Mengelson v. Ingalls Health Ventures

Mengelson v. Ingalls Health Ventures,

No. 1-00-3353 (Ill. App. May 22, 2001)

The Appellate Court of Illinois, First District, ruled against a woman who appealed
a directed verdict on her claim against a health center. She claimed that the
health center negligently failed to hire a skilled and competent phlebotomist
and that the medical assistant who performed the blood draw caused her to contract
reflex sympathetic dystrophy (RDS) in her left arm. One expert testified that
the chances of this happening were one in 6,000,000. The court found that the
woman failed to establish that the medical assistant’s negligence was both the
actual cause of her injuries and that her injury was the foreseeable result
of the medical assistant’s actions.

Mercatus Group, LLC v. Lake Forest Hosp. (Full Text)

Case 1:07-cv-02042 Document 119 Filed 02/16/10 Page 1 of 22

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

MERCATUS GROUP LLC,
Plaintiff,

LAKE FOREST HOSPITAL,
Defendant.

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07 C 2042

MEMORANDUM AND ORDER

Plaintiff Mercatus Group LLC sued Lake Forest Hospital, the Village of Lake Bluff, and

Village Trustees Michael Peters, David Barkhausen, and Rick Lesser in connection with an

alleged plot to monopolize the diagnostic medical imaging market in Eastern Lake County by

preventing Mercatus from opening a facility in that market. Lake Forest Hospital’s motion for
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summary judgment on Mercatus’ antitrust and supplemental state claims is before the court. For

the following reasons, Lake Forest Hospital’s motion is granted as to Mercatus’ federal claims

and the court declines to exercise jurisdiction over the remaining state law claims.

Background

The following facts are undisputed unless otherwise noted.

The Parties

Lake Forest Hospital is an Illinois nonprofit corporation with its principal place of

business in Lake Forest, Illinois. Mercatus was founded in 2003 by Mr. Chris Joseph. It partners

with independent physicians to develop and operate physician centers, which are off-campus

medical office buildings that provide a variety of services to physicians. The clinical services

The court previously dismissed the claims against the Village of Lake Bluff and Village
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Trustees Michael Peters, David Barkhausen, and Rick Lesser for failure to state a claim, leaving
Lake Forest Hospital as the sole defendant.

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enable participating practices to offer comprehensive care to their patients, including diagnostic

imaging. Mercatus also leases office space to physicians and provides business services

including billing services, electronic medical records hosting, telecommunications services,

claims processing, marketing support, staffing, and collections.

Mercatus allows physicians to share in the profits from the center, including as real estate

partners. Mercatus also initially allowed physicians to share in the profits from ancillary

services, including imaging but ceased doing so in March of 2007.

Mercatus’ Efforts to Expand into Lake Bluff

Mercatus operates a physician center in Vernon Hills, Illinois, at which it delivers

diagnostic imaging services including nuclear imaging, magnetic resonance imaging and

computed tomography scans. In 2004, Mercatus began plans to construct a physician center in

Lake Bluff, Illinois. It thus sought appropriately zoned land. It ultimately reached an agreement

to lease the Shepard Land (so-called because it already featured an automotive sales dealership

on part of the property called Shepard Chevrolet), which was zoned L-2, a zone that generally

permits medical office buildings.

The Nature of the Proceedings Before the Board

Mercatus participated in a number of hearings before the Village Board in an attempt to

gain support for its proposed development. Some attorneys attended at least some of these

hearings. Letchinger Tr. (Tab 14) at 39:24 to 40:16 (attorneys Sandy Stein – attorney for an

unidentified party– and Peter Friedman – the Village of Lake Bluff’s attorney – were present at a

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Board meeting); 96:12-24 (unidentified attorneys were present at Board meetings). As noted by
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Lake Forest Hospital, however, Mercatus has not directed the court’s attention to any evidence

indicating that the Hospital’s counsel were among the attorneys present at any of the Board

proceedings. The Board conducted the hearings before it in an orderly fashion, recorded them,

and provided notice of the hearings and a written decision.

Mercatus’ Efforts to Secure Approval for its Project

In April of 2006, Mercatus presented its plans for the proposed Lake Bluff physician

center to the Lake Bluff Board of Trustees (“Village Board”). Lake Forest Hospital

representatives spoke against Mercatus’ proposed development. Mercatus believed that some of

these statements were inaccurate and designed to thwart its planned project. During the April

2006 meeting, the Village Board did not reference any special use ordinance governing the

Shepard land or state that Mercatus needed to obtain development approval prior to proceeding

with its project.

In September of 2006, the Lake Bluff Architectural Board of Review unanimously

approved Mercatus’ site plan, contingent upon review of proposed lighting and signage plans.

Assuming Mercatus satisfied these contingencies, the Architectural Board of Review’s

It appears that an attorney named Sandy Stein was also present during at least one
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Board meeting. Pl. Ex. 14 at 40:91-6. The parties regrettably do not identify this person in their
Rule 56.1 statements or summary judgment filings, so the court cannot ascertain who his/her
client might be. This problem is illustrative of the issues the court faced when addressing the
summary judgment motion: the parties generally assume that the court is familiar with the large
cast of characters and the chain of events at the heart of the parties’ dispute and do not
consistently provide identifying details in their filings. This practice, coupled with the parties’
decision to omit any summary of the facts from their filings and to instead rely only on their Rule
56.1 statements, contributed to the delay in resolving the instant motion for summary judgment.

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decision meant that the Village Board could only deny site plan approval to Mercatus based on

a two-thirds vote.

The parties, however, disagree as to the Village Board’s consideration of development

approval for Mercatus’ proposed facility separately from site plan approval. According to

Lake Forest Hospital, the Village Board had unfettered discretion in deciding whether to grant

development approval to Mercatus. Lake Bluff’s special use ordinance (Df. Ex. 10) and the

amendments to that ordinance in 1976 (Df. Ex. 11) and 1979 (Df. Ex. 12) contain the

discretionary factors the Village Board was required to consider when deciding whether to

grant development approval. In addition, Lake Forest Hospital directs the court’s attention to

the conclusion of the Village Attorney (Trustee Peters) that denial of development approval

did not require written findings or a written resolution but, instead, could be done via an oral

motion and vote. Finally, Lake Forest Hospital stresses that the Village Board considered

comments from the public but representatives from Mercatus and Lake Forest Hospital never

provided sworn testimony before the Board regarding development or special use approval.

On the other hand, Mercatus asserts that the Village Board’s decision to split off the

decision to vote on developmental approval from the decision to vote on site plan approval

was improper and flowed from the Board’s desire to illegitimately deny Mercatus’ site plan. It

also challenges the reliance on Trustee Peters’ views regarding the procedure that the Village

Board was obligated to follow vis-a-vis Mercatus’ project, contending that: (1) Trustee Peters’

employment by Lake Forest Hospital renders his views suspect; and (2) Lake Bluff’s zoning

code (§ 10-2-6(E), Df. Tab 16 at pp. 33-39) is at odds with Trustee Peters’ position as his

method of ruling on a special use permit is not prescribed by ordinance.

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On October 23, 2006, Mercatus came before the Village Board to seek approval of its

site plan. The meeting then followed the same path as the April meeting, as Lake Forest

Hospital representatives spoke against Mercatus’ plan, and Mercatus believed that some of

these statements were inaccurate and designed to thwart its project. Mercatus contends that as

a result of Lake Forest Hospital’s influence on the proceedings (particularly through the

presence of Trustee Peters – a Lake Forest Hospital employee – on the Village Board), the

Village Board improperly created a separate “land use”/development approval requirement that

is not based on Lake Bluff’s zoning code.

In response, Lake Forest Hospital contends that the Village Board proceedings were

proper, arguing that: (1) Mercatus failed to cite to evidence showing that Lake Forest Hospital

was responsible for the Village Board’s decision to require Mercatus to seek development

approval; (2) the Village attorney sufficiently explained the basis for the Board’s decision to

require Mercatus to seek development approval in addition to site plan approval; and (3)

Mercatus’ reading of the impact of Lake Bluff’s zoning ordinances on the Shepard land is

incorrect. The October meeting ended with a vote by the Village Board to grant development

approval to Mercatus based upon the text of the special use ordinance and its amendments and

to postpone deliberation on whether to grant site plan approval to Mercatus until the next

meeting.

Mercatus’ Proposed Project Flatlines

In November of 2006, the Village Board voted to reconsider its earlier approval of a

portion of Mercatus’s project. In early 2007, the Board considered Mercatus’ proposal again

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and denied both development and site plan approval. Mercatus contends that the lack of
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approval was due to improper influence by Lake Forest Hospital, pointing to a statement by

Village Board President Christine Letchinger to the effect that Mercatus’ project failed for

political reasons. Mercatus’ spin on this statement is that “political reasons” was a euphemism

for a desire to protect Lake Forest Hospital.

The record shows, however, that while Ms. Letchinger knew that Lake Forest Hospital

opposed Mercatus’ project, her “political reasons” comment also referred to her belief that

supporting the Mercatus project would not further her efforts to get support for a housing

development project. Ms. Letchinger also testified at her deposition that the Board considered

the Village’s comprehensive plan for the area, which called for retail projects, as well as

concerns about traffic and economic impact, the good of the community, and overdevelopment

when voting on Mercatus’ project. In addition, she stated that she believed that Lake Forest

Hospital had mounted a successful lobbying effort against the Mercatus project.

The parties disagree regarding whether more than two-thirds of the Board indicated that

concerns about competition with Lake Forest Hospital influenced their vote. The court finds

that Mercatus has pointed to evidence that would support a jury’s conclusion that concern

Lake Bluff’s zoning code permits it to deny approval for a site plan based on the
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following criteria: (1) the site plan application is materially incomplete; (2) the proposed site
plan fails to meet applicable zoning standards; (3) the proposed site plan is detrimental to the use
and enjoyment of the surrounding property; (4) the proposed site plan creates undue traffic
congestion or safety hazards; (5) the site plan landscaping does not provide adequate shielding
from or for nearby uses; (6) the proposed site plan creates unreasonable drainage or erosion
problems; (7) the proposed site plan places unwarranted burdens on utility systems; and (8)
restrictions related to the Central Business District (not applicable to the Mercatus project). See
Lake Bluff Zoning Code § 10-1-9(D)(4), 10-1-9(E)(1)-(8), Def. Ex. 14 at 14-009-10.

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about competition between Lake Forest Hospital and the proposed Mercatus facility was one of

many factors that motivated the members of the Board when they voted. See Def. Ex. 13 at

13-029:8-15 (Rener) (noting that “a lot” of residents and community members wanted the

project to be denied, apparently because they were satisfied with Lake Forest Hospital’s

performance, while other residents supported the project because they wanted Lake Forest

Hospital’s performance to improve); 13-034:23 to 13-035:19 (Surkamer) (changed vote due to

satisfaction with Lake Forest Hospital and his belief that there are better uses for the property

and “we don’t need the threat to the hospital”); 13-035:22 to 13-036:24 (Barkhausen) (opining

that competition that causes Lake Forest Hospital to lose money harms the interest of residents

and stating that the interest of residents must be protected); 13-038:8-20 (Lesser) (the use of

the parcel as retail “and the continued viability of the hospital are what are in the best interests

of the people of the Village of Lake Bluff”); Letchinger Tr. at 55:4-14 (“Lake Forest Hospital’s

[concerns about competition] was part of it but not entirely all of it” as concerns about traffic,

development, and retail space also drove the decision to vote against the Mercatus plan).

Mercatus also points to numerous portions of the record that purportedly show that

Lake Forest Hospital was behind the Board’s decision to reject Mercatus’ plan. The court

agrees that the record demonstrates that Lake Forest Hospital lobbied against the proposed

Mercatus facility, see, e.g., Mercatus’ Tab 69 (under seal), but that its efforts were one of many

factors underlying the Board’s decision to vote against the project. The lobbying effort had

three prongs: a Village of Lake Bluff prong, a physician-strategy prong, and a media-public

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relations prong. In addition, John Durkin (Mercatus’ expert) opined that Lake Forest Hospital
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also encouraged other hospitals to make it more difficult for Mercatus to enter the market.

Durkin Report (Df. Tab 10) at ¶ 38, pp. 10-013 to 10-014. 5

After the Village Board rejected Mercatus’ project, it issued findings of fact supporting

the denial of site plan approval as required by Lake Bluff’s zoning ordinances. See Lake Bluff

Zoning Code § 10-1-9(D)(4), 10-1-9(E)(1)-(8), Def. Ex. 14 at 14-009-10. The proffered

reasons – which Mercatus contends were pretextual – were:

•

The development was prohibited under the terms and conditions of the Special
Use Ordinance which required a denial of Site Plan Approval pursuant to
Paragraphs 10-1-9E1 and 10-1-9E2 of the Lake Bluff Zoning Regulations;

the existing access and traffic control was insufficient to meet the access and
traffic requirements of the proposed development; and

the proposed development, as a non-retail medical office building, was
inconsistent with the Village’s Comprehensive Plan which identified the
property on which Mercatus sought to develop as a target for retail and auto-
related uses.

In support of its statement of fact regarding the three pronged approach, Mercatus
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points to deposition testimony of Damon Havill, director of planning and business development
for Lake Forest Hospital. The court agrees with Mercatus’ characterization of Mr. Havill’s
testimony. Lake Forest Hospital’s denial of the corresponding portions of Mercatus’ Rule 56.1
statement is thus unavailing, as Mr. Havill said what he said. Thus, Lake Forest Hospital cannot
redline portions of Mr. Havill’s deposition.

Unsurprisingly, Lake Forest Hospital disagrees with Mr. Durkins’ views. However, the
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court declines to accept Lake Forest Hospital’s invitation to reject Mr. Durkin’s report wholesale
as Mr. Durkin considered evidence in the record that a fact-finder could find was consistent with
his views. See, e.g., Pl. Ex. 8 at 178-180 (CEO of Lake Forest Hospital testified that he spoke
with staff at Highland Park Hospital, and Advocate Condell Medical Center to urge them not to
support the project); Pl. Ex. 73 (emails between a physician liaison at Lake Forest Hospital to
Lake Forest Hospital’s CEO dated after the Village Board and Evanston Northwestern Hospital
withdrew their support for Mercatus and lauding Lake Forest Hospital for its successful efforts to
prevent Mercatus from “invad[ing] other territories around the Suburbs!!!”).

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Mercatus’ Complaint

Mercatus filed suit, contending that Lake Forest Hospital’s lobbying effort against

Mercatus’ project was underhanded and based on a series of lies meant to prevent a competitor

from opening up shop nearby and wicking away patients. Specifically, Mercatus’ amended

complaint alleges that Lake Forest Hospital monopolized or attempted to monopolize the

market for diagnostic imaging services in Eastern Lake County (Counts I & II), monopolized

or attempted to monopolize the market for comprehensive physician services in Eastern Lake

County (Counts III & IV), conspired to unlawfully restrain trade (Count V), and tortiously

interfered with Mercatus’ prospective economic advantage by affecting its relationships with

physicians and Evanston Northwestern Healthcare (Counts VI & VII).

II.

Analysis

Standard for a Motion for Summary Judgment

Summary judgment is proper when the “pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show that there is

no genuine issue of any material fact.” Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477

U.S. 317, 322 (1986). The party opposing the summary judgment motion “may not rest upon

the mere allegations or denials of the adverse party’s pleading”; rather, it must respond with

“specific facts showing that there is a genuine issue for trial.” Fed. R. Civ. P. 56(e). “The

evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in

his favor.” Valenti v. Qualex, Inc., 970 F.2d 363, 365 (7th Cir. 1992). A court should grant a

motion for summary judgment only when the record shows that a reasonable jury could not

find for the nonmoving party. Id.

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Lake Forest Hospital’s Motion for Summary Judgment

In its order addressing Lake Forest Hospital’s motion to dismiss, the court found

(among other things) that it could not decide if the Noerr-Pennington doctrine immunized

Lake Forest Hospital’s alleged misrepresentations to the Village Board because at the motion

to dismiss stage, it could not determine if the Village Board acted in an adjudicatory or

legislative capacity when it denied Mercatus’ development plans. The court also declined to
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consider whether Mercatus had shown that an alleged agreement in restraint of trade existed

because the parties did not sufficiently address whether Mercatus had standing to raise an

antitrust claim.

In its motion for summary judgment, Lake Forest Hospital contends that Mercatus

cannot prevail on its federal antitrust claims – that Lake Forest Hospital monopolized or

attempted to monopolize the market for diagnostic imaging services and comprehensive

physician services in Eastern Lake County (Counts I – IV) and conspired to unlawfully restrain

trade (Count V) – because its lobbying of the Village of Lake Bluff Board of Trustees is

immunized from antitrust liability by the Noerr-Pennington doctrine. Alternatively, Lake

Forest Hospital argues that Mercatus’ antitrust claims fail on the merits, asserting that

Mercatus cannot establish essential elements of an antitrust claim, such as its alleged product

and geographic markets, the existence of or the likelihood of Lake Forest Hospital acquiring

monopoly power, or the existence of a conspiracy in restraint of trade.

Mercatus amended its complaint after the court issued its decision ruling on the motion
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to dismiss. The amended complaint removed the counts directed at the Village defendants and
added three new antitrust claims directed at Lake Forest Hospital, but did not otherwise change
the allegations directed at Lake Forest Hospital.

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With respect to Mercatus’ state law claims that Lake Forest Hospital tortiously

interfered with Mercatus’ prospective economic advantage by affecting its relationships with

physicians and Evanston Northwestern Healthcare (Counts VI-VII), Lake Forest Hospital

contends that it is entitled to summary judgment because its efforts to retain physician

relationships are protected by the competition privilege and its conduct did not cause Evanston

Northwestern Healthcare to end its relationship with Mercatus.

The Noerr-Pennington Doctrine

The Noerr-Pennington doctrine originated in the antitrust context and shields parties

from liability based on, among other things, lobbying efforts and public statements. See

Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 135

(1961) (“no violation of the [Sherman] Act can be predicated upon mere attempts to influence

the passage or enforcement of laws”); United Mine Workers of America v. Pennington, 381

U.S. 657, 670 (1965) (“[j]oint efforts to influence public officials do not violate the antitrust

laws even though intended to eliminate competition. Such conduct is not illegal, either

standing alone or as part of a broader scheme itself violative of the Sherman Act”); see also

Tarpley v. Keistler, 188 F.3d 788 (7th Cir. 1999) (under the First Amendment, “parties may

petition the government for official action favorable to their interests without fear of suit, even

if the result of the petition, if granted, might harm the interests of others”).

This means that under the Noerr-Pennington doctrine, “those who petition government

for redress are generally immune from antitrust liability.” Professional Real Estate Investors,

Inc. v. Columbia Pictures Indus., 508 U.S. 49, 56 (1993). The doctrine applies to petitioning

activity directed at legislative, executive, and judicial branches of federal and state

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governments. See J. von Kalinowski, 3 Antitrust Laws and Trade Regulation § 50.03[1] (2d

ed. Matthew Bender) (collecting cases).

The Sham Exception

There are a number of exceptions to Noerr-Pennington immunity. In this case, the

parties focus on the sham exception. This exception covers “situations in which persons use

the governmental process[,] as opposed to the outcome of that process,” to directly harm or

harass another party. City of Columbia v. Omni Outdoor Adver., Inc., 499 U.S. 365, 380

(1991); see also Greater Rockford Energy & Technology Corp. v. Shell Oil Co., 998 F.2d 391,

397 (7th Cir. 1993). If the sham exception applies, the petitioning entity is not protected by

the First Amendment’s right to petition and may be subject to antitrust liability. See City of

Columbia v. Omni Outdoor Adver., Inc., 499 U.S. at 380 (“A ‘sham’ situation involves a

defendant whose activities are not genuinely aimed at procuring favorable government action

at all, not one who genuinely seeks to achieve his governmental result, but does so through

improper means) (internal citations and quotations omitted); 75 Acres, LLC v. Miami-Dade

County, Fla., 338 F.3d 1288 (11th Cir. 2003) (“There may be situations in which a publicity

campaign, ostensibly directed toward influencing governmental action, is a mere sham to cover

what is actually nothing more than an attempt to interfere directly with the business

relationships of a competitor and the application of the Sherman Act would be justified”).

Legislative or Adjudicative?

The scope of the sham exception differs depending on whether the petitioning conduct

is directed at a legislative or adjudicative body. “When the concerted activities occur in a

legislative or other non-adjudicatory governmental setting, they are not within the Sherman

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Act even though they include conduct that can be termed unethical, such as deception and

misrepresentation.” Metro Cable Co. v. CATV of Rockford, Inc., 516 F.2d 220, 228 (7th Cir.

1975) (internal citations and quotations omitted). Based on this rule, Lake Forest Hospital

contends that the proceedings before the Board were legislative, as opposed to adjudicative,

and Mercatus unsurprisingly argues the opposite.

