U.S. v. Mercy Health Services
| Decision Date | 26 February 1997 |
| Docket Number | 96-1051,Nos. 95-4253,s. 95-4253 |
| Parties | 1997-1 Trade Cases P 71,729 UNITED STATES OF AMERICA, Appellant, v. MERCY HEALTH SERVICES; Finley Tri-States Health Group, Inc., Appellees. State of Arkansas; State of Delaware; State of Florida; State of Illinois; State of Louisiana; State of Maryland; Commonwealth of Massachusetts; State of Minnesota; State of Missouri; State of New Hampshire; State of New Mexico; State of North Carolina; State of North Dakota; State of Ohio; State of Oregon; Commonwealth of Pennsylvania; State of Rhode Island; State of South Dakota; State of Texas; State of Virginia; State of Washington; State of West Virginia; State of Wisconsin; State of New York; American Association of Health Plans; Missouri Managed Health Care Association; California Association of HMOs; Massachusetts Association of HMOs; Oklahoma Association of HMOs; Deere & Company; John Deere Health Care, Inc.; International Union, United Automobile, Aerospace & Agricultural Implement Workers of America; Iowa Managed Care Association; Illinois Association of Health Maintenance Organizations; American Hospital Association; Association of Iowa Hospitals and Health Systems; Barnstead/Thermolyne; Dubuque Bank and Trust; FDL Foods, FDL Foods, Inc.; Flexsteel Industries, Flexsteel Industries Incorporated; Flynn Ready-Mix; Galena State Bank; Interstate Power Company; The Metrix Company; Molo Companies; Myers-Cox and Portzen Construction, Amici Curiae. UNITED STATES OF AMERICA, Appellee, v. MERCY HEALTH SERVICES; Finley Tri-States Health Group, Inc., Appellants. State of Texas; State of Virginia; State of Washington; State of West Virginia; State of Wisconsin; State of Arkansas; State of Delaware; State of Florida; State of Illinois; State of Louisiana; State of Maryland; Commonwealth of Massachusetts; State of Minnesota; State of Missouri; State of New Hampshire; State of New Mexico; State of North Carolina; State of North Dakota; State of Ohio; State of Oregon; Commonwealth of Pennsylvania; State of Rhode Island; State of South |
| Court | U.S. Court of Appeals — Eighth Circuit |
John P. Fonte, Dept. of Justice, Washington, DC, argued (Eugene D. Cohen, Mary Beth McGee, Richard S. Martin, Jesse M. Caplan, and Gregory S. Asciolla, on the brief), for Appellant.
David A. Ettinger, Detroit, MI, argued (Howard B. Iwrey, on the brief), for Appellees.
Before FAGG, ROSS, and MAGILL, Circuit Judges.
The United States brought this action for injunctive relief under Section 7 of the Clayton Act and Section 1 of the Sherman Act to prevent Mercy Health Services (Mercy) and Finley Tri-States Health Group, Inc. (Finley) from merging. The district court 1 denied the injunction, see United States v. Mercy Health Serv., 902 F.Supp. 968, 989 (N.D.Iowa 1995), and the United States appeals. Following the submission of this appeal, Finley formally announced its abandonment of the proposed merger. Contrary to the positions of the parties, we conclude that the appeal in this case is moot, and accordingly we vacate the district court's decision and dismiss this appeal.
Mercy and Finley operate the only two acute-care hospitals in Dubuque, Iowa, a city of 86,403. While there are several small rural hospitals near Dubuque, the closest comparable hospitals to Mercy and Finley are regional hospitals located between 70 and 100 miles away in Waterloo, Iowa, Cedar Rapids, Iowa, Iowa City, Iowa, Davenport, Iowa, Madison, Wisconsin, and Freeport, Illinois (Regional hospitals). 2
In 1993, Mercy and Finley began pursuing a partnership which would have merged the two entities into Dubuque Regional Hospital Systems. The United States investigated the proposed merger and filed a complaint on June 10, 1994, seeking to prevent the merger of Mercy and Finley under Section 7 of the Clayton Act, 15 U.S.C. § 18 (1994), and Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1 (1994).
