergency care clinic; and (6) entering restrictive contracts with City Hospital staff physicians which prohibit their dealings with Potters. They further alleged that Vodrey and Schoolnic conspired with City Hospital with respect to these acts.

Count Two alleged that City Hospital had a monopoly over the provision of minor emergency services and sought illegally to maintain its monopoly and suppress competition in this market through: (1) intimidation and coercion of a City Hospital staff physician who voiced an intent to operate a competing minor emergency services facility, and (2) instigation of and participation in sham proceedings against Potters to suppress BCB's competition. Count Two also alleged that defendants conspired to monopolize and to restrain trade in this market.

Count Three alleged that defendants illegally conspired and sought to maintain City Hospital's monopoly over outpatient pathology services by (1) coercing physicians not to direct patients to Potters' outpatient pathology services, and (2) by offering improper incentives to doctors to refer such business to City Hospital.

Count Four alleged that City Hospital sought to destroy NCA's diagnostic imaging services, monopolized radiology services in this market, and attempted to monopolize CT-scanning services by: (1) refusing doctors employed by NCA access to staff privileges at City Hospital, thereby depriving NCA and Potters of patient referrals and revenues; (2) harassing physicians to prevent them from referring patients to NCA and Potters, and coercing them to refer CT-scan patients to providers other than NCA; (3) restricting the ability of NCA doctors to consult or provide services to patients admitted to City Hospital; and (4) seeking its own certificate of need for installation of a CT-scanner at City Hospital through use of materially false statements about Potters and NCA. Vodrey and Schoolnic were alleged to have conspired with City Hospital in regard to these acts.

City Hospital sought a stay of this action pending the outcome of some relevant Ohio state court litigation (discussed infra in connection with our disposition of Potters' claims of sham activity). The request was denied on February 21, 1984, and each side began the discovery process with preparation of document production demands and interrogatories. However, Potters, NCA and BCB maintain that at an in-chambers status conference on March 9, 1984, which was unreported, the district court suspended discovery pending resolution of summary judgment motions which were to be submitted twenty days after the conference with the response due twenty days later. Although the precise nature of the order made by the district court is not clear from the record, some understanding to suspend discovery apparently existed because neither side thereafter responded to pending discovery requests nor sought compliance with its own requests. Defendants filed motions for summary judgment pursuant to Rule 56, Fed.R.Civ.P., on March 29, 1984, with extensive supporting memoranda and affidavits. Plaintiffs responded in opposition with an extensive supporting memorandum and affidavits on April 23 1984. On January 28, 1985, the district court granted summary judgment for City Hospital, Vodrey, and Schoolnic with respect to all counts of the complaint. Potters, NCA and BCB now appeal the district court's judgment in its entirety.

II.

Summary judgment should be entered only when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), Fed.R.Civ.P. Both the Supreme Court and this circuit have stressed their reluctance to dispose of antitrust litigation on motions for summary judgment. See Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962); Smith v. Northern Michigan Hospitals, Inc., 703 F.2d 942, 947 (6th Cir.1983). As stated in Poller:

Summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot.

368 U.S. at 473, 82 S.Ct. at 491.

This is not to say, however, that summary judgment should never be granted.

While we recognize the importance of preserving litigants' rights to a trial on their claims, we are not prepared to extend those rights to the point of requiring that anyone who files an antitrust complaint setting forth a valid cause of action be entitled to a full-dress trial notwithstanding the absence of any significant probative evidence tending to support the complaint.

First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 1593, 20 L.Ed.2d 569 (1968), reh. denied, 393 U.S. 901, 89 S.Ct. 63, 21 L.Ed.2d 188 (1968). Accordingly, to survive a defendant's motion for summary judgment the plaintiff must provide some factual basis from which elements of intent and conspiracy may be reasonably inferred. Cities Service, 391 U.S. at 290, 88 S.Ct. at 1593; Smith, 703 F.2d at 948. Once the movant has informed the district court of the basis for its motion, identifying those parts of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any" which it believes show the absence of a genuine material fact issue, the nonmovant must go beyond the pleadings and by affidavits or by "depositions, answers to interrogatories, and admissions on file" designate "specific facts showing that there is a genuine issue for trial." Rule 56(c), (e), Fed.R.Civ.P.; Celotex Corp. v. Catrett, --- U.S. ----, ----, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); see also Anderson v. Liberty Lobby, Inc., --- U.S. ----, ---- - ----, 106 S.Ct. 2505, 2509-12, 91 L.Ed.2d 202 (1986). The evidence must be viewed in a light most favorable to the party opposing summary...