As the Seventh Circuit has recognized in the due process context, “the line between

legislation and adjudication is not always easy to draw.” LC & S, Inc. v. Warren County Area

Plan Comm’n, 244 F.3d 601, 603 (7th Cir. 2001) (addressing due process and void for

vagueness challenge to zoning law). Generally, action is legislative in nature if it involves

“the promulgation of general or prospective legislation or establish[es] guidelines by which the

future conduct of certain groups is to be judged,” while actions are adjudicative if they

“involve the application of already enacted ordinances or recognized policies to specific

instances.” Reed v. Village of Shorewood, 704 F.2d 943, 952-53 (7th Cir. 1983)

(distinguishing between adjudicative and legislative actions in the context of a challenge to a

zoning law under the Fourteenth Amendment due process clause). For purposes of Noerr-

Pennington immunity, however, factors germane to determining if a governmental body acts in

a legislative or adjudicative capacity are the “degree of political discretion” exercised by the

entity, “whether it makes or administers laws, and whether it follows enforceable standards of

review, or bears other indicia of adjudicatory bodies.” See J. von Kalinowski, 3 Antitrust

Laws and Trade Regulation at § 50.04[3][c]; see also Metro Cable Co. v. CATV of Rockford,

Inc., 516 F.2d at 228.

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Mercatus’ position, in essence, is that the Village Board applied existing ordinances to

its property and hence by definition must have acted in an adjudicative capacity. It also

stresses that: (1) the Lake Bluff Architectural Board of Review conducted public hearings

about Mercatus’ plan and because it approved the project, two-thirds of the Village of Lake

Bluff Board was required to vote against Mercatus to defeat the project; (2) the Village Board

was required to issue findings of fact containing specific reasons why Mercatus’ project did

not pass muster under Lake Bluff’s zoning ordinances, see Lake Bluff Zoning Code § 10-1-

9(D)(4), 10-1-9(E)(1) – (8) (Df. Ex. 14 at 14-009-10); and (3) the Village Board followed

procedural rules during the hearings, information packets were provided to Trustees, and a

record was created via video recordings of the proceedings and minutes. It also appears that

some lawyers attended at least some of the hearings before the Board, although it does not

appear that counsel for the Hospital was present.

At the motion to dismiss stage, the court declined to determine whether Village Board

acted in a legislative or adjudicatory capacity because it construed Mercatus’ allegations in the

light most favorable to Mercatus. The record at this point, however, is more developed and

while this is a difficult area of the law, the court is not persuaded that the Village’s zoning

decision was adjudicative.

The court begins with the fact that the Village Board delegated initial consideration of

Mercatus’ plan to the Lake Bluff Architectural Board of Review, which conducted public

hearings, but then voted on the proposal after considerable lobbying efforts from proponents

and opponents of Mercatus’ project. This chain of events does not demonstrate that the

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Village Board acted adjudicatively, given that the Board retained the ultimate power to reject

the Architectural Board of Review’s decision with a two-thirds vote.

Mercatus also makes much of the fact that the Board based its decision, at least in part,

on the effect that the Mercatus project would have on Lake Forest Hospital. The record shows

that the Board members considered the likely outcome of increased competition on the

hospital. Nevertheless, this is not per se impermissible. See Coniston Corp. v. Village of

Hoffman Estates, 844 F.2d 461, 468 (7th Cir. 1988) (legislatures need not use

adjudicative-type procedures when ruling on zoning requests and may “base their actions on

considerations – such as the desire of a special-interest group for redistributive legislation in

its favor – that would be thought improper in judicial decision-making”); see also Standard

Bank & Trust Co. v. Village of Orland Hills, 891 F.Supp. 446, 451 (N.D. Ill. 1995) (defendant

local government’s decision regarding proposed building plans and permits is legislative

because it was “free to take into consideration ethical and political issues when deciding

whether to accept the proposed business plans”).

Moreover, the court’s study of the extensive record in this case shows that at heart, this

matter is a simple zoning dispute brought by an entity who received an adverse decision. It is

true that the Board conducted its proceedings in an orderly fashion, recorded them, and

provided notice of hearings and a written decision. However, with the benefit of a full record,

these factors alone are not enough to transform the Board into an adjudicative body. Critically,

it is undisputed that the Board members were the recipients of vigorous ex parte lobbying

efforts from both sides prior to the final vote. They were also authorized to consider what they

believed was best for the community when voting. See Metro Cable Co. v. CATV of Rockford,

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Inc., 516 F.2d at 228 (allegedly unethical lobbying of Rockford City Council in connection

with applications for a cable television franchise did not violate Sherman Act because the

“Rockford City Council was a legislative body, acting as such, and the conduct challenged

here thus occurred in a political setting”); see also Petersburg Cellular Partnership v. Board

of Sup’rs of Nottoway County, 205 F.3d 688, 694 (4th Cir. 2000) (“the zoning permit process .

. . . is a legislative one, involving predictions, value preferences, and policy judgments”).

The court is also unpersuaded by Mercatus’ emphasis on the Board’s decision to

consider whether to grant developmental approval separately from site plan approval.

According to Mercatus, Trustee Peters’ views on how to proceed are suspect because he was a

Lake Forest Hospital employee and Lake Bluff’s zoning code (§ 10-2-6(E), Pl. Tab 16 at 33-

39) does not support Trustee Peters’ position. The fact that Trustee Peters was an interested

party does not automatically create a material question of disputed fact that must go to a jury

because it is not relevant to whether the Board was acting legislatively or adjudicatively.

Moreover, if self-interest were dispositive and created an automatic fact question, orders

granting summary judgment would be virtually non-existent.

Next, the zoning code simply provides a list of discretionary factors for consideration

when making decisions. See, e.g., § 10-2-6(E)(3)(a) (“The proposed use will not have a

substantial or undue adverse effect upon adjacent property, the character of the area, or the

public health, safety, and general welfare”). It neither contains procedural provisions contrary

to the practice followed by the Board nor requires the legislature to “judicialize zoning.”

Coniston Corp. v. Village of Hoffman Estates, 844 F.2d at 468 (“The decision whether and

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what kind of land uses to permit does not have the form of a judicial decision. The potential

criteria and considerations are too open-ended and ill-defined”).

In sum, as the Fifth Circuit has recognized, “when a zoning board acts on an individual

request for a variance, it appears in some sense to be making both a legislative and a judicial

decision” since the focus on the individual case before the board gives “the process of

determining whether a variance should be granted . . . distinctly adjudicative characteristics.”

Mahone v. Addicks Utility Dist. of Harris County, 836 F.2d 921, 934 (5th Cir. 1988).

Nevertheless, zoning decisions are not necessarily adjudicative simply because they are fact-

specific.

As discussed above, the undisputed facts in this case show that the Board’s decision

was inherently political and legislative in nature, and Mercatus’ arguments to the contrary

simply do not show that the rejection of zoning approval for Mercatus’ project was an

adjudicative decision. “[L]egislatures are free to range widely over ethical and political

considerations in deciding what regulations to impose on society.” Coniston Corp. v. Village

of Hoffman Estates, 844 F.2d at 468. The court declines to strip them of that power. This

means that Mercatus cannot proceed with any antitrust claims based on actions taken to

influence the Village Board.

Antitrust Claims Based on Non-Lobbying Conduct

Mercatus’ federal claims are not limited to conduct directed at the Village Board.

Instead, Mercatus asserts that when viewed in the aggregate, a jury could find that Lake Forest

Hospital’s non-petitioning conduct directed at physicians and media violates the antitrust laws.

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Case 1:07-cv-02042 Document 119 Filed 02/16/10 Page 18 of 22

At the motion to dismiss stage, the court considered Mercatus’ allegations that Lake Forest

Hospital allegedly: (1) persuaded physicians who had agreed to work at the Mercatus Center to

back out of their agreements; (2) interfered with the business relationship between Mercatus

and Evanston Northwestern Heathcare; (3) attempted to purchase the Mercatus Center land;

(4) misrepresented that other purchasers were interested in purchasing the Mercatus Center

land; (5) suggested agreements in restraint of trade with Mercatus in other markets outside of

eastern Lake County; and (6) contacted another hospital to disparage Mercatus.

These allegations line up with the evidence presented by Mercatus at the summary

judgment stage, including evidence indicating that Lake Forest Hospital’s lobbying effort in

opposition to the Mercatus project consisted of a Village of Lake Bluff prong, a physician-

strategy prong, and a media-public relations prong. To the extent that Mercatus is repeating

previously rejected arguments, the fact that the court previously relied on allegations in a

complaint and accepted them as true, while today it is reviewing a summary judgment record,

is irrelevant. The court stands by its prior order rejecting Mercatus’ arguments and declines to

revisit it.

This leaves Mercatus with one final arrow in its quiver: that the court erred by viewing

its allegations regarding non-petitioning conduct individually and “in a vacuum.” Mercatus

Response at 4. According to Mercatus, the court must view the evidence regarding non-

petitioning conduct in the aggregate, and when viewed in this manner, its antitrust claims are

sufficient to withstand summary judgment.

In support, Mercatus directs the court’s attention to Continental Ore Co. v. Union

Carbide & Carbon Corp., 370 U.S. 690 (1962). In that case, the Supreme Court considered

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Case 1:07-cv-02042 Document 119 Filed 02/16/10 Page 19 of 22

whether plaintiff Continental Ore (a producer and distributor of a product) was damaged by the

defendants, who allegedly attempted to eliminate the plaintiff’s suppliers. The Court held that

a jury had to determine whether the defendants had refused to deal with the plaintiff and

whether the plaintiff failed to take advantage of independent sources of supplies, explaining:

It is apparent from the foregoing that the Court of Appeals approached
Continental’s claims as if they were five completely separate and unrelated
lawsuits. We think this was improper. In cases such as this, plaintiffs should be
given the full benefit of their proof without tightly compartmentalizing the
various factual components and wiping the slate clean after scrutiny of each.
The character and effect of a conspiracy are not to be judged by dismembering it
and viewing its separate parts, but only by looking at it as a whole and in a case
like the one before us, the duty of the jury was to look at the whole picture and
not merely at the individual figures in it.

Id. at 698-99 (internal quotations and citations omitted).

The Seventh Circuit has recognized that the Continental Ore case “does not address

either antitrust standing or antitrust injury.” Id. at 717. This is unhelpful to Mercatus, which

is attempting to use this case to shore up its position regarding antitrust injury. Nevertheless,

Mercatus is correct that in general, “courts should not be myopic in their assessment of

potential violations of the antitrust laws.” Kochert v. Greater Lafayette Health Services, Inc.,

463 F.3d 710, 716 (7th Cir. 2006); see also City of Mishawaka, Ind. v. American Elec. Power

Co., Inc., 616 F.2d 976, 986 (7th Cir. 1980) (“Injury need not be conclusively shown, but the

evidence [in total] must be sufficient to sustain the inference of injury to some extent”).

Thus, to survive summary judgment, a plaintiff must point to sufficient evidence

showing that the events at issue comprise an anticompetitive scheme culminating in the

ultimate injury – here, the Village Board’s decision to reject Mercatus’ proposed physician

center. See Kochert v. Greater Lafayette Health Services, Inc., 463 F.3d at 716-17. In an

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Case 1:07-cv-02042 Document 119 Filed 02/16/10 Page 20 of 22

attempt to do so, Mercatus asserts that the non-petitioning conduct had “a substantial adverse

impact on competition.” Response at 5. This sweeping statement ignores the fact that the

main potential source of impact on competition was the rejection – by the Village Board – of

zoning approval. The record does not tie the non-petitioning conduct noted by Mercatus (even

if the court accepts them as true) to the Village Board’s adverse action. 7

In addition, as discussed in the court’s prior order, misleading statements and public

expressions of opinion about competitors’ plans cannot provide the basis for an antitrust claim.

Arnett Physician Group, P.C., Greater Lafayette Health Services, Inc., 382 F. Supp. 2d 1092,

1096 (N.D. Ind. 2005) (rejecting contention that allegations of “‘publicity campaign’ against

construction of a new hospital causes antitrust injury. Public expressions of opinion about

competitors’ plans cannot provide the basis for an antitrust claim and such conduct is clearly

lawful”), citing Schachar v. American Acad. of Ophthalmology, Inc., 870 F.2d 397, 400 (7th

Cir. 1989) (“[i]f such statements should be false or misleading or incomplete or just plain

mistaken, the remedy is not antitrust litigation but more speech-the marketplace of ideas”).

The court also adheres to its prior ruling that the refusal to deal with a competitor is not

an antitrust violation. Schor v. Abbott Labs, 457 F.3d 608, 610 (7th Cir. 2006) (“antitrust law

The court acknowledges Mercatus’ assertion that Lake Forest Hospital provided false or
7
misleading information to try to convince potential tenants to stay away. According to Mercatus,
this meant that Mercatus lacked key tenants and thus could not have successfully proceeded even
with the Village of Lake Bluff’s approval. From an injury perspective, however, the Village did
not give its approval. In any event, as discussed below, the actions at issue are misleading
statements and expressions of opinion about competitors’ plans and thus do not support a finding
of antitrust injury.

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Case 1:07-cv-02042 Document 119 Filed 02/16/10 Page 21 of 22

does not require monopolists to cooperate with rivals . . . . Cooperation is a problem in

antitrust, not one of its obligations”) (emphasis in original).

Moreover, to the extent that Mercatus is alleging that Lake Forest Hospital entered into

agreements in restraint of trade, see Pl. SOF ¶ 12, the court previously noted concerns

regarding Mercatus’ standing to pursue this argument. Mercatus did not address these

concerns in its summary judgment filings, and the court will not construct arguments on its

behalf. The court also notes that it appears that these facts are more germane to Mercatus’

state law claims of tortious interference with Mercatus’ prospective economic advantage based

on alleged attempts by Lake Forest Hospital to affect its relationships with physicians and

Evanston Northwestern Healthcare (Counts VI & VII).

For all of these reasons, the court finds that Lake Forest Hospital is entitled to summary

judgment as to Mercatus’ federal antitrust claims (Counts I—V).

State Claims

This leaves Mercatus’ state law claims for tortious interference. If the court eliminates

a plaintiff’s federal claims, it may exercise its discretion and dismiss supplemental state law

claims without prejudice. See 28 U.S.C. § 1367(c)(3); Groce v. Eli Lilly & Co., 193 F.3d 496,

501 (7th Cir. 1999) (“we pause to emphasize that it is the well-established law of this circuit

that the usual practice is to dismiss without prejudice state supplemental claims whenever all

federal claims have been dismissed prior to trial”). This is not an absolute rule. Groce v. Eli

Lilly & Co., 193 F.3d at 501. Nevertheless, given the disposition of the federal claims and the

nature of the remaining state claims, the court, in an exercise of its discretion, declines to

exercise supplemental jurisdiction over the remaining state law claims.

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Case 1:07-cv-02042 Document 119 Filed 02/16/10 Page 22 of 22

III.

Conclusion

For the reasons stated above, Lake Forest Hospital’s motion for summary judgment

[#105] is granted as to Mercatus’ federal claims (Counts I—V), and the court declines to

exercise supplemental jurisdiction over Mercatus’ state law claims (Counts VI & VII). The

clerk is directed to enter a Rule 58 judgment and to terminate this case from the court’s docket.

DATE: February 16, 2010

__________________________________
Blanche M. Manning
United States District Judge

-22-

Mercy Hosp., Inc. v. Baumgardner

NOT FINAL UNTIL TIME EXPIRES
TO FILE REHEARING MOTION
AND, IF FILED, DISPOSED OF.

IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
THIRD DISTRICT
JULY TERM, A.D., 2003

MERCY HOSPITAL, INC.
Appellant,

vs.
BARBARA BAUMGARDNER, and
ETHBERT BAUMGARDNER, and
ANNE M. JONES VALENTINE,
Appellees.

**
**
**
**
**
**

CASE NOS. 3D02-3095
3D02-2686
LOWER
TRIBUNAL NOS. 02-6183
01-8858

Opinion filed December 24, 2003.
An Appeal from the Circuit Court for Miami-Dade County, Norman
S. Gerstein, Judge.
Stephens Lynn Klein Lacava Hoffman & Puya, and Marlene S.
Reiss, and Robert M. Klein; Lewis Fishman, for appellant.
Podhurst Orseck Josefsberg Eaton Meadow Olin & Perwin, and
Joel S. Perwin, for appellees.
William A. Bell; Parenti, Falk, Waas, Hernandez & Cortina, and
Gail Leverett Parenti, for the Florida Hospital Association, as
amicus curiae.

Before GERSTEN, GREEN, and FLETCHER, JJ.
GERSTEN, J.
Mercy Hospital, Inc. (“Mercy Hospital”) appeals an adverse
summary judgment finding the hospital liable for a staff

physician’s failure to comply with a financial responsibility
statute. Plaintiffs Barbara and Ethbert Baumgarder and Anne
Valentine (hereafter collectively referred to as “the plaintiffs”),
cross-appeal the dismissal of their negligence claims against the
hospital. We affirm on the main appeal and the cross-appeal.
The plaintiffs obtained judgments against Dr. Cesare DiRocco
(“Dr. DiRocco”) after successfully pursuing separate lawsuits for
malpractice. Dr. DiRocco had privileges to practice medicine at
Mercy Hospital, where the malpractice occurred.
Thereafter, Dr. DiRocco filed for bankruptcy, and the
plaintiffs were unable to recover on their judgments. The
plaintiffs then brought separate actions against Mercy Hospital
alleging strict liability under Florida’s financial responsibility
law, Section 458.320(2)(b), Florida Statutes (2002), and negligence
for failure to ensure that staff physician Dr. DiRocco complied
with the statute.
Mercy Hospital moved to dismiss both complaints, and the
plaintiffs filed motions for summary judgment on all claims. The
trial court granted the plaintiffs’ motions for summary judgment on
the strict liability claims and entered individual judgments of
$250,000 each for the plaintiffs. Mercy Hospital appeals the
adverse summary judgment. The plaintiffs cross-appeal the
dismissal of their negligence claims.
Section 458.320(2) requires physicians to comply with one of

three financial responsibility options in order to obtain hospital
staff privileges. A physician must have coverage in the amount of
$250,000 per claim, by either establishing an escrow account,
acquiring professional liability insurance, or maintaining a letter
of credit. See § 458.320(2), Fla. Stat. (2002). Alternatively, a
physician is exempt from the requirements of Section 458.320(2) if
he or she agrees to pay any medical-malpractice judgment creditor
$250,000 of any judgment, informs patients the doctor does not
carry medical malpractice insurance, and provides written
notification to the Florida Department of Health demonstrating
compliance with the statute. See § 458.320(5)(g), Fla. Stat.
(2002).
Mercy Hospital argues the trial court erred in granting
summary judgment for the plaintiffs, contending Section 458.320(2)
does not impose liability upon a hospital to ensure a physician’s
compliance. We disagree for the reasons expressed by our sister
districts in Robert v. Paschall, 767 So. 2d 1227 (Fla 5th DCA
2000), review denied, 786 So. 2d 1187 (Fla. 2001), and Baker v.
Tenet Healthsystem Hosp., Inc. 780 So. 2d 170 (Fla. 2d DCA 2001).
As noted in Robert v. Paschall, 767 So. 2d 1227, 1228 (Fla 5th
DCA 2000): “The obvious intent of the legislature [in enacting
Section 458.320(2)] was to make sure that a person injured by the
medical malpractice of a doctor with staff privileges would be able
to ultimately recover at least $250,000 of compensable damages. We

read section 458.320(2)(b) as imposing a statutory duty on the
hospital to assure the financial responsibility of its staff-
privileged physicians who use the hospital for medical treatment
and procedures.” See also Baker v. Tenet Healthsystem Hosp., Inc.
780 So. 2d 170 (Fla. 2d DCA 2001)(hospital has a statutory duty to
assure staff-privileged physicians are financially responsible).
We agree with the well-reasoned decisions of the Fifth and
Second Districts. The statute mandates financial responsibility as
a condition to maintaining staff privileges and imposes a duty on
the hospital to ensure compliance. Accordingly, we affirm on the
main appeal. Finding no error in the trial court’s well reasoned
decision to dismiss the negligence claims, we affirm on the cross-
appeal as well.
Affirmed.
FLETCHER, J., concurs.