Following a two-week trial, the district court held that the United States had failed to carry its burden of proving that the merger would have anticompetitive effects and denied the requested injunction. Key to the district court's conclusion was its finding that the United States had not proven that the relevant geographic market did not include the Regional hospitals, a necessary prerequisite to finding anticompetitive effects. See Mercy Health Serv., 902 F.Supp. at 987. 3 The district court also held that if the United States had proven a more limited geographic market, then the court would have rejected Mercy's and Finley's argument that efficiencies stemming from the merger justified any anticompetitive effects. Id. at 989.
On appeal, the United States argues that the district court clearly erred in finding that the United States failed to prove a more limited geographic market. On cross-appeal, Mercy and Finley contend that the district court erred in rejecting their efficiency arguments.
On January 15, 1997, after this appeal had been submitted to this Court, Finley formally announced that it had abandoned its proposed merger with Mercy. In a press release, Kevin L. Rogols, the president and chief executive officer of Finley, announced Finley's
decision to withdraw from the Dubuque Regional Health System (DRHS), a planned partnership between Finley and Mercy Health Center, where both hospitals would have shared operating revenues.
Reprinted in Resp. of the United States of America to Letter from the Court Dated January 21, 1997 (Feb. 7, 1997). The release was circulated to the national press, and was reported in the Wall Street Journal. See Two Iowa Hospitals Drop Plan to Merge Operations, Wall St. J., Jan. 21, 1997, at A4. In response to this Court's request for a statement from counsel regarding the nonmerger decision, counsel for Mercy and Finley explained that:
Though [Mercy and Finley] have dissolved their partnership, the parties desire to have the opportunity to combine some or all of their operations in the future. They are unwilling to commit that they would not do so.... A decision that the case was moot would leave an issue unresolved that could be of great importance to the parties in the future.
Defs.' Position Statement Regarding Status of the Case at 2 (Feb. 7, 1997). The United States also asserted that the appeal was not rendered moot by Finley's decision to abandon the merger. See Resp. of the United States of America to Letter from the Court Dated January 21, 1997 at 1.
This Court does not have jurisdiction to hear an appeal in a matter that no longer constitutes a live case or controversy. As the Supreme Court has stated:
The exercise of judicial power under Art. III of the Constitution depends on the existence of a case or controversy.... [A] federal court has neither the power to render advisory opinions nor to decide questions that cannot affect the rights of litigants in the case before them. Its judgments must resolve a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.... The rule in federal cases is that an actual controversy must be extant at all stages of review, not merely at the time the complaint is filed.
Preiser v. Newkirk, 422 U.S. 395, 401, 95 S.Ct. 2330, 2334, 45 L.Ed.2d 272 (1975) (quotations and citations omitted). See also Keevan v. Smith, 100 F.3d 644, 647 (8th Cir.1996) ; Beck v. Missouri State H.S. Activities Ass'n, 18 F.3d 604, 605 (8th Cir.1994) (per curiam) ( . We may not consider an appeal, even if all of the parties involved wish us to, if the relief ultimately obtained would be meaningless and the resultant opinion no more than advisory.
Generally, the "voluntary cessation of allegedly illegal conduct does not deprive the tribunal of power to hear and determine the case, i.e., does not make the case moot." United States v. W.T. Grant Co., 345 U.S. 629, 632, 73 S.Ct. 894, 897, 97 L.Ed. 1303 (1953). This is because
[a] controversy may remain to be settled in such circumstances, e.g., a dispute over the legality of the challenged practices. The defendant is free to return to his old ways. This, together with a public interest in having the legality of the practices settled, militates against a mootness conclusion.
Id. (). See also City of Mesquite v. Aladdin's Castle, Inc., 455 U.S. 283, 289, 102 S.Ct. 1070, 1074, 71 L.Ed.2d 152 (1982) (...
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