Weiss v. York Hosp.

Decision Date27 September 1984
Docket NumberNo. 82-3581,82-3580 and 82-3581,Nos. 82-3507,s. 82-3507,82-3581
Citation745 F.2d 786
Parties, 1984-2 Trade Cases 66,211 Malcolm WEISS, Appellee in& 82-3580, Cross-Appellant inv. YORK HOSPITAL and the Medical and Dental Staff of York Hospital, S. Philip Laucks, M.D.; Harold H. MacDougall, M.D., Ian L. MacKenzie, M.D., John P. Whitely, M.D., S.W. Deisher, M.D., (Executive Committee--Jack A. Kline, M.D., Lois M. Kushner, Ivan L. Butler, M.D., Gary Ardison, M.D., and Thomas L. Bauer, M.D., Appellants in& 82-3580, Cross-Appellees in
CourtU.S. Court of Appeals — Third Circuit

Arnold Levin, Michael D. Fishbein (argued), Levin & Fishbein, Philadelphia, Pa., Lewis H. Markowitz, Marc G. Tarlow, Markowitz & Seidensticker, York, Pa., for Malcolm Weiss, appellee in Nos. 82-3507 & 82-3580, cross-appellant in No. 82-3581.

Stuart H. Savett (argued), David H. Weinstein, Robert J. LaRocca, Kohn, Savett, Marion & Graf, P.C., Philadelphia, Pa., Robert J. Brown, Kain, Brown & Roberts, York, Pa., for appellants in Nos. 82-3507 & 82-3580, cross-appellees in No. 82-3581.

Roland Morris, H. Buckley Cole, Duane, Morris & Heckscher, Philadelphia, Pa., for amicus curiae, The Hosp. Ass'n of Pennsylvania.

Before ADAMS * and BECKER, Circuit Judges, and VAN DUSEN, Senior Circuit Judge.

OPINION OF THE COURT

BECKER, Circuit Judge.

I. Introduction and General Background - 791
II. The Facts - 793
A. Hospital Services in the York MSA - 793
B. Discrimination Against D.O.'s at York - 794
C. Staff Privileges Application Precedure - 796
D. Doctor Weiss' Application for Staff Privileges - 797
III. Procedural History and Problems - 799
A. Before the Distrit Court - 799
B. Appellate Jurisdiction - 801 (1) The Defendants' December 9 Appeal - 802 (2) The Plaintiff's December 13 'Cross-Appeal - 803
C. Class Certification - 804

(1) The Necessity of Proof of Demand - 805

(2) The Requirements of Fed.R.Civ.P. 23 - 807

(a) Rule 23(a) - 807

( i) Numerosity - 807

( ii) Commonality - 808

(iii) Typicality - 809

( iv) Adequacy of Representation - 811

(b) Rule 23(b)(2) - 811

D. The Vicinage Requirement of 28 U.S.C. § 1393(a) - 811
IV. The Sherman Act Claims - 812
A. Section 1 of the Sherman Act - 812

(1) Proof of an Agreement; Is There a Sufficient Number of

Conspirators? - 813

(2) Proof of Restraint of Trade - 817

(a) Introduction - 817

(b) Is the Defendants' Exclusionary Conduct the Equivalent of a

Concerted Refusal to Deal (Boycott)? - 818

(c) The 'Learned Profession' Exception - 820

(d) The District Court's Charge and The Sherman Act Section 1

Verdict as to Weiss - 822

(3) Substantiality of Effect on Interstate Commerce - 824

B. Section 2 of the Sherman Act - 825

(1) Relevant Market - 825

(2) Monopoly Power - 827

(3) Willfull Acquisition or Maintenance of Monopoly Power - 827

C. The Propriety and Scope of the Injuction Under Section 16 of the Clayton Act - 828
V. Conclusion - 831
I. INTRODUCTION AND GENERAL BACKGROUND

This antitrust case arises from the refusal to grant hospital staff privileges to a physician. The plaintiff, Malcolm Weiss, is an osteopath 1 who was denied staff privileges at York (Pennsylvania) Hospital. Dr. Weiss brought this suit, both individually and as representative of the class of all osteopathic physicians in the York Medical Service Area (York MSA), 2 against York Hospital ("York"), the York Medical and Dental Staff, and ten individual physicians who served on the York Medical Staff Executive Committee and the York Judicial Review Committee. York is controlled by, and, at the time Dr. Weiss applied for staff privileges, was exclusively staffed by doctors who graduated from allopathic medical schools. 3

The gravamen of Weiss' lawsuit is that, although allopaths (hereinafter referred to as medical doctors or M.D.s) and osteopaths (D.O.s) are equally trained and qualified to practice medicine, 4 his application for staff privileges at York hospital was turned down solely because of his status as an osteopath. Generally, a physician can admit and treat patients only at hospitals where he has staff privileges. If a patient desires to receive medical treatment at a hospital for which that patient's doctor does not have staff privileges (either because the patient prefers the reputation of that hospital or because that hospital is the only available hospital with equipment that is necessary for the patient's treatment) then the patient's doctor will have to refer the patient to another physician who has staff privileges at the hospital in question. See Weiss v. York Hospital, 548 F.Supp. 1048, 1053 (M.D.Pa.1982) (finding of fact, No. 32-34). As the result of such a referral the first doctor loses the opportunity to treat (and therefore to charge) the patient.