GREEN, J. (dissenting)
Because the legislature has not expressly provided, or
evidenced any intent to provide, a private cause of action against
a hospital for a staff physician’s failure to comply with a
licensing statute, I must respectfully dissent.
Chapter 458 is regulatory and its specified legislative
purpose is “to ensure that every physician practicing in this state
meets minimum requirements for safe practice.” § 458.301, Fla.
Stat. (1999). Physicians who fall below the minimum standards
“shall be prohibited from practicing in this state.” Id. To that
end, Chapter 458 is a licensing statute.
As a condition of licensing, a physician is required to
demonstrate a financial ability to pay medical malpractice claims.
§ 458.320(1), Fla. Stat. (1999).1 As a continuing condition of
hospital staff privileges, a physician is also required to
establish financial responsibility by:
(a)
Establishing and maintaining an escrow account
consisting of cash or assets eligible for deposit in
accordance with s. 625.52 in the per claim amounts
specified in paragraph (b).
(b)
a n d m a i n t a i n i n g p r o f e s s i o n a l
O b t a i n i n g
liability coverage in an amount not less than $250,000
per claim, with a minimum annual aggregate of not less
than $750,000 from an authorized insurer as defined under

1 The statute provides that financial ability can be
demonstrated in various ways: 1) The establishment and maintenance
of an escrow account; 2) professional liability coverage or 3)
obtaining and maintaining an unexpired, irrevocable letter of
credit. § 458.320(1)(a),(b),(c).
5

s. 624.09, from a surplus lines insurer as defined under
s. 626.914(2), from a risk retention group as defined
under s. 627.942, from the Joint Underwriting Association
established under s. 627.351(4), through a plan of self-
insurance as provided in s. 627.357, or through a plan of
self-insurance which meets the conditions specified for
satisfying financial responsibility in s. 766.110.
(c)
Obtaining and maintaining an unexpired
irrevocable letter of credit, established pursuant to
chapter 675, in an amount not less than $250,000 per
claim, with a minimum aggregate availability of credit of
not less than $750,000. The letter of credit shall be
payable to the physician as beneficiary upon presentment
of a final judgment indicating liability and awarding
damages to be paid by the physician or upon presentment
of a settlement agreement signed by all parties to such
agreement when such final judgment or settlement is a
result of a claim arising out of the rendering of, or the
failure to render, medical care and services. Such
letter of credit shall be nonassignable and
nontransferable. Such letter of credit shall be issued
by any bank or savings association organized and existing
under the laws of this state or any bank or savings
association organized under the laws of the United States
that has its principal place of business in this state or
has a branch office which is authorized under the laws of
this state or of the United States to receive deposits in
this state.
§ 458.320(2)(a),(b),(c). A staff physician’s coverage is inclusive
of the coverage provided for licensure. Id.
Moreover, this financial responsibility statute expressly
provides that physicians need not comply with the enumerated
financial requirements if they agree to certain conditions. §
458.320(5). Specifically,
(5) The requirements of subsections (1) [and] (2) . .
. shall not apply to:

* * *
(g) Any person holding an active license under this
6

chapter who agrees to meet all of the following criteria:
1. Upon the entry of an adverse final judgment arising
from a medical malpractice arbitration award, from a
claim of medical malpractice either in contract or tort,
or from noncompliance with the terms of a settlement
agreement arising from a claim of medical malpractice
either in contract or tort, the licensee shall pay the
judgment creditor the lesser of the entire amount of the
judgment with all accrued interest or either $100,000, if
the physician is licensed pursuant to this chapter but
does not maintain hospital staff privileges, or $250,000,
if the physician is licensed pursuant to this chapter and
maintains hospital staff privileges, within 60 days after
the date such judgment became final and subject to
execution, unless otherwise mutually agreed to in writing
by the parties. Such adverse final judgment shall
include any cross-claim, counterclaim, or claim for
indemnity or contribution arising from the claim of
medical malpractice. Upon notification of the existence
of an unsatisfied judgment or payment pursuant to this
subparagraph, the department shall notify the licensee by
certified mail that he or she shall be subject to
disciplinary action unless, within 30 days from the date
of mailing, he or she either:
a. Shows proof that the unsatisfied judgment has been
paid in the amount specified in this subparagraph; or
b. Furnishes the department with a copy of a timely
filed notice of appeal and either:
(I) A copy of a supersedeas bond properly posted in
the amount required by law; or
(II) An order from a court of competent jurisdiction
staying execution on the final judgment pending
disposition of the appeal.
§ 458.320(5)(g)(1). Failure to comply with the conditions of
subsection 1 results in an emergency order of suspension which may
be followed by disciplinary action. § 458.320(5)(g)(2),(3),(4).2

2 Specifically, the statute provides:

Conspicuously absent from the statute is any language
providing a third-party injured patient with a private cause of
action against a hospital for a staff physician’s breach of
statute. Without such language, or at a bare minimum, clear
legislative intent, courts have repeatedly declined to infer the
existence of a private cause of action to a regulatory statute.
See, e.g., Murthy v. N. Sinha Corp., 644 So. 2d 983, 986 (Fla.

2. The Department of Health shall issue an emergency
order suspending the license of any licensee who, after
30 days following receipt of a notice from the Department
of Health, has failed to: satisfy a medical malpractice
claim against him or her; furnish the Department of
Health a copy of a timely filed notice of appeal; furnish
the Department of Health a copy of a supersedeas bond
properly posted in the amount required by law; or furnish
the Department of Health an order from a court of
competent jurisdiction staying execution on the final
judgment pending disposition of the appeal.
3. Upon the next meeting of the probable cause panel
of the board following 30 days after the date of mailing
the notice of disciplinary action to the licensee, the
panel shall make a determination of whether probable
cause exists to take disciplinary action against the
licensee pursuant to subparagraph 1.
4. If the board determines that the factual
requirements of subparagraph 1. are met, it shall take
disciplinary action as it deems appropriate against the
licensee. Such disciplinary action shall include, at a
minimum, probation of the license with the restriction
that the licensee must make payments to the judgment
creditor on a schedule determined by the board to be
reasonable and within the financial capability of the
physician. Notwithstanding any other disciplinary
penalty imposed, the disciplinary penalty may include
suspension of the license for a period not to exceed 5
year. In the event that an agreement to satisfy a
judgment has been met, the board shall remove any
restriction on the license.

1994)(holding that regulatory statutes governing construction
industry did not create private cause of action absent evidence in
language or legislative history of intent to create private cause
of action). See also Fla. Physicians Union v. United Healthcare of
Fla., Inc., 837 So. 2d 1133, 1137 (Fla. 5th DCA 2003)(“The courts
of this state have long been reluctant to find the legislature
intended private parties to have causes of action to enforce
statutes . . . without strong indication that was the legislature’s
intent.”); Moyant v. Beattie, 561 So. 2d 1319, 1320 (Fla. 4th DCA
1990)(“In general, a statute that does not purport to establish
civil liability, but merely makes provision to secure the safety or
welfare of the public as an entity, will not be construed as
establishing a civil liability.”). Because there is no statutory
language creating a private cause of action, or indication that the
legislature ever intended to create a private cause of action, we
cannot create one by judicial fiat.
For that reason, I believe that Robert v. Paschall, 767 So. 2d
1227 (Fla. 5th DCA 2000) and Baker v. Tenet Healthsystem Hosps.,
Inc., 780 So. 2d 170 (Fla. 2d DCA 2001) were wrongly decided. In
Robert, the Fifth District held that a hospital was liable, up to
a limit of $250,000, for a staff–privileged physician’s failure to
comply with the financial responsibility statute. Robert, 767 So.
2d at 1228. The court held that this cause of action against the
hospital did not arise, however, until a judgment had been entered

against a staff physician which was not satisfied. Id. at 1228-29.
In inferring this private cause of action, the Robert court stated:
We believe this holding is compatible with the
legislative intent to make sure that plaintiffs, such as
the Roberts, are compensated assuming they are so
entitled, at least up to $250,000.
Id. at 1229. Similarly, the Second District, relying on Robert,
affirmed a dismissal without prejudice of a plaintiff’s claim
against a hospital under section 458.320, finding the claim
premature because the plaintiff had yet to establish liability on
the part of the staff physician. Baker, 780 So. 2d at 171.
Prior to these cases, there was nothing in the common law to
suggest that a hospital had a duty to ensure that its staff
physicians were financially responsible. As the First District has
said:

[N]o case, either in Florida or elsewhere, has recognized
the tort of negligent selection of a financially
“incompetent” physician. . . . It is true that the
corporate negligence doctrine is premised on the notion
that it is foreseeable that a hospital’s failure to
properly investigate an applicant for staff privileges
would present a foreseeable risk of harm to the
hospital’s patients. . . . No concurrent public reliance
on a hospital’s monitoring of a staff physician’s
malpractice judgment–paying skills has been noted in the
cases.
Beam v. Univ. Hosp. Bldg., Inc., 486 So. 2d 672, 673 (Fla. 1st DCA
1986), (citations omitted).
We cannot assume that the legislature intended to create a
cause of action and abrogate the common law without clear,
unambiguous and affirmative language to that effect. See Raisen v.
10

Raisen, 379 So. 2d 352, 353-54 (Fla. 1979)(stating that, as a
general rule, common law should be changed through legislative
enactment, not judicial decisions); Assoc. for Retarded Citizens–
Volusia, Inc., 741 So. 2d 520, 525 (Fla. 5th DCA 1999)(“Had it been
the intent of the legislature to abrogate the well-settled common
law rule . . . the legislature no doubt would have specifically
said so.”). There is no such language in section 458.320. Thus,
I believe that the Second and Fifth Districts overstepped their
authority in creating a private cause of action where one was not
expressly provided for by the legislature and we should decline to
follow their lead in this case. I would therefore reverse and
certify conflict with the holdings from these Districts.

Mercer v. HCA Health Serv. of Tennessee, Inc. (Summary)

Mercer v. HCA Health Serv. of Tennessee, Inc., No.M2000-02785-COA-R3-CV (Tenn. Ct. App. Feb. 7, 2002)

A widow sued a hospital and psychiatrist, claiming that her husband’s suicide was caused by the negligence of the defendants in releasing her husband prematurely from involuntary commitment. The Tennessee Court of Appeals reversed the trial court’s grant of summary judgment in favor of defendants, holding that the psychiatrist was not entitled to absolute immunity for actions undertaken under the state involuntary commitment statutes and that the plaintiff widow alleged facts sufficient to support a claim against the hospital.

The appellate court held that the state legislature chose not to grant immunity to individuals who have acted negligently in the involuntary commitment process, and concluded that considerations of public policy did not require a grant of judicial immunity for doctors involved in involuntary commitment proceedings.

Furthermore, the court held that the plaintiff alleged facts sufficient to support a claim against the hospital. Two registered psychiatric nurses, retained as experts by the plaintiff, testified that the standard of care requiring the treatment team to assess the patient’s potential for suicide, to document their observations, and to communicate those observations to each other and to the doctor was breached by defendants. Team members failed to review the medical records of the patient’s previous hospitalization, despite hospital policy requiring such review, and the doctor’s determination that the patient should be discharged was based solely on a few interviews conducted with the patient.

Mercatus Group, LLC v. Lake Forest Hosp. (Full Text)

In th e
Un ited S tates Court o f Appea ls
F o r th e S ev en th C ircu it

No . 10-1665

M ERCATUS GROUP , LLC ,

LAKE FOREST HOSP ITAL,

P la in ti f f-Appel lan t,

v .

D efendant-A pp ellee .

Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 07 cv 2042—Blanche M. Manning, Judge.

ARGUED NOVEMBER 4 , 2010—D EC IDED M AY 26 , 2011

Be fore BAUER, MAN ION, and HAM ILTON, C ircu it Judges .
H AM ILTON, C ircu it Judge . The F irs t Am endm en t of th e
Cons t itu t ion sta tes tha t Congress sha l l m ake no law
abridg ing the “righ t of the peop le peaceab ly to assemb le ,
and to p e t it ion the Governm en t for a redress of griev –
ances .” Under the N oerr-Penn ing ton doc trine , federa l
an t i t ru s t law s have been in terpre ted to pro tec t these
F irs t Am endm en t r igh ts by immun iz ing pet it ion ing
ac t iv ity from l iab ility . In th is app ea l from the d is tr ic t

No . 10-1665

judgm en t for de fendan t –
court ’s gran t of summ ary
ap p e l lee L ake Fo re s t H o sp ita l , w e mu s t d ec id e
whe ther tha t d oc tr ine she lters from an t itrus t liab ility
one compe titor ’s a lleged m is rep re sen ta t ion s abou t
ano the r made du r ing and in re la t ion to local zon ing
p roceed ings . W e conc lud e tha t it doe s . Becau se noth ing
else in the record i s su fficien t to m ake ou t a cla im
for liab ility under the an t itrus t law s , we affirm .

I . Background
In 2004 , p la in t iff-appe l lan t M erca tus Group , LLC , began
p lan s to con stru ct a phys ic ian cen t e r— essen tia lly , a
m ed ica l office bu ild ing from wh ich phys ic ian s can p rov id e
m ed ica l services— in the V i llage of Lake B lu ff , Illino is .
M e rcatus sough t to bu ild th is cen te r on a p la t of land
occup ied a t tha t t im e by an au tom ob ile deale rsh ip (the
“Shepard Land ”) . M erca tu s ’ par tn er in th is ven tu re
w as Evans ton Nor thwes tern H ea lthcare (“ENH ” ), w i th
wh ich M erca tus p lanned to cons truc t a num ber of such
phys ic ian cen ters .
Appellee Lake Fores t H osp i ta l (the “Hosp ita l”) is
located in nearby Lake Fo re s t , a short d is tance from
the Sh ep ard Land . The Hosp ita l recogn ized the “huge
threa t” tha t the proposed M erca tus Lake B lu f f cen ter
posed to its ab ility to com p e te in the loca l m arke t for
m ed ical se rv ices . To p ro tec t it se lf from th is threa t , the
Hosp ita l lau n ched a mu l ti-pronged campa ign des igned
to p reven t M erca tu s from open ing the phys ic ian cen ter .
F irs t , the H osp i ta l lobb ied m em bers of the Lake B luff
Board of V illage Trus tees— bo th ind iv idua lly and a t a

No . 10-1665

num ber of pub lic V illag e B oa rd m ee tings held on th is
m a t ter— to deny M erca tus the app rova ls necessary to
beg in con stru ct ion on
th e Sh epa rd Land . Second ,
the Hosp ital launched a pub lic re la tion s campa ign en –
cou raging Hosp ital emp loyees and donors , a s we ll a s the
loca l c omm un i ty , to pu t po lit ica l pressure on the V i llage
Board to oppose the M erca tu s cen ter . Th ird , the Hosp ita l
to ld ENH to s tay ou t o f Lake B lu ff and mad e a num ber
of deroga to ry s ta temen ts abou t M e rcatus to ENH and
other healthcare p rovid ers . Finally , the H osp ita l iden ti-
fied two Hosp ita l-a ffilia ted phys ic ian p rac t ice groups
tha t p lanned to move the ir p ract ices to the new M e rcatu s
phys ic ian cente r and offe red those group s va riou s incen-
t ives no t to do so .
The Hosp ita l’s e fforts w ere success fu l . Bo th phys ician
prac tice groups pu lled ou t o f the ir cond it iona l agree –
m ent s w ith M e rcatus , the V illage Boa rd den ied M e rcatus
th e approva ls necessary to d ev e lop th e Sh epard Land ,
and ENH term ina ted its bus iness rela t ionsh ip w ith
M erca tus . M erca tus never opened a phys ic ian cen ter
in Lake B luff .
M erca tus brough t th is su i t in federal d is tric t cour t ,
a lleg ing in relevan t par t tha t the Hosp ita l had m onop o –
lized and /or a t temp ted to m onopo lize a lleged m arke ts
for “com p rehen sive phys ician serv ices” and “d iagnos tic
im ag ing services”
in eastern Lake C oun ty , Illino is ,
in v io la tion of the She rm an Ac t , 15 U .S .C . § 2 . On the
1

1
M e rca tu s ’ am end ed com p la in t d e fin es “d iagno st ic im ag ing
serv ices” as “m agne t ic resonance im ag ing , com pu te rized
(con t inued . . .)

No . 10-1665

Hosp ita l’s mo t ion , the d is tr ic t cour t d ism issed som e of
M erca tus ’ c la im s aga ins t the Hosp ita l for fa ilure to s tate
a c laim . M ercatus Group LLC v . Lake Forest H osp ., 528
F . Supp . 2d 797 (N .D . Il l. 2007) (“M erca tus I” ). M e rcatus
filed an am ended comp lain t and , fo llow ing ex tens ive
d iscovery , the d is tr ic t cou r t gran ted the H osp i ta l ’s
m ot ion for summ ary judgm en t on tha t am ended com –
p lain t . M ercatus Group LLC v . Lake Forest H osp ., 695 F . Supp .
2d 811 (N .D . Il l. 2010) (“M ercatus II”) . Th e d is t r ic t cour t
conc lud ed tha t the Hosp i ta l’s e f forts be fore the V illage
Boa rd we re p ro tec ted from an t it ru s t liability by the
F irst Am endm en t righ t to pe t it ion the governm en t for
th e red ress of grievances . Id . at 818-21 . A s for th e H osp i-
ta l ’s o ther conduc t , the cou r t he ld tha t w h a t i t charac ter-
ized as m ere m isrep re sen ta t ions and d isparag ing com –
m en ts w ere , as a m a t ter o f law , insu f fic ien t to g ive r ise
to an tit ru st liab ility . Id . a t 823 ; see also M erca tus I , 528
F . Supp . 2d at 810 (d ism is sing part of or ig ina l comp la in t
on s im i lar ground s) .
On appea l , M erca tu s f irs t argues tha t th e Hosp i ta l ’s
pe t it ion ing conduc t re la t ing to the V i llage Board m ee tings

1
( . . .con t inued )
tom og raphy , nuc lea r m ed ic ine , rad iog raphy , and u l tra –
sonography , so ld to p a t ien ts” and “comp reh en siv e phy sic ian
serv ices” a s “b us iness se rv ices such as b i l ling ass is tance ,
c l in ica l se rv ice s su ch as on -s i te d iagno st ic im ag ing se rv ice s ,
and rea l esta te s e rv i ce s , su ch as leas ing sp ace to phy s ic ian s .”
W e do no t add ress in th is app ea l the v iab i l i ty o f p la in t i ff’s
p roposed p rodu c t and geog rap h ic m ark e t d e f in i t ion s .

No . 10-1665

is not p ro tec ted by the F ir s t Am endm ent becau se the
Hosp ita l m ade a num b er of m isrepresen ta tions tha t
a ltered the ou tcom e of those m ee tings . M erca tus argues
in the a lterna t ive tha t the Ho sp i ta l’s other conduc t— its
pub lic rela t ions campa ign , its commun icat ions w ith
ENH and o ther hea lthcare prov iders , and its e fforts to
conv ince the phys ic ian prac tice groups no t to re locate
the ir prac t ices to M erca tus ’ phys ic ian cen ter— v io la ted
the Sherman A c t even if the V i llage Board proceed ings
are d isregard ed .
W e affirm . Even if w e assum e that th e H o sp i ta l mad e
m a te ria l m i srep re sentat ion s du ring and re la ting to the
V i llage Board proceed ings concern ing M erca tus ’ phys ic ian
cen te r, such m i srep re sen ta tion s are lega lly irre levan t
becau se those m ee tings were inheren tly polit ica l in
na ture . The sam e is true o f the Hosp i ta l’s pub lic re la –
t ions campa ign , wh ich was inex tr icab ly in ter tw ined
w ith the Hosp ita l’s efforts be fo re the Board . A s for
the Hosp i ta l ’ s con tac t s w i th ENH and o ther hea l thcare
prov iders , those con tac ts cons titu ted m ere speech tha t
wa s no t ac tionab le under the Sherm an Ac t . F ina lly , no
reasonab le tr ier of fac t cou ld conc lud e from th is rec –
o rd that th e Hosp ita l’s su ccess fu l effort to conv in c e
phys ic ians not to reloc a te the ir prac tices to M erca tus ’
p roposed phys ic ian center con st itu ted p redatory con –
du c t forb idd en by the an t itrus t law s .

II . Standard o f R eview
W e rev iew de novo the d istric t cou rt ’s gran t of sum –
m ary judgm en t . Omn icare , Inc . v . Un ited H ea lth G roup ,

No . 10-1665

Inc ., 629 F .3d 697 , 705 (7 th C ir . 2011 ). Summ a ry judgm ent
is appropr ia te when the p lead ings and subm iss ions in
the record ind ica te the absence of any genu ine issues
o f m a ter ia l fac t , such tha t the m ov ing party is en t it led
to judgm en t as a m at te r of law . M idw est Imports , L td . v .
Cova l , 71 F .3d 1311 , 1317 (7 th C ir . 1995 ). Becau se M e rcatus
opposed summ ary judgm en t , w e d raw all rea sonab le
fac tua l inferen ce s f rom the record in M erca tu s ’ favor .
Jakubiec v . C ities Serv ice Co ., 844 F .2d 47 0 , 471 (7 th C ir .
1988) . W e w i ll a ffirm on ly if , v iew ing the record in such
a favo rab le ligh t to M ercatus , no reasonab le jury cou ld
have rendered a verd ic t in M erca tus ’ favor on any of
its cla im s . W i lson v . W i l l iam s , 9 97 F .2d 348 , 350 (7 th C ir .
1993 ) .
In evalua t ing mu l t ip le c la im s under these s tandards ,
w e recall that a p lain tiff “shou ld be given the fu ll benefit
of [it s] p roof w ithou t t igh t ly compa rtmen ta liz ing the
var iou s fac tual compon en ts and w ip ing th e s la te c lean
a fter scru t iny o f each .” Con tinen ta l O re Co . v . Un ion Carbide
& Carbon Corp ., 370 U .S. 690 , 699 (1962) . Tha t does not
m ean , however , tha t we w ill aggregate the effec ts of
conduc t immun ized from an t it ru s t liability w i th the
e ffec ts of conduc t no t so immun ized . Tha t app roach
wou ld nu l lify the immun i ty . For tha t reason , we mus t
first iden t ify any conduc t tha t is immun ized . A fter
w e do so , w e cons ider the ev idence of the rem a in ing
cha l lenged conduc t in the aggrega te to see if it is su f-
fic ien t to support an t itrus t liab ility .

No . 10-1665

III. Lobby ing the V il lage Board— the N oerr-Penn ington D oc-
trine
M e rcatus ’ p rim a ry a rgum ent on appeal is tha t the
Hosp ita l ’s conduc t in the V i llage Board proceed ings
is not p ro tec ted by the F irs t Am endm ent . Th is , M e rcatus
argues , is becau se the Hosp i ta l a l leged ly m ade num er-
ous m isrepresen ta tions and m a ter ia l om iss ions o f fac t
to the V illage Board tha t u lt im a tely cau sed the Board to
deny M e rcatus pe rm is sion to begin con st ruc tion on the
Sh epard Land .

A . Facts on Summ ary Judgm en t
M erca tus first appeared be fore the V i llage Bo ard a t
an Ap r il 2006 boa rd m ee t ing , at wh ich t im e M e rcatus
m ade an in form a l pre-filing presen tat ion of its pre –
l im inary p lans for a phys ic ian cen ter on the Shep ard
Land . M erca tus represen ta t ives argued tha t the phys ic ian
cen ter wou ld be “a good pro jec t for the commun i ty
of Lake B lu ff .” The V illage Boa rd a lso hea rd from the
Hosp ita l’s ou tgo ing pres iden t , B ill R ies , who c la im ed
th a t the M erca tus phys ic ian cen ter wou ld no t be good
for the commun i ty because i t w ou ld ex trac t “the mos t
pro fitab le ou tpa t ien t serv ices” from loca l hosp i ta ls . R ies
al so ques tioned M ercatus’ comm itm en t to char itab le
m ed ica l care and c la im ed tha t the Hosp i ta l “comm it –
ted over $25 m i l lion in sub sidy and char ity to the
peop le of Lake C oun ty ,” rep re sent ing “nea rly 13 pe rcen t
o f our ne t revenue .” V i llage Board trus tee M ichae l
Pe ters , a phys ic ian a t the Hosp ita l, a lso expressed

No . 10-1665

conce rn tha t the M e rcatus p lan m igh t jeopa rd ize the
Hosp ita l and cou ld lead to h igher hea lthcare prices .
In Sep tem ber 2006 , the Lake B luff A rch i tec tu ra l Board
of Rev iew reviewed the p roposed s i te p lan for the
M erca tu s phys ic ian cen ter . The A rch i tec tu ra l Board
recomm ended app rova l o f the s ite p lan , wh ich was
th en taken und e r con s id era t ion by th e V illage Board .
A ccord ing to Lake B lu f f ord inances , on ly a vote by two –
th irds of th e V illage Board cou ld overtu rn th e A rch it e c –
tu ra l Board ’s s i t e p lan app rova l . A t the V i l lage Board ’s
Oc tober 2006 m ee ting , however , Lake B lu ff’s at torney
in form ed the V i llage Board tha t , in add it ion to s ite
p lan app rova l , M erca tu s needed separa te V i llage Boa rd
app roval even to develop the Shepa rd L and . A s he ex-
p lained , a spec ial u se ord inan ce had been app licab le
to
the Shepard Land s ince 1 972 . Tha t ord inance
“sp ec ia lly c lass ified” th e Sh epard Land “ for u sage as a
new re tail au tom ob i le . . . fac ility .” Any “new uses or
d i fferen t u se s” w ere to be “subm it ted to the [V i llage
Boa rd ] for a pub lic hea ring to asce rtain whethe r the
sam e w ill be approved .” The 1976 and 1979 am endm en ts
to the ord inance reaffirm ed th a t any proposed fu ture
deve lopm en t or use o f the Shepard Land requ ired V i llage
Board approva l. M er ca tus ’ a t torney at temp ted
to
con vince the Board tha t the ord inance and its am end –
m ent s d id not requ ire a sepa ra te vote on developm ent
approva l , bu t to no ava il . Th e V illage Board ele c t ed
to con s id e r
i s s u e o f d ev e lopm en t app rova l
t h e
separa te ly be fore add ress ing th e issu e of s ite p lan ap –
p rova l .

No . 10-1665

Represen ta t ives o f M erca tus and the H osp ita l both
made sta tem en ts to th e V illage Board regard ing d eve lop –
m en t app rova l . On beha lf of M erca tu s , B i ll M aggard
argued for app rova l becau se the phy s ic ian cen te r wou ld
“prov ide [ ] new so lu t ions to the hea lthcare cris is by
e lim ina t ing ine ffic ienc ies in hea lthcare .” He a lso argued
tha t the Hosp i ta l “doesn ’ t have a m onopo ly on pro –
v id ing hea lthcare serv ices to the c ommun ity” and
po in ted ou t tha t th e M e rca tus agreem en t w ith ENH
ob liga ted it to prov ide charity care .
In re spon se , Ho sp ital CEO Tom M cA fee po in ted ou t
tha t the Hosp i ta l is a no t-for-pro fit charity and vo iced
concern tha t M erca tus wou ld “cherry p ick the mos t
p ro f i tab le services ou t o f commun ities for for -p ro fit
ven ture backed opera tions a t the expense of commun i ty
hea l thcare p rov ide rs .” If the M erca tu s p ro jec t w en t for-
w ard , M cA fee es tim a ted , it wou ld cos t the Hosp ita l “at
leas t $2 m illion a year in los t bot tom line .” He add ed
tha t “m illions o f do llars [for] th is hosp ita l is n u rses a t
the bed s ide” and “ l itera lly [r isked ] the su rv ival of the
ins t itu t ion .” M cA fee a lso no ted tha t M erca tus ’ par tner
ENH was being inve st iga ted by the FTC for an ti-com pet i-
t ive a c t iv it ies . In sum , he sa id , “enab ling M erca tus to
develop a fac ility that w ill com pete w i th the hosp ita l . . .
w i l l no t advance the hea lthcare need s of th is comm u –
n ity . It w ill defin ite ly dam age them .”
A f te r fu rthe r statem ent s by the H o sp ital’s CEO and
a numbe r of Ho sp i ta l phys ic ians who opposed the
M e rcatus p ro ject , as we ll a s from som e local c it izen s
who spoke ou t in favo r of the pro jec t , V i llage Boa rd

No . 10-1665

t ru s tee D r . Peters aga in exp re s sed conce rn tha t the
M erca tus phys ic ian cen ter cou ld have a nega t ive
impac t on the Hosp ita l. Dr . Pe ters a lso specu la ted
tha t M erca tus wou ld u l tim a tely ra ise pr ices , no ting that
the FTC had found M erca tus ’ par tner ENH “gu i lty o f
rais ing pr ices”
in 2005 . The Board then voted to
approve the deve lopm en t of the Shepard Land bu t de –
ferred its vo te on s ite p lan app rova l to its Novem ber
m ee ting .
A t the Boa rd ’s Novem ber mee ting , howeve r, the
Board vo ted to r e con sid er its gran t of d eve lopm en t ap –
p rova l . The Board then tab led the m a t ter to i ts Janua ry
m ee ting . A t that m ee ting , Hosp ita l CEO M cA fee again
vo iced h is belie f tha t the M erca tus p hys ician cen ter
wou ld “rem ove m illions o f d o l lars” from the H osp ita l ,
wh ich “s imp ly [d id no t] have the resources to de –
fend [i tse lf] .” W i th D r . Pe te rs abs ta in ing , the Board
th en unan imous ly vo ted to d eny d eve lopm en t ap –
p rova l . The Boa rd also den ied site p lan app rova l .

B . The N oerr-Penn ing ton D octrine
In it s am ended comp la in t , M e rca tu s c la im ed tha t the
Hosp i ta l shou ld be he ld liab le in an t itrus t because
it d ra st ica lly m i srep re sented , am ong othe r th ings , the
ex ten t to w h ich the M ercatus phys ician cen te r wou ld
harm the Ho sp ital . In it s am ended comp la in t , M e rcatus
a lleged tha t th e Hosp ital lied when it c la im ed tha t the
M e rcatus cen te r wou ld “cau se a $2 m i ll ion los s to [the
Hosp ital] , d rive the Ho sp ital ou t of bu s ine s s , and

No . 10-1665

preven t [the Hosp i ta l] from prov id ing char ity care .” For
pu rposes o f th is dec is ion on ly , we w ill assum e tha t all of
the sta tem en ts cha llenged by M erca tus w ere in fac t fa lse .2
In gran t ing summ a ry
jud gm ent aga in st M e rcatus
on th is c la im , the d is tr ic t cour t he ld tha t any m isrepre –
sen tat ions to the Board were immun ized from an t itrus t
liab il i ty under the N oerr-Penn ing ton doc tr ine . M ercatus II,
695 F . Supp . 2d a t 818 -21 . Th is doc tr ine takes it s nam e
from Eastern R .R . Presiden ts Con ference v . N oerr M o tor
Freight , Inc ., 365 U .S . 127 (1961) (ho ld ing th a t ra ilroads ’
pub lic ity campa ign to p rom o te support for law s harm fu l
to tru cking in te rest was immune from an tit ru s t liab il-
ity ) , and Un ited M ine W orkers o f Am erica v . Penn ing ton ,
381 U .S . 657 (1965) ( jo in t effort s by m ine rs ’ un ion and
large coa l compan ies to have federal agency im p ose
h igher m in imum wage for coa l supp l iers to TVA were

2
A cco rd ing to M e rca tus , the fa lsi ty o f the H osp i ta l ’s c la im tha t
M e r ca tu s posed a th rea t to th e Ho sp ita l can b e shown “by
s im p ly ob serv ing [the H osp i ta l ’s ] ac tu a l f inan c ia l s ta tu s”— th e
fa ct tha t th e Ho sp ita l had “ sub s tan tia l a sse ts in c lud ing
cash , stock , land [ ,] a nd bu i ld ings” as w e l l as “subs tan t ia l ex tra
cap ita l capac i ty fo r expan s ion .” M e r ca tu s a lso c la im s tha t th e
H o sp i ta l ’s in terna l no tes rev ea l th e fa lsi ty o f the H o sp i ta l ’s
c la im tha t i t prov id ed $25 m i l l ion in sub s idy and cha r i ty to
the comm un i ty . Because , as w e exp la in be low , the a l leged
fa ls i ty o f th e Ho sp ita l ’s sta t em en t s to th e V i l lag e Boa rd is o f
no lega l s ign ifican ce in th is ca se , w e exp re ss no op in ion on
wh e th e r M e rca tu s m u s te red su ffic ien t ev id en ce to p rov e th e
fa ls i ty o f th e Ho sp ita l ’s p red ic t iv e s ta tem en ts to th e V i l lag e
Boa rd .

No . 10-1665

imm une from an titru st liab i lity ) . Th e doc tr in e ex tends
ab so lu te immun ity under the an tit ru st law s to “busi-
nesses and oth er associa t ions when they jo in toge ther to
pe t it ion leg is la t ive bod ies , adm in is tra t ive agenc ies , or
cou rts for ac tion that m ay have an ticom pet itive e ffec ts .”
W i lk v . Am erican M ed ica l Ass ’n , 719 F .2d 207 , 229 (7 th C ir .
1983) ; see LaSa l le N a t ’ l B ank o f Ch icago v . DuP age County ,
777 F .2d 377 , 384 n .6 (7 th C ir . 1985) (N oerr-Penn ing ton
doc tr ine “bars Sherm an Ac t su it s aga in st pe rson s
who a s soc ia te for the pu rpose of re st ra in ing trade and
compe t it ion
if
they pursue
th is pu rp ose
through
leg it im a te po l it ica l m ean s”) .
Th is immun ity i s ex tended “ in part becau se the
or ig inal pu rposes of th e Sh erman A c t d id not in clude
regu lat ing polit ica l a c tiv ity and in par t becau se it is
ques t ionab le whe ther the first am endm en t a llows such
regu la t ion .” P rem ier E lec . Constr . Co . v . N at ’ l E lec . Contrac-
tors Ass’n , Inc . , 814 F .2d 358 , 371 (7 th C ir . 1987 ). The N oerr-
Penn ing ton doc t rine recogn izes that our dem oc ra tic
system of governm en t derives its very v i ta lity from
its c it izens ’ ab i lity to re jec t the sta tus quo and to
advocate for change s in the law . “The Sh e rm an Ac t ex –
p resses on e po licy ; peop le are free to try to persuad e
th eir rep resen ta tives that monopoly is p re ferab le . . . .
Th e f irs t am endm en t p ro tec ts th e r igh t of th e p eop le to
ask for th is boon .” Id .

1 . The Sham Excep tion to Noerr-Penn ing ton
M erca tus concedes tha t the N oerr-Penn ing ton doc tr ine
wou ld immun ize tru th fu l s ta tem en ts m ade to the V i llage

No . 10-1665

Boa rd . Rathe r, it a rgues tha t , because a number of the
Hosp i ta l ’s s ta tem en ts to the Boa rd were fa lse (or w ere
so ma ter ia lly incomp le te a s to be con s ide red fa lse) , the
“sham ” excep t ion to N oerr-Penn ing ton immun ity shou ld
app ly . The sham ex cep tion was firs t m en tioned in
N oerr it se lf , wh ich specu la ted : “There m ay be s itua tion s
in wh ich a pub lic ity campa ign , os tens ib ly d irec ted
toward in f luenc ing governm en ta l ac tion , is a m ere sham
to cover wha t is ac tually no th ing m o re than an a t temp t
to in terfere d irec t ly w i th the bus iness rela t ionsh ips o f
a compe t itor and the app l ica t ion of the Sherm an A c t
wou ld be jus t ified .” 365 U .S . a t 144 . In th e years since ,
courts have recogn ized tw o spec ific k ind s of conduc t tha t
can tr igge r the sham excep tion : (1 ) sham law su it s ; and
(2 ) fraudu len t m isrepresen ta tions . See Ko ttle v . N orthw est
K idn ey C enters , 146 F .3d 1056 , 1060 -62 (9 th C ir . 1998) .3
M erca tu s re lies on th e fraud bran ch of th e sham ex cep –
t ion to N oerr-Penn in g ton . Th is excep t ion trace s it s or ig in s

3
Th e N in th C ir cu i t has sa id in d ic ta tha t th e sham ex cep tion
can a l so app ly if a pa r ty b r ing s a se r ie s o f law su i ts w i thou t
reg ard to the ir m er i ts , ev en i f a few hav e som e m er i t as a
m a t te r o f ch ance . See K o ttle , 146 F .3d a t 1060 . W e hav e no t
faced tha t issue . See P ro fe ss iona l R ea l E s ta te Inv e sto rs , In c . v .
C o lum b ia P ic tu re s In du s ., 508 U .S . 49 , 60 n .5 (1993 ) (“A w inn ing
law su i t is by d e fin it ion a reasonab l e e f fo r t a t p e t i t ion ing fo r
red re ss and therefo re no t a sh am .” ) ; C a liforn ia M o tor T ransp or t
C o . v . Tru ck ing U n lim ited , 404 U .S . 508 , 513 (197 2 ) (“One c la im ,
wh i ch a c ou r t o r agency m ay th ink base le ss , m ay go
unno t iced ; bu t a pa t tern o f base less , repe t i tive c la im s m ay
em erg e wh ich l e ad s th e fac t finder to conc lud e th at th e ad –
m in ist ra t iv e and jud ic ia l p ro ce sse s hav e b een abu sed .”) .

No . 10-1665

back to the Sup rem e Cou rt ’s h in t that “[t ]here are m any . . .
form s of illegal and reprehens ib le prac t ice wh ich m ay
corrup t the adm inistra t iv e or jud icia l processes and wh ich
m ay resu lt in an t itrus t vio la t ions . M isrepresen ta tions ,
condoned in the po lit ica l arena , are not immun ized
when used in th e adjudica tory process.” Ca l iforn ia M o tor
Transp ., 404 U .S. a t 513 (em ph ases added ) ; see id . a t 512
(“[U ]ne th ica l conduc t in the se t t ing of the ad jud ic a tory
process o f t en resu lts in sanc tions . Per jury o f w i tnesses
is one examp le .” ). The Cou r t la ter added tha t “une th ica l
and de cep t ive p ract ices can con st itu te abu se s of adm in –
ist ra t ive or
in
that m ay resu lt
jud icia l processes
an t itrus t vio la t ion s .” A l lied Tube & Conduit Corp . v . Ind ian
H ead , Inc ., 486 U .S . 492 , 500 (1988 ) (c i ta t ion om i t ted ) .
A lthough these s tatem en ts w ere techn ica l ly d ic ta—
ne i ther Ca lifo rnia M o tor T ran spo rt nor A llied Tube invo lved
per jury or fa lse s tatem en ts b e fore an ad jud ica t ive or
adm in is tra t ive bod y— the re is lit tle doub t tha t fraudu lent
m is rep re sentat ion s may rende r pu rported pet it ion ing
ac t iv ity a sham no t protec ted from an t itru s t l iab ility . See
Chem inor D rugs , L td . v . E thy l C o rp . , 168 F .3d 119 , 124 (3d
C ir . 1999 ) ; Kott le , 146 F .3d at 10 60 ; P o tters M edica l C enter
v . C ity H osp . Ass ’n , 800 F .2d 568 , 580-81 (6 th C ir . 1986) ;
St . Joseph ’s H osp ita l , Inc . v . H osp ita l Co rp . o f Am erica , 795
F .2d 948 , 955 (11th C ir . 1986 ) ; O ttensm eyer v . Chesapeake &
P o tom ac Te l . Co . o f M d ., 756 F .2d 986 , 994 (4 th C ir . 1985) ;
Israe l v . Baxter Labs., Inc ., 466 F .2d 272 , 278 (D .C . C ir . 1972) .
Bu t see A rm strong Surg ica l Center , Inc . v . Arm strong County
M em ’ l H osp ., 185 F .3d 154 , 160 (3d C ir . 1 99 9 ) (ca lling in to
doub t ex is tence of fraud excep t ion) .

No . 10-1665

No t every fraudu len t m isrepresen ta tion dur ing an
ad jud ica t ive or adm in is tra t ive proceed ing can g ive rise
to an t i trus t l iab i l i ty , how ever . A s the Sup rem e Cou r t
has exp la ined , “ the sham excep t ion con ta in s an ind is –
pensab le ob jec t ive componen t ,” P ro fessiona l Rea l Esta te
Inv estor s , Inc . v . Co lum bia P ictures Indu s ., 508 U .S. 49 , 58
(1993 ) , bu t a lso “d ep end s on the ex ist ence o f an ti-
compe t it ive in ten t ,” id . at 57 n .4 . In the con tex t of the
fraud ex cep t ion ,
tha t
ind ica te
requ irem en ts
th ese
ne ither inadver ten t m isrepresen ta tions , nor m isrepre –
sen ta t ion s lack ing any ascerta inab le effec t on the pro-
ceed ings in wh ich they we re m ad e , are w i th in the
fraud excep t ion ’s am b it .
Fo r
th is reason , a m isrepresen ta tion renders an
ad jud ica t ive p roceed ing a sham on ly if the m isrepre –
sen tat ion (1 ) was in ten t iona lly made , w i th know ledge of
its fa ls i ty ; and (2) w as m ater ial , in the sen se that it
ac tua lly altered the ou tcom e of the proceed ing . See B a lt i-
m o re Scrap Corp . v . D av id J. Joseph C o . , 237 F .3d 394 , 401 -02
(4 th C ir . 2001 ) (conc lud ing that any fraud excep t ion to
N oerr-Penn ing ton “ex tends on ly to the type of fraud tha t
dep rives litiga tion of its legit im acy” ) ; Chem inor D rugs,
168 F .3d a t 124 (“ If the governm en t ’s ac t ion was no t
dependen t upon the m i srep re sented in form a tion , the
m isrepresen ted in form a t ion was no t m a ter ia l. . . . [On ly ]
a m a teria l m isrepresen ta tion tha t affec ts the very core of
a lit igan t ’s . . . cas e w i ll prec lud e N oerr-Penn ing ton immu –
n ity . . . .”) ; Ko tt le , 146 F .3d a t 1060 (“ lit iga tion can be
d e em ed a sham if a party ’s know ing fraud upon , o r i t s
in tent iona l m i srep re sentat ion s to , the cou rt dep rive the
litigat ion of its legit im acy” ) (quotat ion om itted ) ; P o t ters

No . 10-1665

M edica l C enter , 800 F .2d a t 580 (“ [K ]now ing ly fa lse sub –
m iss ions or in ten t iona l m isrepresen ta tions cons t i tu te
an abuse of governm en t p rocess es . . . . On ly known
fa ls ity support s an an t it ru s t offense .” ). So formu la ted , the
4
fraud excep t ion c loses a s izab le loopho le in the Sup rem e
Cour t ’s d e f in it ion of sham lit iga tion , see Pro fessiona l Rea l
E state Investors , 508 U .S. a t 60-61— a lthough succe ss fu l
pe t it ion ing act iv ity m ay no t , as a genera l m a t ter , be
deem ed a sham , the fraud excep t ion can rem ove tha t
immun i ty if success is ach ieved by m eans o f in ten t iona l
fa lsehoods .

4
The Sup rem e Cou r t ha s no t ye t exp l i c i t ly spoken as to
“w he the r and , i f so , to wha t ex ten t N oerr p erm i ts th e im po s i t ion
o f an t it rus t l iab i l ity fo r a li tigan t ’s fraud o r o the r m isrep resen ta –
t ions .” P ro fession a l R ea l E s ta te Inves tors, 508 U .S . a t 61 n .6 .
N ev er th e less , bo th o f the sou rces c i ted in tha t foo tno te— Fed . R .
C iv . P . 60 (b )(3 ) and W a lk e r P roce ss E qu ip . , In c . v . Food M ach . &
C h em . C o rp . , 382 U .S . 172 (1965 )— suppo r t th is fo rm u la t ion o f
the fraud excep t ion . See id . a t 177 (con c lud ing tha t p roo f tha t a
pa r ty “ob ta ined [a ] pa ten t by know ing ly and w i ll fu l ly m isrep re –
sen t ing fa c t s . . . wou ld b e su ffic ien t to str ip [tha t pa rty o f
p ro tect ion ] from th e an t it ru st law s” ) ; id . a t 179 -80 (H a r lan , J .,
con cu rr ing ) (ag ree ing tha t an t i tru s t l iab i l i ty m ay l ie w h e n a
“pa ten t is shown to hav e b een p ro cu red by know ing and w i ll fu l
fraud ” and w hen “m onop o l iza t ion [ is ] know ing ly p rac ticed
und er th e g u i se o f a p a ten t p ro cu red by d e l ib era te fraud ” ) ;
W a lsh v . M cC a in Food s L td . , 81 F .3d 722 , 726 (7 th C ir . 1 9 9 6 ) ( to
ob ta in re lie f from a judgm en t und er Ru l e 60(b )(3 ), m ov ing
pa r ty m u s t show , am on g o the r e lem en ts , tha t b ecau se o f fraud
o r m isrep resen ta tio n “ i t was p rev en ted from fu lly and fair ly
presen t ing i ts case a t tr ia l” ) .