In addition, Weiss alleged that the treatment that he received at the hands of the M.D.s who control York sent a message to other D.O.s in the York MSA not to apply for staff privileges at York. In Weiss' submission, this scheme to exclude D.O.s from York Hospital was motivated by a desire to restrict the ability of D.O.s to compete with M.D.s, thereby increasing the profits of the M.D.s. Weiss contends that this conduct violates sections 1 and 2 of the Sherman Act, 15 U.S.C. Secs. 1 & 2, and state law (tortious interference with contractual relations).

The district court bifurcated the trial. The liability phase commenced on August 11, 1982, and on September 1, 1982, the jury returned unanimous answers to 42 special verdict questions. The district court molded the jury's responses into findings of liability in favor of the class (but not Weiss) and against the medical staff on the section 1 claim; in favor of Weiss and the class and against the hospital on the section 2 claim; and in favor of Weiss and against the hospital and four of the individually named defendants on the state law claims. All other defendants were exonerated on all other claims. Adopting the jury's findings of fact (by which it considered itself bound), the district court thereupon entered a final injunction against the hospital and the medical staff pursuant to section 16 of the Clayton Act, 15 U.S.C. Sec. 26, essentially prohibiting them from future discrimination against osteopaths. In addition, the district court scheduled a second trial to determine damages based on plaintiffs' claim for treble damages under section 4 of the Clayton Act, 15 U.S.C. Sec. 15, ordered that all class members be notified of their right to apply for damages. Prior to commencement of that trial, defendants and plaintiffs brought these appeals.

The case raises a number of complicated legal questions. Our opinion is divided into five parts. Part I is this introduction and general background. In part II we detail the facts. Part III discusses a number of preliminary issues, including the extent of our appellate jurisdiction over the questions presented by the appeals, the propriety of the class certification, and the proper vicinage for the jury trial in this case. We hold that we have no appellate jurisdiction to review the defendants' challenges to the district court's findings of liability under section 1 and 2 of the Sherman Act to the extent that those findings relate solely to plaintiffs' claims for treble damages under section 4 because there is no final judgment as to these claims, and no exception to the final judgment rule applies. We reach the same conclusion with respect to the state law claims. We thus limit this opinion to a review of questions raised by the district court's issuance of an injunction under section 16 and its exoneration of some of the defendants on some of plaintiff's claims. We also hold that the class certification was proper and that the trial was held in an appropriate location.

In part IV we turn to the heart of this appeal: a review of the findings of liability under sections one and two of the Sherman Act against the hospital and the medical staff, and the consequent issuance of an injunction under section 16 of the Clayton Act. We affirm the court's issuance of an injunction against the medical staff for violating section 1, an injunction that also benefits Weiss. However, we reverse the district court's grant of an injunction against the hospital for violating section 2 because we believe that that plaintiff has failed to adduce sufficient evidence to enable him to carry his burden of demonstrating that the hospital engaged in any willful behavior designed to acquire or maintain its monopoly power. Because of a problem with the jury charge we grant a partial new trial on the question of Weiss' professional competence and character, a factor relevant to the defendants' defenses to Weiss' section 1 damage claims. In addition, we affirm, as supported by the evidence, the district court's exoneration of various defendants on various claims. We then review the scope of the injunction issued by the district court and conclude that, given our substantive decisions on the questions of liability under sections 1 and 2, the district court should be given the opportunity to re-consider the appropriate scope of injunctive relief in the first instance. Part V contains a summary of our conclusions.

II. THE FACTS 5
A. Hospital Services in the York MSA

There are two providers of in-patient hospital services in the York MSA: York, which is run by M.D.s, and Memorial Hospital ("Memorial"), which is run by D.O.s. York is by far the larger of the two, with approximately 450 beds and 2,500 employees. Memorial has 160 beds. 6 The testimony at trial established that York had a market share of 80% of the patient-days of hospitalization in the York MSA.

In addition to York's overall market dominance, testimony at trial established that certain complex, highly technical "tertiary care" 7 services and facilities are, for a number of reasons, only available at York. 8 Included...

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