No . 10-1665

A s no ted , the fraud excep t ion is based on the Sup rem e
Cou rt ’s d es ire to p ro tec t th e in tegr ity of non -polit ica l
governm ental p roceed ing s . For tha t reason , the fraud
excep t ion con ta ins , in add i t ion to its subs tan t ive compo –
n en ts , a th reshold procedura l com pon en t : th e ex cep –
t ion does no t app ly a t a ll ou ts ide o f ad jud ica t ive pro –
ceed ings . See A l lied Tube, 486 U .S . a t 499 -500 (“A pub l ic ity
campa ign d irec ted a t the genera l pub l ic , seek ing leg is la –
t ion o r execu t ive ac t ion , en joys an t itrus t immun i ty even
when the campa ign emp loys une th ica l and decep t ive
m e thod s .”) (c i ta t ion om i t ted ) ; Ca li forn ia M o tor Transp .,
404 U .S . at 513 (not ing tha t m is rep re senta t ion s are “con –
doned in the po lit ica l arena” ). “There is an emphas is on
deba te in the po lit ica l sphere , wh ich cou ld accom –
m oda te fa lse s ta tem en ts and revea l the ir fa ls ity . In th e
ad jud ica tory sphere , however , in forma t ion . . . is re lied
on as accura te for dec is ion m ak ing and d ispu te resolv –
ing .” C lipper Exxpress v . Rocky M oun ta in M o to r Ta r i f f
Bureau , Inc ., 690 F .2d 1240 , 1261 (9 th C ir . 1982) . A s a resu lt ,
fraudu lent s ta temen ts
in
the ad jud icat ive con t ex t
“ threa ten [ ] the fa ir and impar t ia l func t ion ing o f these
agenc ie s and do[ ] not d e se rve immun ity from the
an t itrus t law s .” Id . Recogn iz ing th is thresho ld procedura l
requ irem en t , the d is tr ic t cour t in th is case conc lud ed
th a t the fraud excep t ion d id no t app ly because the pro –
ceed ings be fore the V illage Board w ere leg is la t ive (i .e .,
polit ica l) in natu re . M ercatus II, 695 F . Supp . 2d a t 821 .5

5
In acco rd w i th th e bu lk o f th e ca se law u s ing th is te rm ino logy ,
w e re fe r t o a l l de c is ion -m ak ing d r iv en who l ly o r p r im ar i ly
(con t inued . . .)

No . 10-1665

2 . D raw ing the Lin e : Adjudica tive or Leg isla tive?
On appeal , the part ie s focu s the ir argum ent s on N oerr-
Penn ing ton a lm os t en t irely on wh e ther the Board pro-
ceed ings w ere leg is la t ive or ad jud ica t ive . Bu t wha t makes
a proceed ing ad jud ica t ive or leg is la t ive for the pu rposes
o f the e xcep t ions to N oerr-Penn ing ton? The answ er to th is
ques t ion is no t a s obv ious as it m igh t seem at firs t . Som e
proceed ings— c iv il or cr im inal tria ls , for exam p le— are ,
by the ir very na ture , a lw ays ad jud ica tory . O ther t im es ,
how ever , a governm en ta l body w ill ac t in a leg is la t ive
capac ity in som e cases bu t in an ad jud ica t ive capac ity
in o thers .
A leg is la ture c learly ac ts in a po lit ica l, leg is la t ive capac –
ity when it con temp lates the pas sage of a new law , for
ex amp le , bu t the Sup rem e Court has ind ica ted tha t a
leg is la ture m igh t a lso ac t in an ad jud icat ive capac ity in
certa in c ircum s tances , a t leas t so far as N oerr-Penn ing ton
immun i ty is concerned . Compare A l lied Tube , 486 U .S .
a t 504 (express ing doubt that “m is rep resen ta t ion s mad e
under oa th at a legis la tive comm it tee hea r ing in the
hop es o f spurring leg is la t ive ac t ion” are pro tec ted under
N oerr-Penn ing ton) , w ith F .T .C . v . Superior C ourt Tr ia l
Lawyers A ss ’n , 493 U .S. 411 , 424 (1990) (“ It of course
rem a ins true tha t no v io la t ion of th e [Sherm an ] A c t can
be p red icated up on m e re a ttemp t s to in fluence the

5
( . . .con t inued )
by po l icy and po l i t ica l cons id era t ion s as “ leg is la t iv e ,” fu l ly
cogn izan t o f th e fac t th at m any su ch d ec is ions are m ad e by
execu t ive b ran ches ra th er than leg is la tu res .

No . 10-1665

passage or enforcem en t of law s .” (quo ta t ion om i t ted )).
G iven the coun t le ss var ia tion s on state and federa l agen-
c ies , i t may o f ten no t be c lear whe ther , in a g iven c ir-
cum s tance , an agency is ac t ing leg is la t ive ly , ad jud ica –
t ive ly , or perhap s som ehow even in both capac ities s i-
mu ltaneously . See Dan iel J . Dav is , Comm en t , The Fraud
Excep tion to the N o err -Penn ing ton D octrine in Jud ic ia l and
Adm in is tra tive Proceed ings, 69 U . Ch i . L . Rev . 325 , 333
(20 02 ) (observ ing that “som e federal s ta tu tes manda te
tha t ce rtain agenc ie s u se hyb rid p roces se s tha t com b ine
leg is la t ive and ad jud ica tory p rocedures” and tha t ad –
m in is tra t ive proceed ings “can exh ib it charac ter is t ics of
bo th leg is la t ive and jud ic ia l ac t ions”) . The d is tr ic t cou r t
correc t ly observed tha t “the line between leg is la t ion
and ad jud ica t ion is no t a lw ays easy to draw .” M ercatus II,
695 F . Supp . 2d a t 819 (quo ta t ion om i t ted ) .
In the ir br ie fs , the par t ies ca ll to our a t ten t ion on ly a
single dec ision from th is cou rt d iscuss ing in any d etail
whe ther a p roceed ing was ad jud ica t ive or leg is la t ive for
th e purpose of app ly ing th e fraud ex cep t ion to N o err-
Penn ing ton . In M etro Cab le Co . v . CATV o f Rock ford , Inc ., w e
con s ide red whe ther a mayor and c ity counc i l ac ted in a
legis la tive or ad jud icat ive capac ity w hen they den ied the
p lain tiff a fran ch ise to const ru c t and operate a cab le
te lev ision system . 516 F .2d 220 , 222 (7 th C ir . 1975 ) . In
so do ing , we iden t ified a numbe r of character is tic s in –
d icat ing that the franch ising dec is ion was leg is la t ive
rather than ad jud ica t ive .
F irst , w e cons idered the general na ture of the au thority
ex erc ised by the m ayor and c ity counc il . The counc il

No . 10-1665

possessed leg is la t ive pow er and , in fac t , “ the on ly way
it [w as ] organ ized and equ ipped to ac t” w as “as a leg is la –
t ive body .” Id . a t 228 . The m ayor , for h is part , was “an
execu t ive o fficer w i th som e leg is la t ive du t ies , wh ich
inc lude [d ] p re s id ing over the c ity counc il and vo t ing
when the a lderm en are equa l ly d iv ided .” Id . Second , w e
con s ide red the form a lity of the counc il’s fact -f ind ing
p rocesses . Un like a cou rt or oth er ad jud ica t iv e body
whe re evidence mu s t sat is fy s tr ic t ru le s of re levance and
adm iss ib i li ty , the counc i l d id no t “comp i le an ev iden t iary
record through form a l proceed ings” and was “ fr ee to
base its ac t ions on in fo rm a t ion and argum en ts tha t com e
to it from any sou rc e .” Id . Th ird , we con s ide red the
ex ten t to wh ich the fac t -find ing process was sub jec t to
po lit ica l in f luences , no ting that the counc i l was “sub jec t
to lobbying and o ther form s of ex parte in f lu en ce” tha t
typ ify th e legis lat ive or polit ica l process . Id . Based on
the totality of these factors , we conc lud ed tha t the
m ayor and c ity c ounc il had ac ted in a leg is la t ive
capac ity , so th e comp lained -of pe t it ion ing act iv ity w as
immun e from an t i tru s t l iab i l ity under N oerr-Penn ing ton . Id .
The M etro C able fac tors are not exc lus ive . A num ber of
o the r factors m ay a lso p rove help fu l in determ in ing
whe ther a proceed ing is ad jud ica t ive or leg is la t ive .
Though perhap s encompassed by the M etro C able fac tor
rega rd ing the form a li ty of the fact -find ing p roces s , the
Sup reme Cou r t has t reated as s ign ifican t whe ther any
test im ony a t the proceed ing in ques t ion was g iven
und er oa th or a ffirma t ion , under pena lty o f per jury .
See A ll ied Tube , 486 U .S. a t 504 (ques t ion ing wh e ther
“m isrepresen ta t ions m ade under oa th” are pro tec ted

No . 10-1665

under N oerr-Penn ing ton) ; Ca l i forn ia M o tor Transp ., 404
U .S . a t 512 (“ [U ]ne th ica l conduc t in the se t t ing o f th e
ad jud ica tory process of ten resu l ts in sanc t ions . Per jury
o f w i tnesses is one examp le .” ). An oa th or a ffirma t ion
backed by pena lty o f per jury shou ld im press upon
a w i tne ss the solemn ity of the occa sion and the
impor tance o f te lling the tru th , and shou ld m ak e c lear
tha t the w i tness is not “a t liberty to exaggera te or co lor
h is vers ion of an even t ,” a s m igh t be pos sib le in a
m ore po litical or leg isla tive set ting . See , e .g ., United Sta tes
ex re l. H ayw ood v . W o l f f, 658 F .2d 455 , 463 (7 th C ir . 1981) .6
In c lassify ing proceed ings as leg is la t ive or ad jud ica t ive
for an t itrus t pu rp oses , other cour ts have found s ig –
n ifican t whe th e r the governm ental ac tion s at is sue
w ere ma t ters of d iscre t ionary au thority or were ins tead
gu ided by more de fin ite s tandards suscep t ib le to jud ic ia l
review . Kott le , 146 F .3d at 1062 ; Boone v . Redevelopm en t
Agen cy of San Jo se , 841 F .2d 886 , 896 (9 th C i r . 1988 ). The
absence of de fin ite s tandards is more charac ter is t ic of
pu re ly po lit ical or legis la tive ac tiv ity than of ad jud icat ion .
See Franch ise Rea lty In tersta te Corp . v . San Francisco Loca l

6
W e r e je ct M e rca tu s ’ un suppo r ted con t en t ion tha t a gov ern-
m en t proce ed ing is m ore l ike ly t o be ad jud ica t iv e i f a p ar ty
is rep resen ted b y lega l counse l a t tha t p ro ceed ing . A f ter a l l ,
the p resence o r absence o f counse l a t a p roceed ing te l ls ve ry
l i t t le abou t the na tu re o f the p ro ceed ing i tse l f— a c iv i l t r ia l
rem a ins ad jud ica t ive rega rd less o f whe the r a pa r ty appea rs
pro se , and d e c is ion -m ak ing in form ed by lobby ing is no less
po l i t ica l m e re ly because the lobb y is rep resen ted b y lega l
counse l .

No . 10-1665

Jo int Exec . Bd . o f Culinary W orkers , 5 42 F .2d 1076 , 1079
(9 th C ir . 1976 ) (no t ing tha t p rec ise s tandard s “are
s imp ly absen t from the rough and tum b le of the po lit ica l
arena ; a lm os t any pos it ion , inc lud ing the self-in teres ted
p lea of on e comp e t itor that anoth er shou ld be d en ied a
perm i t , m ay be u rged before such a po l i t ica l body”) .7

7
M erca tu s argues tha t w e sh ou ld g iv e s ign i f ican t w e igh t to
whe the r , in o the r con texts , the law t rea ts the gov e rnm en ta l
a c t iv i ty a t issue as leg is la t iv e o r ad jud ica t iv e . W e be l iev e
tha t su ch c la ss i fica t ion s , m ad e fo r d i ffe ren t pu rpo se s no t
conne c t ed to th e F ir st Am endm en t con ce rn s und er ly ing th e
N o er r-P enn ing ton doc tr ine , are un l ik e ly t o b e u se fu l
in
app ly ing tha t doct r ine . Und e r I l l ino is law , for exam p le , a
hea r ing m igh t be cha rac te r ized as “ leg isla tive” fo r pu rposes
o f
jud ic ia l rev iew , se e 65 ILCS 5 /11-13 -25 (m ak ing any
d ec is ion regard ing an app l ica t ion for a spec ia l u se “sub jec t to
d e novo jud ic ia l rev iew as a leg is la t ive d ec is ion , reg ard less
o f wh eth er th e p ro cess in re la t ion th ere to is cons id ered ad –
m in is tra t ive for o the r pu rposes” ) , a t the sam e t im e i t is
deem ed “ad jud ica t ive” fo r the pu rp ose o f de te rm in ing w ha t
p roc es s is du e a t tha t hea r ing , see P eop le ex r el. K la er en v .
V illag e o f L isle , 781 N .E .2d 223 , 234 (I ll . 2002 ) (d e em ing
h ea r ings concern ing sp ec ia l u se app lica t ions “adm in is tra t iv e
or qu as i – jud ic ia l” for pu rpose s o f d e term in ing whe the r p e t i –
t ion er s re c e iv ed du e p ro ce ss , no t b ecau se o f po li t ica l con –
s ide ra t ions bu t because “p ro p e r ty r igh ts a re a t stake” ). See
Ou r S av ior E vang elic a l Lu th eran C hu rch v . S av i lle , 922 N .E .2d
1143 , 1162 (I l l . App . 2 0 0 9 ) ( in terp re t ing 65 ILCS 5 /11 -13 -25 to
add r e s s on ly “ th e m od e o f d ir ec t jud ic ia l rev iew ov er th e
l is ted zon ing d ec is ion s , no t the app l ica t ion o f d u e p ro cess to
any o f tho se . . . dec is ion s” ) (quo ta t ion om itted ) .

No . 10-1665

Before app ly ing these fa c tors to the ca se now before
u s , how ever , w e mu st no te th e s ign ifican t con st itu tiona l
concerns imp l ic a ted by the fraud excep t ion ’s app lica t ion
to pet ition ing ac tiv ity . N oerr-P enn ing ton w as crafted to
p ro tec t the freedom to pe t it ion guaran teed under the
First Am endm en t . See , e .g ., P rem ier E lec . Constr . Co . , 814
F .2d a t 371 . Th is freedom has long been r ecogn ized as a
corn er s tone of dem ocra t ic governm en t itself . See United
M ine W orkers o f Am erica , D ist . 12 v . Il l ino is S ta te Bar
A ss’n , 389 U .S . 217 , 222 (1967) (“ [T ]he righ ts to assem b le
peaceab ly and to pe t i t ion for a red ress of gr ievan ces are
among the mos t prec ious of th e l iber t ies sa feguarded by
th e B ill of Righ ts .”) ; D e Jonge v . O regon , 299 U .S. 353 , 364
(1937 ) (“The very idea of a gove rnm en t , repub lican in
form , imp l ies a righ t on the par t o f i t s c it izens to m ee t
p eaceab ly for con su ltat ion in re spect to pub lic a ffa ir s
and to pe t it ion for a redress of grievances .” ) (quo ta t ion
om it ted ) ; M cD ona ld v . Sm ith , 472 U .S. 479 , 486 (1985)
(B rennan , J., concu rr ing) (not ing tha t , “excep t in the
m os t ex t reme circum s tances ,” the r igh t to pet it ion the
governm ent “cannot be pun ish ed . . . w ithou t v io la ting
those fund am en ta l pr inc ip les of
jus tice
liberty and
wh ich lie a t the base o f a ll c iv il and po lit ica l ins t itu t ions” )
(quo ta t ion om i t ted ) .
A ccord ing ly , we have recogn ized tha t the app l ica t ion
of the sham excep tion m igh t inadverten t ly st ifle the
leg itim ate exerc ise of th is core righ t . H avoco o f Am er ic a ,
L td . v . H o llobow , 702 F .2d 643 , 651 (7 th C ir . 1983) (decla ring
tha t the fraud excep t ion “canno t be used to ch ill [the ]
cons titu t iona l righ t” to “pe t it ion w i thou t fear of sanc –
tions” ) ; Stern v . U .S . Gypsum , Inc ., 547 F .2d 1329 , 1345 (7 th

No . 10-1665

C ir . 1977 ) (conc lud ing , in con tex t o f c iv il righ ts su it , “ tha t
the rea l if periph era l ch ill of the r igh t to pe t it ion wh ich
[the ] know ing fa l s ity ru le cou ld engende r is s ign ifican t
enough for the F irs t Am endm en t va lue s to p lay a p a r t
in cons tru ing federal leg is la t ion” ); see also BE & K
Constr . Co . v . NLRB , 536 U .S . 516 , 529-33 (2002) (con –
s ide r ing F irs t Am endm en t bu rd en imposed by NLRB ’s
effec t ive expan s ion of the sham e x cep t ion in labor case s) ;
Forro Prec ision , Inc . v . IBM Corp ., 67 3 F .2d 1045 , 1060 (9 th
C ir . 1982 ) (ex tend ing N oerr-Penn ing ton to commun ica –
t ions w ith law en forcem en t based on concern tha t a
con trary ru l ing wou ld d iscourage c it izens from pro-
v id ing inform a t ion to the po l ice) .
That r isk g row s when , as m ay often be the case , a
layp erson is un certa in wh eth er th e governm en ta l ac t ion
a t i s sue is ad jud ica tory or leg is la t ive . See Jam es M .
Sabov ich , Pe tition W ithou t Prejud ice: Aga inst the Fraud
Exception to N oerr-P enn ing ton Immun ity From the Toxic Tort
Perspec t ive , 17 Penn . St . Env t l . L . Rev . 1 , 12 (2008) (ob –
serv ing tha t th e “fact -spec ific” te st u sed to determ ine
“w he ther the p roceed ing is jud ic ia l , leave [s ] the im –
mun i ty for m any pe tit ions uncer ta in .” ) (footn o t e om it –
ted ) . Such uncer ta in ty m ay stem either from an un fam il-
iarity w ith the re levan t legal pr in c ip les due to a lack
o f legal coun se l , or from a m ore bas ic un fam iliarity
w ith the spec ific p roceed ings at issue . For exam p le , a
pe t it ioner m igh t not know tha t one mun ic ipa l body ,
u n like its coun terparts in other mun ic ipa lit ies , forb id s
ex parte lobbying of its m em bers , or sh e m igh t s imp ly
be unaware tha t a proh ib it ion on such lobbying has
any legal s ign ificance for her pe t it ion ing act iv ity .

No . 10-1665

Rega rd le ss of it s sou rce , the greater the unce rtain ty , the
m or e like ly tha t laypeop le w i ll hes ita te to seek redress ,
ou t o f fear th a t the ir pe t it ion ing act iv ity w ill sub jec t
them to legal liab ility . G iven the “broad spec trum of
poss ib ilit ies” imp l ica ted whenever a person con temp lates
engaging in legit im a te F i rs t Am endm ent pe tit ion ing
ac t iv ity , a law ’s ch illing e ffec t is part icu larly grea t when
it is unc lear whe ther tha t law ac tua lly fo rb id s the con –
temp lated ac tiv ity . See Sch irm er v . N agode, 621 F .3d 581 ,
586 (7 th C ir . 2010) . Such ch i ll ing effec t w i ll be par-
t icu la rly p ronounced w hen , as is the case w ith the
an t itrus t law s , the a l leged ly fraudu len t s ta tem en ts m ay
be pun ishab le by t reb le dam ages . Tha t is not to say tha t
any such ch ill wou ld be con fined to on ly tha t narrow
c lass of pe t it ion ing act iv ity forb idd en by the an t i tru s t
law s , of cou rse . A fte r all , “N oerr-Penn ing ton has been
ex tended beyond th e an titru st law s , where it or ig inated ,
and is tod ay u nders tood as an app l ica t ion of the first
am endm en t ’s speech and pe t it ion ing c lauses .” See N ew
W est , L .P . v . City of Jo liet , 491 F .3d 717 , 722 (7 th C ir . 2007 ) .
For these reasons , we mus t ensure tha t we do no t trans –
form the Sh erm an A c t in to a m eans by wh ich to ch ill
v i ta l conduc t pro tec ted under the F irs t Am endm en t . C f .
La ird v . Ta tum , 408 U .S . 1 , 11 (1972) (not ing tha t “con st itu-
tional v iola tions m ay a rise from the d eterren t , or ‘ch illing ,’
effec t of governm en ta l regu la t ions tha t fa ll shor t of a
d irec t p roh ib it ion aga in st th e ex erc is e o f F irs t Am end –
m en t r igh ts”) .
App ly ing the fac tor s we se t ou t above , it is c lear tha t
the V illage Board ac ted in a leg is la t ive capac i ty wh en
it dec lined to app rove the p roposed M ercatus phys i-
c ian cen ter . L ike the c ity counc il in M et ro Cab le , the

No . 10-1665

Boa rd gene ra lly ac ts in a po licym aking capac ity . The
Board also appears ill-equ ipped to condu ct ad jud ica –
t ive proceed ings . It conduc ts the vas t m a jority o f its
bus iness through rela t ive ly in forma l pub l ic m ee t ings
and hold s form a l hea r ing s on ly once a year rega rd ing
the Lake B lu f f budge t .
M ore spec if ica l ly , the p roce s s by wh ich the Board
cons idered wh e ther to gran t M erca tus approva l to
deve lop the Shepard Land was dec ided ly leg is la t ive or
po lit ical in na tu re . Both M e rca tu s and the Ho sp ital en –
gaged in ex parte lobby ing of ind iv idua l Board m em bers
pr ior to the hear ings . M erca tus execu t ives con tac ted or
m e t persona lly w i th ind iv idua l Board m embers , and a t
least one Board m ember even took a tou r o f M erca tus ’
fac ilit ies . A number of Lake B lu ff res iden ts a ls o con –
tac ted the Boa rd m embers to vo ice th e i r v iew s on the
M erca tus pro jec t . Th is lobbying act iv ity by advoca tes
on both s ides was p erfec t ly leg it im a te , as wou ld no t be
the ca se in an ad jud icat ive p roceed ing . In fact , the
lobby ing wa s encou raged by the v illage p re siden t , who
de sc ribed the dec is ion as “ [e ]s sent ia lly . . . p o lit ical” and
pre ferred to g ive par t ies “ the op p or tun ity to lobby
d irec t ly the trus tees .” Le tch inger Dep . a t 18 , 20 .
The processes by wh ich the Board ga thered in forma –
t ion to gu ide its dec is ion -m ak ing , un l ike the processes
in ad jud ica t ive p roceed ings , were d ec ided ly in form al .
None o f the ev idence the Board con s id ered w as sub jec t
to st ric t ru le s of adm is sib ility or any recogn izab le eviden-
t ia ry ru le s , for tha t m a tter . A t leas t one Boa rd m embe r ,
on h is own in i t ia t ive , con tac ted independen t th ink tanks

No . 10-1665

for gu idan ce . M em bers of the genera l pub l ic w ere
a l low ed to voice the ir op in ions regard ing M erca tus ’
p roposed s ite p lan . N one of the te st im ony be fore the
Board was g iven under oa th or on pena lty o f per jury .
The Board ’s dec is ion on deve lopm en t app rova l was
no t gu ided by en forceab le , de fin ite s tandards sub jec t to
review . The sp ec ia l use ord inance app licab le to the
8

8
W e dec l ine M e rca tu s ’ inv i ta t ion to de te rm ine fo r ou rse lves
w h eth er th e v il lag e ’s sp ec ia l u se o rd in an ce ac tu a l ly g ran t ed
the Boa rd b road au th o r i ty to d eny d ev e lopm en t app rova l .
M e rca tu s had th e oppo r tun ity to p r esen t th is a rgum en t to th e
Z on ing Bo a rd o f App ea ls , 65 ILC S 5 /11 -13 -3 (f) ; 65 ILC S 5 /11 -13 –
12 , and then to the sta te cou r ts o n adm in is tra t ive rev iew , 65
ILC S 5 /11 -13 -1 3 , b u t the re is no ind ica tion in the reco rd tha t
M e rca tu s ev e r d id so . Hav ing esch ew ed tha t oppo rtun ity ,
M e rca tu s canno t now tu rn to th e an t i trus t law s to avo id th e
consequences o f tha t dec ision . The an t it rus t laws a re des igned
to p ro te ct com p e ti t ion . Th ey ar e no t a gua ran te e o f good
gov e rnm en t . See C ity o f C o lum b ia v . Om n i Ou tdoo r A dv e r. , In c . ,
499 U .S . 365 , 378 (1991 ) (no ting tha t th e an t i trus t law s w e re no t
crea ted to “ v ind ica te [ ] . . . p r in c ip le s o f good gov ernm en t” ) ;
N o e r r , 3 6 5 U .S . a t 140 (“ In so fa r as [th e Sh erm an A c t ] se ts up a
cod e o f e th ics a t a l l , i t is a cod e tha t cond em ns trad e res tra in ts ,
no t po l i t ica l ac t iv i ty . . . .” ) . And they ce r ta in ly a re no t a l icense
for the fed era l cou r t s to d isp la ce the S ta te o f I l l ino is to s i t in
rev iew o f wha t is en t ir e ly a m a tter o f loca l law . C f . C ity o f
C o lum b ia , 499 U .S . a t 372 (“ ‘W e shou ld no t l igh t ly assum e
th at [th e an ti tru st law ] d ic ta tes tran s fo rm a t ion o f sta te ad –
m in i s tra t iv e r ev iew in to a fed era l an t i trus t job .’ ” ), quo t ing P .
A reed a & H . Hov enkam p , A n t itru st Law ¶ 212 .3b , p . 145 (Supp .
(con t inued . . .)

No . 10-1665

Shepa rd Land requ ired tha t the Boa rd app rove any
add it iona l deve lopm en t of tha t land , bu t the ord in an ce
prov ided no s t andards govern ing the gran t or den ial of
that approva l . A s severa l Board m emb ers recogn ized ,
th is broad language gave the Board s ign ifican t d iscre –
t ion wh eth er or not to gran t M erca tu s approva l to
d eve lop th e Sh epard Land .
The record thus show s beyond reasonab le d ispu te
tha t the proceed ings be fore th e Board were leg is la t ive
in natu re . It was , as th e v illage p res id en t exp la in ed ,
“u lt im a te ly a po lit ical dec is ion” not to gran t M e rca tu s
app roval to develop the Shepa rd Land . B ecause the
fraud excep t ion does no t app ly to leg is la t ive pro –
ceed ings , gu ided as they are by po l i tica l cons idera –
tions , N oerr-Penn ing ton immun i ty app lies . W e need no t
add ress whe ther the Hosp ita l’s alleged m isrepresen ta –
t ions rendered the Board proceed ings a sham . Th e
d is tr ic t cour t proper ly gran ted summ ary judgm en t for
the Hosp ital on Me rcatus ’ an t it ru s t c la im s based on the
Hosp ita l’s ac t iv it ies du r ing the V illage Board proceed ings .

8
( . . .con t inued )
1989 ) . I f M e rca tu s can invok e fed era l an t i trus t law s by c la im ing
tha t the V i l l ag e B o ard had no au tho r i ty to re jec t M erca tu s ’ s i te
p l an on ce th e A rch itec tu ra l Boa rd had app roved it , and c an
th er eby ob ta in a fed era l fo rum to rev iew th e m e r i ts o f th e
V i l lag e Boa rd ’s d e c is ion to re je ct th e p lan , “w e canno t
im ag ine w ha t zon ing d ispu te cou ld no t be shoehorned in to
fede ra l cou r t .” C on is ton C orp . v . V illage o f H o ffm an E s t a tes , 844
F .2d 46 1 , 467 (7th C ir . 1988 ) .

No . 10-1665

IV . The H osp ita l’s Publ ic Re la tions Cam pa ign
M erca tu s nex t argues tha t , even if N oerr-Penn ing ton
immun izes the Hosp ital’s a lleged m is rep re sentat ion s
d irec t ly to the Board , it does no t app ly to m isrepresen ta –
t ion s made to the p ub l ic du r ing the cou rse of the
Hosp ita l’s pub lic re la t ions campa ign . W e d isagree .

A . Facts on Summ ary Judgm en t
To en cou rage Lake B lu ff c it izen s to pu t po lit ica l
pressure on the Board , the Hosp i ta l lau n ched a broad
pub lic re la t ions campa ign p or tray ing M erca tus as a
th rea t to “charity care and general hea lth care serv ices .”
A s part o f th is campa ign , the Hosp ita l con tac ted its
emp loyees , phys ic ians , and donors to w arn them of th e
danger M erca tus posed to the Hosp ita l’s ab i lity to
p rov ide care and encou raged them to con tac t Board
m em bers to vo ice their oppos ition to the M ercatus phys i-
c ian cen te r . Hosp ita l phys ic ian s also sen t a let te r , al-
leged ly d ra fted by the Ho sp i ta l’s pub lic re la tion s con –
su lt ing firm , to a local new spape r saying tha t the
M erca tus cen ter wou ld o ffer services the Hosp i ta l
a lready prov ided and urging Lake B lu ff res iden ts to
ask the Board to recons ider its approva l of the proposed
M erca tu s phys ic ian cen ter .

B . Pub lic Re la tions Cam pa igns—A N ecessary Corol lary
o f N oerr-Penn ing ton
Th is pub lic re la t ion s campa ign , d es ign ed to en cou rag e
the pub lic to u rge the Boa rd to d isapp rove M e rcatus ’ p lans

No . 10-1665

to deve lop the Shepard Land , is also she l tered by N oerr-
Penn ing ton . N o err itse lf he ld tha t a pub lic re la t ions cam –
pa ign to in fluence governm ent ac t ion wa s beyond the
re ach o f the Sherm an A ct . 365 U .S . at 140 -42 . A s th e
Sup rem e Cou rt has exp la in ed , a “pub lic ity campa ign
d irec ted a t the general pub l ic , seek ing leg is la t ion or
execu t iv e ac t ion , en joys an t itrus t immun i ty even when
th e cam paign em p loys uneth ica l and decep tive m ethod s .”
A l l ied Tube, 486 U .S. a t 499 -500 ; see id . a t 504 (s ta t ing
that “round ing up suppor te rs is an accep tab le and const i-
tu t iona l ly p ro tec ted m e thod of inf luenc ing e lec t ions”) .
Desp ite M ercatus’ in sis tence to the con trary , th e H osp i-
ta l’s pub lic re la t ions campa ign does no t lose its p ro tec –
t ion even if it cau sed M e rcatus in ju ry un re la ted to the
B oa rd ’s den ia l of deve lopm en t app rova l. “ It is inev itab le ,
whenever an at temp t is made to in f luence leg is la t ion by
a campa ign of pub l ic ity , tha t an inc iden ta l e ffec t o f tha t
cam pa ign m ay be the inf lic t ion of som e d irec t in jury
upon the in te re st s of the pa rty aga in st whom the
campa ign is d irec ted .” N oerr , 365 U .S . a t 143 ; see id . a t 144
(“Inh eren t in [f igh ts be tw een compe t i tors] , wh ich are
comm onp lace in the halls of legis la tive bod ie s , is the
poss ib ility , and in m any ins tances even the probab ility ,
tha t one group or the o ther w ill get hur t by the argum en ts
tha t a re m ade .” ). A ll bu t the mo s t s tunn ing ly un succe ss fu l
pub lic re la t ions cam pa igns w i ll persuade a t least som e
m embers of the pub lic . Those ind iv idu a l s m ay , in tu rn ,
re fu se or hes itate to do bu s ines s w ith the ta rge t , caus ing
tha t targe t som e in jury desp i te the governm en t ’s re fusa l to
ac t . Such in jur ies are inev itab le whenever a bus iness
a t tem p t s to ra lly the pub lic to encou rage governm ent

No . 10-1665

ac t ion tha t w ill adverse ly a ffec t one o f its compe t itors .
To make such in ju r ie s from pub lic re la tion s campa ign s
ac t ionab le under the an t itrus t law s wou ld “be tan ta –
moun t to ou tlaw ing a ll su ch campa ign s .” Id . a t 143 -44 .
That wou ld grea tly lim it peop le’s ab ility to ra l ly pub lic
support to the ir causes , thereby lim it ing the ab ility o f
all bu t the m os t pow er fu l and influ en tia l ind ividuals
to pe t it ion effec t ive ly for red re ss . Such an invas ive reg –
u la tion of the po lit ical p roces s “has no t been done
by any th ing in the Sherm an A c t .” Id . a t 144 . Summ ary
9
jud gm en t
fo r
th e H osp i ta l
r e g a rd in g
i ts pub l ic
re la t ions camp aign w as correc t as a m a t ter of law .

V . The H osp ita l’s D eroga tory and Territoria l Commun ications
M e rcatus a lso argues tha t a number of statem ent s the
Hosp ita l m ade ou tside o f its pub lic re la t ions campa ign
v io la ted
impa ired
law s because they
the an titrus t
M ercatus’ ab ility to compete w ith the H osp ita l .

9
Ou r sta tem en t in P rem ier E lec tr ic tha t , “ if . . . in ju ry o ccu rs no
m a tte r how th e g ov e rnm ent re spond s to th e requ e st fo r
a id— then w e hav e an an t i tru s t c a se ,” 814 F .2d a t 376 , shou ld
no t b e con stru ed to th e con trary o r a s con fl ic t ing w i th A llied
Tu be o r N oerr . Ou r sta tem en t add ressed on ly tho se c ircum –
s tan ces in w h ich a pa r ty im p oses an un law fu l res tra in t o f
trad e , su ch a s a b oy co tt , a s pa rt o f a la rg er a ttemp t to p e t i t ion
the gov e rnm en t . See id . (no ting tha t th e d e fendan t ’s p e t i t ion ing
ac t iv i ty w as “an unv a rn ished e ffo r t to en fo rce a p r iva te p r ice-
f ix ing ag reem en t” ) .

No . 10-1665

A . Facts on Summ ary Judgm en t
In add it ion to its pub lic re la t ion s campa ign aga in s t
M erca tus , the Hosp ita l a lso a lleged ly commun icated w i th
o ther bus inesses to m ake it m or e d ifficu lt for M erca tus to
en ter the Lake B lu f f m arke t . For examp le , the Hosp ita l
con tac ted M erca tus ’ bus iness par tner ENH to ques t ion
why it wou ld suppor t a phys ic ian c en ter “ tha t was
idea l ly des igned to lure [aw ay] phys ic ians th a t w ere
a ligned w ith the hosp ital ,” and to wa rn ENH to stay ou t
o f Lake B lu ff . A Hosp ita l emp loye e also con tac ted other
h ea lth care p rov id ers to d iscu ss M e rca tu s ’ CEO ’s rude
trea tm en t o f her du r ing her v is it to M erca tus ’ Vernon
H ills fac ility and to w arn them of the compe t it ive threa t
M erca tus posed to the ir bus iness . M erca tus a lso a lleges
tha t
the Ho sp ital made fa lse sta tem ent s as se rt ing
“that M ercatus w as not in com p lian ce w ith fed eral an ti-
kickback regu lat ion s .”

B . “M ere” Sp eech and the Law of Antitru st
Un like the H osp ita l’s pub lic re la t ions camp aign , w e
see no d is ce rn ib le connec t ion be tw een any of these com –
mun icat ions and the proceed ings be fore the Board ; as a
resu lt , th ey are simp ly ou ts ide N oerr-Penn ing ton ’s reach .
See MC I Commun ications Corp . v . Am . Te l . & Te legraph Co . ,
708 F .2d 1081 , 1159 (7 th C ir . 1983 ) (“The N oerr-Penn ing ton
doc t r in e is con cern ed so le ly w ith th e righ t to at temp t
to in f luence gove rnm en t ac t ion .” ). Tha t is not to say , of
cou rse , that these s ta tem en ts are n ecessa rily ac tionab le
in an t itrus t . To reso lve tha t part icu lar ques t ion , w e
mus t cons ider the prec ise speech at issue here .

No . 10-1665

1 . The H osp ita l ’s W a rn ing to ENH
W e first turn to the Hosp ita l’s warn ing that ENH s tay
ou t o f the H osp ita l’s terr itory . Under c ircu it preceden t ,
such a terr itoria l adm on it ion to a compe t itor— like o ther
speech made in the comm e rc ia l con text—does no t vio la te
the an t it ru s t law s un le ss it lead s to an agreem ent
to re st ra in trade or i s accompan ied by som e sort of “en-
forcem en t m echan ism ” des igned som eh ow to coerce or
compe l tha t compe t itor to heed the adm on it ion . See
Sanderson v . Cu ll igan In t’ l Co ., 415 F .3d 620 , 623 (7 th C ir .
2005) (a ffirm ing summ ary judgm en t aga ins t an t i trus t
c la im based on alleged ly de fama tory s ta tem en ts , due to
lack of “an en fo rcem en t m echan ism ”) ; Schachar v .
Am erican A cadem y o f Ophtha lm o logy , Inc ., 870 F .2d 397 , 400
(7 th C ir . 1989 ) (“W ithou t [an en forcem en t m echan ism ]
the re
is on ly uncoord ina ted
ind iv idua l ac tion , the
essen ce of compe t i t ion .”).
W e find no th ing in th e record to ind ica te tha t the Hos –
p i ta l’s warn ings to ENH were backed by any sort of
coerc ive conduc t tha t m igh t g ive r ise to an t itrus t liab ility .
The Hosp ita l d id no t th rea ten to spearhead a boyco t t of
ENH ’s serv ices or to have ENH ’s supp l iers w i thho ld
m ed ica l supp l ies if it en tered Hosp ita l territory . See
Scha ch ar, 870 F .2d at 399 (not ing that boyco t ts and agre e –
m en ts no t to d is tr ibu te certa in produc ts are the types of
enforcem ent m echan ism s tha t may rende r speech ac tion –
ab le under the an t itrus t law s ). Nor d id the Hosp i ta l
possess any inheren t au thor ity tha t it cou ld leverage to
com p e l ENH to s tay ou t o f Lake B lu ff . See id . a t 398
(find ing s ign ifican t tha t de fendan t had “no au thority

No . 10-1665

insurers , s ta te m ed ica l soc ie t ies or
over hosp ita ls ,
licensing boa rd s , and other persons who m igh t b e ab le
to govern the pe r fo rm ance o f surgery” ). Regard less of
wha t the Hosp ita l sa id , ENH was free to choose for
itself whether to compete c lose to the H osp ita l .
Pu t s im p ly , a ll the Hosp ita l d id w as say a loud wha t
every bus iness a lready th inks abou t its compe t itors : s tay
ou t o f my terr itory . See O lym p ia E qu ip . Leasing Co . v . W .
Un ion Te legraph Co . , 797 F .2d 37 0 , 379 (7 th C ir . 1986 )
(“M os t bus inessm en don ’t like the ir compe t itors , or for
that ma tter comp e t it ion .” ) . Su ch a s ta tem ent , absen t an
agreem en t or any coerc ive en forcem en t m echan ism s to
back it up , is simp ly no t ac tionab le under the Sherman A c t .

2 . The H osp ita l’s D eroga tory Comm en ts Abou t M ercatus
W e nex t tu rn to the rem a inder of t he H o sp ita l’s com –
mun ica t ions , a ll of wh ich served to d isparage e ither
M e rcatus it se lf or the se rv ice s it offe red . L ike the
Hosp ita l’s terr itoria l adm on it ions to ENH , these sta te –
m en ts w ere not backed by threa t s des igned to coerce
accep tance of the Hosp ita l’s view s abou t M erca tus . See
Sanderson , 415 F .3d at 623 ; Schachar, 870 F .2d a t 400 . A s a
re su l t , th is speech can be compared to a k ind of comm er-
c ia l speech fam i liar to a l l: adver t isem en ts . L ike an adver-
t isem en t (th ink of App le ’s long-runn ing “M ac vs . PC”
comm erc ia ls , for examp le ) , the Hosp ita l’s sta tem en ts
imp lic it ly tou ted the Hosp ital’s s treng ths wh i le calling
in to ques t ion the w isdom of do ing bus iness w ith
M erca tu s . A s a gen era l ma t ter , su ch s ta tem en ts are ou t –
s id e the reach of the an t itrus t law s , however crit ica l they

No . 10-1665

m ay be of a com pet itor’s p rodu c t or business m od el .
“An t itrus t law doe s not compe l your compe t itor to
p ra ise your p roduc t o r sp onsor your work . To requ ire
coope ra tion or fr iend lines s am ong rivals is to undercu t
the in te llec tua l founda t ions o f an t itrus t law .” Id . a t 399 .
Th is ana lys is holds tru e even if the Hosp ita l’s sta te –
m en ts abou t M ercatus w ere fa lse . A s w e recogn ized in
Sanderson , even fa lse s tatem en ts abou t a compe t itor serve
to “set the s tage for compe tit ion .” 415 F .3d a t 623 . If the
Hosp ita l fa lse ly c la im ed tha t M erca tus wou ld d r ive
loca l commun i ty -based hosp ita ls ou t of bus iness , for
examp le , M erca tus cou ld respond w ith in forma t ion to
refu te tha t c la im . If the Hosp ita l fa lse ly cla im ed tha t
M e rcatus v io la ted an t i-k ickback regu la tion s , M e rcatus
cou ld respond w i th fa c ts ind ica t ing the fa ls ity o f tha t
c laim .
By engaging in th is p rocess , M e rcatus cou ld
1 0
have d er ived a d is tinc t compe t it ive advantage: a fa lse –
hood , when exposed , w ill like ly “gen erate bad w ill
toward the firm by wh ich [the pub lic ] was m is led .” Covad
Commun ications Co . v . Be l l A t lan tic Corp ., 398 F .3d 666 ,
674 (D .C . C ir . 2005) .
The genu ine an t icompe t it ive e ffec ts of fa lse and m is –
lead ing s ta tem en ts abou t a compe t itor are m in im a l, a t
bes t . A lthough fa lse s tatem en ts abou t a riva l “ can [theo-
re t ica l ly] obs truc t com pe t i t ion on the m er i ts ,” i t is d if-
ficu lt to iden t ify those “ fa lse s tatem en ts on wh ich

10
M er ca tu s c la im s tha t , “ in [ its ] sub stan t ia l ly w eaken ed sta te . . .
[ i t] d id no t hav e the luxu ry o f m ore speech ,” bu t w e fa i l to
se e how i t wa s rend e red unab le to sp eak .

No . 10-1665

buyers do, or ough t reasonab ly to , re ly .” 3 P . A reeda & D .
Tu rner , An t itrust Law , ¶ 737b a t 280 -81 (1978) , quo ted
in Am erican Pro f ’ l Testing S erv ice, Inc . v . H arcourt Brace
Jovanov ich Lega l & Pro f ’ l Pub l icat ions, Inc ., 108 F .3d 1147 ,
1152 (9 th C ir . 1997 ). M any consum ers w i ll “recogn ize
d isparagem en t as non -ob jec t ive and h igh ly biased .” Id .
A s a resu lt , cour ts mus t exerc ise “c au t ion . . . aga ins t
a t tach ing much w e igh t to iso la ted examp les of d isparage –
m en t ,” and c la im s based on one compe t ito r ’s d isparage –
m en t of another “shou ld presump t ive ly be ignored .”
Id . Recogn iz ing these conce rn s , othe r c ircu it s have con –
c lud ed tha t the an t icompe t it ive e ffec ts of fa lse speech
are p resump tively m in im al . See , e .g ., Am erican Counc i l
o f Certi f ied Pod ia tric Physic ians & Surgeons v . Am erican Bd .
o f Pod iatric Surgery , Inc ., 323 F .3d 366 , 370 (6 th C ir .
2003 ) ; Am erican Pro f ’ l Testing Serv ice , 108 F .3d a t 1152 ;
N a tiona l A ss’n o f Pha rm ac eutica l M frs . v . Ayerst Labs ., 850
F .2d 904 , 916 (2d C ir . 1988) .
A s w e s a id in Sanderson , ab sent an accompany ing
coerc ive en for cem en t m echan ism of som e kind , even
dem on st rab ly false “[c ]omm erc ial sp eech is not ac tionab le
und er the an t itrus t law s .” 415 F .3d a t 624 ; see Schachar,
870 F .2d a t 400 (no t ing th a t , w henever one compe t i tor ’s
s tatem en ts abou t ano ther are “fa lse or m is lead ing or
incomp lete or jus t p la in m is taken , the rem edy is not
an t itrus t lit iga tion bu t m ore speech— the marke tp lace
of ideas” ) ; cf . Assoc iated Gen . Con tra ctors o f Ca l iforn ia , Inc .
v . Ca lifo rnia Sta te Coun cil o f Carpen ters, 459 U .S . 519 , 526 –
27 (1983) (ob se rv ing tha t even conduc t tha t m igh t con –
s t itu te “comm on -law fraud or dece it” is “p la in ly no t
sub jec t to rev iew under the federa l an t i trus t law s”) .

No . 10-1665

To the ex ten t tha t a fa lsehood r esu lts in som e harm to
a comp et itor , tha t is a m a t ter be t ter su ited for the law s
aga in st un fa ir compe tit ion or fa lse advert is ing , not the
an t itrus t law s , wh ich are “concerned w i th the protec –
t ion of com pe t it ion , no t compe t itors .” M u l l is v . A rco
Pe tro leum Corp ., 502 F .2d 290 , 298 (7 th C ir . 1974) (quo ta t ion
om it ted ) ; see N orthw est Pow er Products , Inc . v . Om ark
Indus ., Inc ., 576 F .2d 83 , 88 (5 th C ir . 1978 ) (“The thrus t of
an t it ru s t law is to p revent re st ra in ts on compe tit ion .
Un fair compe t it ion is st ill compe t it ion and the pu rpose
o f the law o f un fa ir compe t it ion is to impose re s tra in ts
on tha t com pe t i t ion .”). “ Som e o the r law m ay requ ire
jud ic ia l in terven t ion in order to increase the por tion of
tru th in advert is ing ; the Sherm an A c t does not .” Sanderson ,
415 F .3d a t 624 .
N e ither the Hosp ita l’s terr itor ia l comm en ts nor its
a lleg ed deroga tory sta tem en ts abou t M erca tus are a
va lid bas is , wh e ther cons id er ed a lone or in con junc t ion
w ith the Hosp ita l’s other comp lained -of conduc t , for an
an t itrus t c la im . The d is tr ic t cou rt correc t ly gran ted sum –
m ary judgm en t for the Hosp ita l regard ing these m a t ters .

V I . The H osp ita l’s “Physic ian S tra tegy”
Thus far , we have d eterm ined that the bu lk of the H osp i-
tal’s comp la ined -of conduc t is e ithe r (1 ) pet it ion ing
ac t iv i ty immun e from an t i tru s t l iab i l ity under N oerr-
P enn ing ton ; or (2 ) spee ch tha t fa lls ou ts ide the scope o f
the an t it ru s t law s . The on ly rema in ing is sue to w a rran t
d iscuss ion re la tes to the Hosp i ta l’s “phys ic ian s trat –

No . 10-1665

egy”— i t s a t t em p ts
to conv in ce c er ta in H osp i ta l –
affilia ted phys ician p rac tice group s not to relocate their
p rac t ices to the M erca tu s phys ic ian cen ter .

A . Facts on Summ ary Judgm en t
Beg inn ing in 2004 , M erca tus app roached a num ber of
phys ic ians to d iscus s re locat ing their prac tices to its
proposed phys ic ian cen ter . By M ay 2006 , a num ber of
H o s p i t a l – a f f i l i a t e d p h y s i c i a n s h a d c o n d i t i o n a l l y
accep ted offers to re loca te to the phys ic ian cen ter .
Fou rteen of the seven teen phys ic ians whom M e rcatus
recru ited were on the Hosp ita l’s sta ff , and s ix o f tha t
num ber w ere tenan ts of Hosp i ta l office space . In par-
t icu lar , two phys ic ian prac tice group s , North Suburban
M ed ica l A ssoc ia tes (“NSM ” ) and Lake Forest M ed ica l
A ssoc ia tes (“LFM ” ), agreed to move the ir prac t ices to
th e M ercatus phys ician cen te r if M ercatus m et ce rtain
con trac tua l m iles tones . A s par t of those agreem en ts ,
those prac t ice group s signed “no -shop” agreem en ts
tha t forbade them from pu rsu ing or en te rtain ing a “con –
trac tua l re la t ionsh ip or other agreem en t w i th any o ther
en t ity o r person engaged in a bus iness s im ilar to
[M ercatus] .”
The Hosp ita l wan ted th ese phys ic ian groups— s ign if-
ican t revenue producers impor tan t to the Hosp i ta l— to
ge t ou t of the ir dea ls w i th M erca tus . To do so , the Hos –
p i ta l offered a number of incen t ives to N SM and LFM to
ent ice them not to re locate to the p roposed M e rcatus
phys ic ian cen ter . The Hosp i ta l offered to assum e NSM ’s

No . 10-1665

office lease and then to sub lease a m ore m anageab le
por t ion of th a t space ba ck to N SM , to he lp N SM
negot ia te a lease ex tens ion from its land lord , and to
m ake N SM a par tn er in the d evelopm en t o f an elec tron ic
m ed ica l records in terface— essen t ia lly “the sam e th ings
tha t M erca tus h ad agreed to prov ide .” The Hosp i ta l a lso
offe red LFM a chance to par tn er w ith the H osp ita l in
develop ing an elec tron ic m ed ica l record s sys tem , as w ell
as a subs idy to imp lem en t tha t sys tem in LFM ’s of-
fices . The Hosp ita l a lso announced th a t i t wou ld freeze
LFM ’s lease ra te and o ffered to prov ide LFM ass is tance
in recru i ting a new phys ic ian to its prac tice .
A lleged ly ,
1 1
the Hosp i ta l a lso fa lse ly to ld these phys ic ians tha t
M erca tus had v io la ted certa in an t i -k ickback regu la t ions .
Bo th NSM and LFM even tua lly term ina ted the ir rela –
t ionsh ips w ith M erca tus , bu t the Hosp i ta l has fo llowed
th rough on on ly som e , bu t no t a ll , of its offers to thos e
prac tice group s .

B . Lack o f Ev idence o f Predatory Conduct
On appea l , M e rca tu s argu es that th is condu ct was no t
p ro tec t ed by N oerr-Penn ing ton and wa s not (a s the
d is tr ic t cou rt con cluded ) m ere sp eech ou ts id e th e s cop e

11
M e rca tu s c la im s tha t th e Ho sp i ta l a lso p rom ised th e
p h y s i c ian g roup s “equ ity in [the H o sp ita l ’s] rea l esta te .”
N o th ing in th e p o r t ion s o f th e re co rd r e l ied on by M e rca tu s
suppo r ts th is con ten t io n . A t m os t , the reco rd ind ica tes tha t
the H osp i ta l w a s cons ide r ing whe the r to o ffe r the phy s ic ian
g roup s su ch an equ ity op tion .

No . 10-1665

of the an t it ru s t law s . A l thou gh we agree w ith M e rcatus
on both po in ts , M e rcatus has fa iled to p re sent suffic ient
ev idence tha t the Hosp ita l’s ac t ions cons titu ted ac tua l
or a ttemp ted m onop o l iza t ion under the Sherman A c t .
See P rofessi on a l R eal E state Investors , 508 U .S . at 61 (not ing
that “even a p lain tiff who defeat s [a ] defendan t’s cla im
to N oerr immun i ty . . . mus t st ill prove a subs tan t ive
an t itrus t vio la t ion” ) . To prove ac tua l monopo liza t ion of
a m arke t , M erca tus mus t show (1 ) tha t the Hosp ita l
possessed m onopo ly pow er in tha t m arke t ; and (2 ) tha t
the Hosp i ta l w i llfu l ly a cqu ired or m a in ta ined tha t
pow er by m eans o ther than the qua lity o f i ts produ c t , its
bu siness acum en , or h istor ica l acc iden t . Ch i ll icothe Sand
& Gravel Co . v . M artin M arietta Corp ., 61 5 F .2d 427 , 430
(7 th C ir . 1980 ). To p rove at temp ted monopo lizat ion ,
M erca tus mus t show (1 ) the Hosp ita l’s spec ific in ten t to
ach ieve monop o ly power in a re levan t m arke t ; (2 ) preda –
tory or an t icom pe t it ive conduc t d irec ted to accom –
p l ish ing th is purpose ; and (3 ) a d angerous probability
that the a ttem p t a t m onopolizat ion w ill succeed . Lek tro –
Vend Corp . v . The Vendo Co . , 660 F .2d 255 , 270 (7 th C ir .
1981) . The second e lem en t of each c la im can be m e t by
show ing tha t the Hosp ita l engaged in preda to ry or
an t icompe t it ive conduc t o f som e kind . See Ch i ll icothe
Sand & Grave l , 615 F .2d at 430 ; Am erican Academ ic
Supp l iers , Inc . v . B eck ley-Cardy , Inc ., 922 F .2d 1317 , 1320 (7 th
C ir . 1991 ) (“The o ffen se of m onopolizat ion is the acqu isi-
t ion of m onopo ly by im p roper m e thod s or , m ore com –
m on ly . . . the abuse of monopo ly , the la tter occu rr ing
for examp le w h en a m onopo lis t by pr ic ing below cos t
succeeds in repe lling or in t im ida t ing new en tran ts or

No . 10-1665

ex tend ing h is m onopoly in to n ew m arke ts .”) ; S ta te o f
Il l ino is ex rel . Burr is v . Panhand le Eastern P ipe L ine Co .,
935 F .2d 1469 , 1481 (7 th C ir . 1991 ) (“Sec t ion 2 forb ids no t
the in ten t iona l pu rsu it of m onopo ly pow er bu t the em –
p loym en t of un jus t ifiab le m ean s to ga in tha t pow er .”) .
Turn ing to M erca tus ’ su bm iss ions to th is cour t , we see
lit t le to ind ica te why the Hosp ita l’s ac t ions m igh t be
con sid ered an ticom pet itive or p redatory . Th is issue is
neve r rea lly add ressed in M erca tus ’ open ing br ie f, wh ich
focu se s pr im arily on argu ing that N oerr-Penn ing ton im –
mun i ty does not app ly . A nd M erca tus ’ bare c la im tha t
the Hosp ital’s conduc t “p revented [M e rcatus ’] en try and
reduced compet ition” s imp ly does not su ffice . A fte r all ,
m any k ind s o f conduc t m ay preven t or d iscourage a
po ten t ia l compe t itor from en ter ing a par t icu lar m arke t .
Federa l an t itrus t law s are imp l ica ted on ly when tha t
condu c t is p redatory or un just ifiab le . See , e .g ., Burris,
935 F .2d a t 1481 (“Sec t ion 2 forb ids no t the in t en t iona l
pu rsu it of monopo ly powe r bu t th e emp loym en t o f un just i-
f iab le m ean s to ga in tha t pow er .”) .
To the ex ten t tha t M erca tus add resses th is issue , it on ly
fur ther mudd ies wha t are already murky wa ters . Its
rep ly brie f argues tha t the H osp i ta l “ tort ious ly vio la ted
M erca tus ’ no -shop agreem en ts .” The Hosp i ta l w as no t
pa rty to those agreem ent s and cou ld n o t b reach a
con trac t to wh ich it w as no t a par ty . A ssum ing tha t
M erca tu s m ean t to say tha t the H o sp i ta l tor t ious ly in ter-
re la tion sh ip s w i th
it s con tractua l
fe red w i th
the
phys ic ians , an allegat ion
tha t
the H osp ita l ac ted
“ tort iou s ly” doe s lit tle to advance Mercatus’ argum ent . The

No . 10-1665

an tit ru st law s are des igned to p ro tec t com p e tit ion , wh ile
bu sines s tort law is gene ra lly des igned to p ro tec t the
com pet itors them selves . See , e .g ., Am erican Counc il o f
Certi f ied Pod ia tric Physic ians & Surgeons v . Am erican B d . o f
P od iatr ic Surgery , Inc ., 323 F .3d 366 , 372 (6 th C ir . 2003 )
(“ Isola ted bu s ine s s tort s . . . do not typ ically rise to the
leve l of [an an t i tru s t] v io la t ion u n less there is a harm
to compe t i t ion itse lf .”) .
Fo r th e Hosp i ta l ’s a l leged in ter-
1 2
ference to have v io la ted the an titrus t law s , then , its
spec i f ic ac ts of in terference mus t have had a nega tive
effec t on com pe t i t ion . The prob lem is , any in terfer-
ence w ith the no -shop agreem en ts w as arguab ly pro –
com petitive to a t least som e ex ten t , g iven tha t the no -shop
agreem en ts w ere des igned to p reven t the Hosp i ta l or
anyone e lse from com p e t ing for the phys ic ians of LFM
and N SM . Tha t rem a ins true whe ther or no t th e
Hosp ita l , w h ich was adm it ted ly aware o f the no -shop
ag reem en ts ’ ex is tence , ac tua lly knew the subs tance of
those agreem en ts .

12
W e a g re e w i th the H osp i ta l tha t M e rca tus ’ c la im app ea rs
som ew ha t ak in to a b reed o f an t i tru s t v io la t ion recogn iz ed in
the N in th C i rcu it as “p reda to ry h i r in g .” “Un law fu l p red a to ry
h ir ing occu rs wh en ta len t is a cqu ir ed no t fo r pu rpo se s o f u s ing
tha t ta len t bu t fo r pu rp o se s o f d eny ing it to a com p et ito r .”
U n iv er sa l A na ly t ic s , In c . v . M a cN ea l-S chw end le r C o rp . , 914
F .2d 1256 , 1258 (9 th C i r . 1990 ) (ad d ress ing “ the fi rs t repo r ted
case o f a c la im ed v io la t io n o f sec tion 2 as a resu lt o f a l leged
emp loy ee ra id ing or p r ed a tory h ir ing” ) . W e hav e n ev e r re cog –
n iz ed p red a to ry h ir ing as a v a l id theo ry o f an t i tru s t l iab i l i ty
and need no t d o s o a t th is t im e s ince M erca tu s has sa id i t
does no t asser t a p red a to ry h ir ing c la im .

No . 10-1665

To show that th e Hosp ita l’s “phys ic ian s tra t egy”
v io la ted the an t it ru s t law s , M e rcatus had to p re sen t
e v i d e n c e
t h a t
t h e H o s p i t a l e n g a g e d
i n s om e
an t icompe tit ive conduc t in add it ion to it s a lleged in –
terferen ce w ith th e no-shop agreem en ts . To that end ,
M erca tus a lleges tha t th e H osp ita l fa lse ly
imp l ied
tha t M erca tus w as in v io la t ion of an t i-k ickback regu la –
t ion s , bu t w e have a lready con cluded that s ta tem en ts o f
th is sort are either p ro -com pet itive or have , at best , a
m in im a l an t icompe t it ive e ffec t . Se t ting aside tha t a lleged
fa lse sta tem en t , we ju s t cannot see any reason to be t rou –
b led by the manne r in w h ich the Ho sp ital wen t abou t
conv inc ing these phys ic ians not to m ov e the ir prac tices
to M erca tus ’ phys ic ian cen ter. The Hosp ita l d id no t
leverage i ts m arke t p ow e r to m ake the phys ic ians offers
on sup ra-compe t it ive term s imposs ib le for any compe t itor
to ma tch . The Ho sp ital s imp ly offe red the phys ic ians
m any of the sam e
incen t ives M erca tus o ffered to
induce them to re locate the ir pract ices in the first p lace .
Nor is there any evidence tha t the Hosp ita l resor ted to
un fa ir or coe rc ive tact ic s , such as threat s to revoke the
phys ic ians ’ Hosp ita l s ta ff pr iv ileges i f they re located to
M erca tu s ’ phys ic ian cen ter .1 3
To the ex tent tha t M e rcatus t rie s to a rgue tha t the
Hosp ita l, in the course o f m ak ing its o f fers , “exer ted

13
In h is dep os it ion test im ony , M e rca tus ’ CEO im p l ied tha t
the H osp i ta l th rea tened to m ake pub l ic one phys ic ian ’s “pe r –
sona l condu c t issue” i f tha t phy s ic ian con t inued to suppo r t
M e rca tus . I f t rue , th is w ou ld b e troub l ing , bu t the phy s ic ian
d en ied tha t th e H osp i ta l ev er m ad e such a threa t . No adm is –
s ib le ev id en ce suppo r ts M e rca tu s ’ a llega t ion .

No . 10-1665

ext reme p re ssure” on the phys ic ians , th is a rgum ent
founders for two reasons . F irst , the ev idence ind ica tes
tha t at leas t som e of the “p re ssure” of wh ich M e rcatus
comp lains w as no t exerted by the Hosp ita l bu t w as an
ind irec t resu lt of the Hosp ita l’s pub lic re la t ions cam –
paign . A ccord ing to M ercatus’ own CEO ’s d epos i-
t ion tes t im ony , the Hosp ita l’s “m is in form at ion in com –
mun ica t ing w i th a l l cons t i tuen ts . . . su l lied the en t ire
phys ic ian m arke t” for M erca tus . For examp le , one key
phys ic ian fe l t “os trac ized from the . . . commun i ty
becau se . . . of h is support of the p ro jec t in the face of the
hosp ita l’s ob jec tions .” Another phys ician was “fa irly
shaken” by “buzz in the commun ity .” Bu t such com –
mun ity reac tion wa s
the
inev itab le re su l t of
the
Hosp ita l’s robus t pub lic re la t ions campa ign . W e have
a lready exp la ined tha t the pub lic re la t ions campa ign
fa lls und er the p ro tec t ion of N oerr-Penn ing ton .
Second , to wha tever ex ten t the Hosp ita l d irec t ly exer ted
p ressu re on LFM and NSM to rem ain w ith the H osp ita l ,
the Hosp i ta l had good compe t it ive r eason to do so .
M erca tu s read i ly adm i ts tha t i t was try ing to lure
away from the Hosp ita l a group o f doc tors w i th “a
cr it ica l m ass” o f more than 30 ,000 pa t ien ts . The loss of
th is many pa t ien ts w as app ar en t ly fa ta l to M erca tus ’
p lans to bu ild a phys ic ian cen ter anywhere in Lake
B lu ff . Th e e ffec ts of su ch a loss on the H osp ita l wou ld
undoub ted ly have been sign ifican t as w e ll . It is not t rou –
b l ing , then , tha t the H o sp i ta l m ade an ex traord inary
e ffo r t to re ta in these phys ic ians (and , th rough them , the

No . 10-1665

And even if such
revenue from trea ting their pa t ien ts ).
1 4
e ffort s we re som ewhat aggre ss ive or heavy -hand ed , the
an tit ru st law s do not p roh ibit “conduc t that is on ly
un fa ir , impo lite , or une th ica l.” Scha char, 870 F .2d a t 400
(c i ta t ion om i t ted ) .
W e a lso s ee noth ing p redatory or an ticom pet itive in
the fac t tha t the Hosp ita l fa iled to fo llow through w ith
a few of the prom ises it made to conv ince these prac tice
group s no t to re loca te to the M erca tu s phys ic ian cen ter .
For s tar ters , w e re jec t M erca tu s ’ econom ic exper t ’s
a t temp t to argue tha t any fa ilu re to keep a p rom –
ise— apparen tly , regard less o f the reason for that fail-
ure— is an t icompe tit ive . If tha t we re the case , even the
m o s t mundan e b reach of con trac t cou ld vio late the an ti-
trus t law s . Les t w e t ransform every inadver ten t fa ilure
to keep a comm erc ia l prom ise
in to an an t itrus t
v io la t ion , we conc lud e tha t the Hosp i tal’s conduc t can
be con sid ered predatory on ly if its p rom ises w ere mad e
not to com pete in the m arke t , bu t on ly to un fair ly
s tym ie unwan ted compe tit ion .
Tha t m igh t be the case if , for examp le , it cou ld be
shown tha t the Hosp ita l’s prom ises were m ade w i th
no in ten t of ever be ing kep t , or if th e Hosp ita l’s p rom is e s
w ere broken on ly af te r the Hosp i ta l rea lized tha t

14
I t is qu es t ionab le wh e th er th e Ho sp ita l ev en exer ted su ch
p re s su r e . Du r ing h is d epos it ion , a phy sic ian w i th N SM m ad e
qu i te c lear tha t he d id no t fee l any p r e ssu r e from the H osp i ta l ,
wh ich he sa id had “o ffe red ano ther oppo r tun i ty th a t I cou ldn ’t
exp lo re wh i le I w as und er the no -shop” ag reem en t .

No . 10-1665

M e rcatus ’ compe tit ive th rea t had pas sed . Bu t noth ing
in the record , even when v iewed in the ligh t mo s t favo r –
able to M e rca tu s , ind icates tha t th is wa s the ca se . The
ev idence show s on ly tha t the H osp ita l fu lfilled som e
bu t no t qu ite a ll of the prom ises it made to each
phys ic ian group . NSM agreed to partne r w i th the
Hosp ita l to deve lop an elec tron ic m ed ica l rec ords sys-
tem . NSM has no t ye t s igned a con trac t to pu rchase
that sys tem , though it has expressed “verba l in ten t” to do
so . A nd though the Hosp ita l he lped N SM ob ta in an
ex ten sion of its office lease , th e Hosp ita l has ne ith er
a s sum ed that lease nor subleased a port ion of th e offic e
space thereund er back to N SM . The Hosp i ta l froze LFM ’s
lease ra te a s p rom ised , bu t has not ye t p rov ided the
p rom ised rec ru itm en t ass istan ce to L FM , apparen tly
because LFM never recru ited another phys ic ian . A s a
resu l t , we have , a t best , a c la im for breach of con trac t by
the phys ic ians aga ins t the Hosp ita l (or perhaps a c la im for
prom issory estoppe l) , no t an an t itrus t case by M erca tus .
Because of the p o ten t ia l ch ill tha t an t itrus t lit iga tion
can h ave on leg it im a te pro-compe t it ive prac tices , see
M a tsush ita E lec . Indus . Co . v . Zen ith Rad io Corp ., 475 U .S .
5 74 , 594 (1986 ) , M erca tus w as ob liged , in oppos ing th e
Hosp ital’s m o t ion for summ a ry judgm en t , to “p re sent
ev idence tha t tends to exc lud e the possib ility tha t
th e [H osp i tal’s ] conduc t w as as consis ten t w ith compet i-
t ion as w i th illegal conduc t .” N e lson v . M onroe Reg ’ l
M ed . C en ter , 925 F .2d 1555 , 1578 (7 th C ir . 1991 ) (quo ta t ion
om it ted ) . Desp i te th is burden , M erca tus appears to
m ere ly comp lain tha t the Hosp i ta l had the audac ity to
t ry to re ta in th e bu sin ess of th e phys ic ian s th rough

No . 10-1665

whom M erca tus adm it ted ly sou gh t to draw subs tan t ia l
incom e away from the Hosp ita l. Bu t th is is an ex am p le
of the very typ e o f com pe t i t ion the an t i trus t law s w ere
des igned to protec t . It wou ld be p erverse if M erca tus ’
failu re to p reva il in tha t com petition gave it a gr ievance
cogn izab le under the She rm an A c t . Even if the Hosp ita l
had monopo ly power in the geograph ic and produc t
m a rke ts M e rcatus ’ econom ic expe rt endorsed ,
the
Hosp ital had no du ty to step as ide and a llow M e rcatus
to m ake off w i th i ts phys ic ians , pa t ien t s , and revenue . Cf .
O lymp ia Equip . Leasing , 797 F .2d a t 379 (“Con sum ers
wou ld be worse off if a firm w i th monopo ly p ow er had
a du ty to ex tend pos i tive assis tance to new en tran ts , or
hav ing ex tended it vo lun ta rily a du ty to c on t inue it
indefin ite ly .” ) . Noth ing in the volum inou s record cou ld
enab le any reason ab le finder of fac t to render a verd ic t
for M erca tus regard ing the Hosp i ta l’s pursu i t of these
two phys ic ian pract ice group s .

V II . Conclusion
In th e end , the vas t m a jority o f the conduc t o f wh ich
M e rcatus comp la in s wa s a legit im a te exe rc ise of the
Hosp i ta l’s righ t to pe t it ion the governm en t for redress ,
regard less o f how d ishonest or d is tas te fu l tha t conduc t
m igh t have been . None o f the rem a in ing comp lained -of
conduc t— com p e t i t ion for key phys ic ians , emp ty ter-
r i tor ia l s ta tem en ts to a compe t i tor , and fa lse de roga tory
s tatem ent s abou t M e rcatus— g ives rise
to
liab ility
und er the an t i trus t law s , wh e ther cons idered in iso la –
t ion or taken toge ther as a who le . To the ex tent M e rcatus

No . 10-1665

w as harm ed by the Hosp i ta l’s ac t ions , any rem ed ies
m igh t ar ise under Illino is tort law , no t federal an t itrus t
law . The judgm en t of the d is tr ic t cour t is AFFIRMED .

5 -2 6 -1 1

Mercy Hosp., Inc. v. Baumgardner

MALPRACTICE
– HOSPITAL LIABILITY FOR INDEPENDENT CONTRACTOR

Mercy Hosp., Inc. v. Baumgardner,

Nos. 3D02-3095, 3D02-2686 (Fla. Dist. Ct.
App. December 24, 2003)

A physician filed for bankruptcy soon after receiving
two adverse malpractice judgments. The plaintiffs then sued the hospital
where the malpractice occurred
to recover the damages they were awarded.

Florida’s financial responsibility statutes require a physician to either
be insured or have the ability to pay up to $250,000 per malpractice claim
in order to obtain hospital privileges. The lower court found that it was the
intent of the statutes to ensure that a person injured by the medical malpractice
of a physician with privileges would be able to recover at least $250,000 and
that a hospital is liable when a physician with privileges fails to comply
with the statute. The appellate court affirmed the lower court’s decision and
found that the statutes imposed a duty on hospitals to ensure compliance.

Merce v. Greenwood

IN THE UNITED STATES COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION
FILED
CLERK, U.S. DISTRICT COURT
December 17, 2004 (12:49pm)
DISTRICT OF UTAH

ADAM MERCE, an individua l, and EMILY
DEMONG, an individual,
Plaintiffs,

vs.

MARK W. GREENWOOD, M.D ., DAVID
M. POPE, M.D., KIRK R. ANDERSON,
M.D., IHC HEALTH SERVICES, INC., dba
SEVIER VALLEY HOSPITAL and IHC
HEALTH SERVICES, INC., dba UTAH
VALLEY REGIONAL MEDICAL CENTER,
Defendants.

ORDER DISMISSING
PLAINTIFFS’ EMTALA CLAIMS
AND DENYING PLAINTIFFS’
MOTION TO AMEND THE
COMPLAINT

Case No. 2:04-CV-00610 PGC

This case presents a statute of limitations question under the Emergency Medical

Treatment and Liability Act (EMTALA). In June 2002, plaintiff Adam Merce was discharged

from emergency room treatment by defendant doctors David M. Pope and Mark W. Greenwood.

Shortly after that discharge, he suffered serious injuries – injuries, he alleges, the doctors should

have discovered in his emergency room visits. More than two years later (in July 2004), Merce

filed the lawsuit alleging several claims, including violations of EMTALA’s anti-dumping

provisions. The doctors moved to dismiss the EMTALA claims, citing EMTALA’s two-year

statute of limitations. Merce responded that the two-year statute had not run because of various

state law tolling provisions, including tolling provisions for pre-litigation screening procedures

and for delayed discovery of an injury.

The court rejects Merce’s argument that EMTALA’s two-year statute of limitations is

tolled by these state law provisions. Congress chose to adopt an iron-clad two-year statute, rather

than allow tolling for such reasons. The court must therefore follow the congressional

determination and dismiss Merce’s EMTALA’s claims.

Background

For purposes of this motion, the court finds the following facts. Plaintiff Adam Merce

began feeling sick on June 15, 2002. On June 18, 2002, during a CT scan, Merce suffered a

grand mal seizure and was taken to the emergency room at Sevier Valley Hospital in Richfield,

Utah. Dr. Pope was the emergency room physician who examined Mr. Merce there. Dr. Pope

diagnosed a grand mal seizure, prescribed Dilantin and told Mr. Merce to go home. Merce went

home as ordered, but his problems continued. In the early morning hours of June 19, 2002,

Merce returned to the emergency room. Dr. Greenwood examined him, gave him a spinal tap

and, diagnosed viral spinal meningitis. Dr. Greenwood prescribed morphine and antibiotics and

admitted Merce to the hospital.

The next day, worried by his apparent lack of improvement and ultimately dissatisfied

with the care at Sevier Valley hospital, Merce’s companion, plaintiff Emily Demong, drove

Merce to Utah Valley Medical Center in Provo. His condition continued to worsen until, on June

Page 2 of 13

22, 2002, an MRI was finally performed. The MRI revealed that Merce suffered from herpes

simplex encephalitis. Merce slipped into a coma that same afternoon.

Plaintiffs allege that Merce suffered acute brain injury as a result of the failure to

accurately diagnose or treat his condition. Plaintiffs have brought state law medical malpractice

and EMTALA claims against Drs. Pope and Greenwood in connection with these events.

II.

Pope’s and Greenwood’s Motion to Dismiss Plaintiffs’ EMTALA claims

Dr. Pope’s alleged EMTALA violation occurred on June 18, 2002. Dr. Greenwood’s

allegedly occurred on June 19, 2002. But plaintiffs did not file their present EMTALA claims

until July 1, 2004, more than two years after these alleged violations took place. Dr. Pope has

therefore moved to dismiss plaintiffs’ EMTALA claims under EMTALA’s two-year statute of

limitation, and Dr. Greenwood has joined that motion.

In response, plaintiffs argue that EMTALA’s two-year statute of limitations is tolled by

the pre-litigation procedures required under Utah State law and that EMTALA’s statute of

limitations does not run until a claimant “discovers” the violation.

Odd ly, neither defendant has raised a st raightforward challenge to plain tiffs ’ EMTALA

claim against him: namely, that under the plain language of the Act, only hospitals can be sued

for violations.1 A private right of action against an individual doctor does not appear to be

authorized. However, because the court disposes of plaintiffs’ EMTALA claims against Drs.

Pope and Greenwood on statute of limitations grounds, it has no need to further address this

issue.

142 U.S.C. § 1395dd(d)(2)(A).

Page 3 of 13

EMTALA provides a private cause of action for its violation and contains its own statute

of limitations provision: “[n]o action may be brought under this paragraph more than two years

after the date of the violation with respect to which the action is brought.”2 In addition,

EMTALA contains a preemption provision, which states that nothing in the act “preempt[s] any

State or local law requirement, except to the extent that the requirement directly conflicts with a

requirement of this section.”3 EMTALA is a separate federal statute, not merely an outgrowth of

state malpractice law. As the Tenth Circuit has repeatedly noted, EMTALA “[s]ection 1395dd is

an anti-dumping provision, not a federal medical malpractice law.”4 EMTALA does, however,

incorporate state law provisions regarding available damages.5

Utah state law contains several provisions circumscribing the statute of limitations in

medical malpractice cases. Under Utah law, the two-year limitations period is expressly tolled

while plaintiffs comply with the required pre-litigation screening procedures.6 Pre-litigation

screening and certification of claims is required under Utah law before a medical malpractice

claim can be filed7 and a request for panel review must be made within 60 days after service of

242 U.S.C. § 1395dd(d)(2)(C).

342 U.S.C. § 1395dd(f).

4St. Anthony Hospital v. U.S. Dept. of Health and Human Services, 309 F.3d. 680, 694
(10th Cir. 2002) (citing Bryan v. Rectors & Visitors of University of Virginia, 95 F.3d 349, 351
(4th Cir. 1996); Repp v. Anadarko Municipal Hosp., 43 F.3d 519, 522 (10th Cir. 1994)).

542 U.S.C. § 1395dd(d)(2)(A).

6UTAH CODE ANN. § 78-14-12(3)(a).

7UTAH CODE ANN. § 78-14-12(2)(a).

Page 4 of 13

the statutorily-required notice of intent to commence a medical malpractice action.8 The

Division of Professional Licensing must complete its pre-litigation hearing within 180 days of

the date a request for review is filed9 or else its jurisdiction terminates and a claimant is held to

have complied with all requirements for commencement of a court action.10 In addition to these

pre-litigation requirements, Utah law also provides that the statute of limitations does not begin

to run unt il “discovery” of the conduct giving rise to the alleged in jury.11

Plaintiffs argue that because EMTALA adopts substantive state law provisions governing

available damages, it also incorporates substantive state law procedural provisions governing

malpractice claims (including provisions tolling the statute of limitations) and that EMTALA’s

two-year statute of limitations is thus tolled by these provisions. While the Tenth Circuit has not

addressed this issue, the Fourth Circuit has squarely rejected plaintiffs’ argument. In Vogel v.

Linde,12 the Fourth Circuit held that EMTALA’s two-year limitations period is not tolled by

infancy or incompetency (as limitations periods would be under Virginia state law) because it is

black letter law that statutes of limitation do not toll unless the statute expressly so provides.

Subsequently, in Power v. Arlington Hospital,13 the Fourth Circuit concluded that pre-litigation

8Id.

9UTAH CODE ANN. § 78-14-12(3)(b)(i).

10UTAH CODE ANN. § 78-14-12(3)(b)(ii).

11UTAH CODE ANN. § 78-14-4(1) (2002).

1223 F.3d 78 (4th Cir. 1994).

1342 F.3d 851 (4th Cir. 1994).

Page 5 of 13

claim screening provisions required under Virginia state law did not toll EMTALA’s two-year

limitations period because the state law provisions conflicted with the federal statute and were

thus preempted by EMTALA.

Power involved a situation inverse to the situation here; it was the defendant seeking to

incorporate state law restrictions on the statute of limitation, rather than the defendant. But the

principle remains the same: state law does not alter EMTALA’s congressionally-determined

procedural requirements regardless of whom they benefit. Thus, the defendant hospital in Power

had moved to dismiss plaintiff’s EMTALA claim because she had failed to submit her claim for

pre-litigation review by a medical malpractice review panel as required under Virginia law. The

district court denied the hospital’s motion to dismiss and the Fourth Circuit affirmed, holding

that EMTALA does not “expressly or impliedly incorporat[e] state-mandated procedural

requirements for EMTALA claims.”14 The Circuit agreed with a previous ruling by the Virginia

Supreme Court that Virginia’s “notice of claim provision, and its requirement that suits cannot be

filed until after they are reviewed by a malpractice review panel, directly conflicts with

EMTALA.”15 The Circuit then noted that “[n]otwithstanding the fact that the Virginia Act tolls

the statute of limitations during compliance with its procedural prerequisites, these state law

tolling provisions cannot toll the running of EMTALA’s statute of limitations,”16 and cited as

support for this position the U.S. Supreme Court’s recognition that “‘[i]f Congress expressly puts

14Id. at 866.

15Id. (citing Smith v. Richmond Memorial Hosp., 416 S.E.2d 689, 695 (Va. 1992).

16Id.

Page 6 of 13

a limit upon the time for enforcing a right which it created, there is an end of the matter.’”17 The

Circuit thus concluded that because Virginia’s pre-litigation procedures had the potential to

directly conflict with EMTALA, they were “not applicable to an EMTALA claim.” Failure to

comply with state procedures, in other words, would not bar plaintiff’s EMTALA claim.

The U.S. District Court for the District of Colorado also recently reached a similar

conclusion. In Bird v. Pioneers Hospital,18 plaintiff Bird brought an EMTALA claim against

Pioneers Hospital after she was discharged during labor and told to drive herself to another

hospital in Grand Junction, Colorado. She started to deliver her baby en route and due to

complications that developed, her baby suffered severe injuries and died 15 days later. Pioneers

Hospital moved to dismiss plaintiff’s EMTALA claim on the ground that she had failed to

comply with the notice-of-claim requirements under the Colorado Governmental Immunity Act

(CGIA). The district court rejected this argument. The court held that EMTALA preempts the

state law notice-of-claim requirement “because the state statute . . . is potentially in direct

conflict with EMTALA’s statute of limitations.” In so doing, the district court followed the

Fourth Circuit’s reasoning in Power:

Under the CGIA . . . a plaintiff’s notice requirement is triggered by the
“discovery” of his injury, whereas EMTALA’s statute of limitations commences
as of the date of the violation of the Act. Further, the CGIA tolls statutes of
limitations pending compliance with the CGIA’s procedural requirements where
the time necessary for such compliance would otherwise exceed the limitations
period. Consequently, a plaintiff may discover his injuries and provide notice
within EMTALA’s statute of limitations but still fail to complete the CGIA’s pre-

17Id. (quot ing Holmberg v. Armbrecht, 327 U.S. 392, 395 (1946)).

18121 F.Supp.2d. 1321 (D.Colo. 2000).

Page 7 of 13

suit compliance procedures and file his complaint within the federal limitations
period. As a result, there is a potential direct conflict between compliance with
the CGIA’s procedural requirements and EMTALA’s statute of limitations.
Accordingly, I conclude that EMTALA preempts the CGIA’s notice of claim
statute because the state procedural requirement stands as an obstacle to the
accomplishments and execution of Congress’ objectives in enacting EMTALA.19

The reasoning of both the Fourth Circuit in Power and the District of Colorado in Bird is

persuasive here. State procedural requirements could stand as an obstacle to the congressional

determination that a two-year statute of limitations is appropriate for EMTALA claims. The

court therefore holds that because a potential direct conflict exists between Utah’s pre-litigation

claim screening requirements and EMTALA’s statute of limitations, EMTALA preempts state

law on this point. As a result, Utah state pre-litigation screening requirements are not

“incorporated” into EMTALA and do not toll EMTALA’s two-year limitations period.

The Second Circuit’s decision in Hardy v. New York City Health & Hospitals Corp.20 and

the Ninth Circuit’s decision in Draper v. Chiapuzio21 do not alter the court’s conclusion. Both

Draper and Hardy involved the interrelationship between state law notice-of-claim provisions

and EMTALA’s statute of limitations. In both cases, the Circuits held that EMTALA did not

preempt the state law notice-of-claim requirements. The Circuits reasoned that compliance with

both EMTALA’s two-year statute of limitations and the state law notice-of-claim provisions at

issue was not an impossibility and thus, that no direct conflict between state and federal law

existed.

19Id. at 1326.

20164 F.3d 789 (2nd Cir. 1999).

219 F.3d 1391 (9th Cir. 1993).

Page 8 of 13

Draper and Hardy may be incorrectly decided. The New Mexico Court of Appeals came

to this conclusion in Godwin v. Memorial Medical Center.22 In Godwin, the state trial court had

granted summary judgment to the hospital on Godwin’s EMTALA claim finding that Godwin

had not filed a notice-of-claim within 90 days of the event giving rise to the injury as required

under New Mexico’s Tort Claims Act and that this notice-of-claim provision was incorporated

into EMTALA thus barring Godwin’s suit. The Court of Appeals reversed, holding that the

notice-of-claim provision in the state’s Tort Claims Act did not apply to EMTALA actions. The

Court of Appeals thus rejected the reasoning of Draper and Hardy, instead concluding that

[t]he fact of the matter is that if failure to give a 90-day notice bars an Emergency Act
claim, the two-year period given [under EMTALA] is taken away. The two-year
limitations period in effect is reduced to 90 days or less and effectively vitiated. These
circumstances create a direct conflict between the Tort Claims Act notice-of-claim
requirement and the Emergency Act’s statute of limitations and purposes. We hold that
the Tort Claims Act notice-of-claim requirement is preempted by the Emergency Act and
therefore not applicable to an Emergency Act claim.23

The court need not go so far as the New Mexico Court of Appeals, however, because

Draper and Hardy are distinguishable from the case at hand. Both Draper and Hardy involved

state law requirements that at least arguably created no conflict with EMTALA. Both cases

involved state laws requiring merely that a notice of claim be filed – and nothing more – before a

plaintiff could file suit. Such laws are different than Utah’s medical malpractice scheme, which

requires not only the simple filing of a notice-of-claim but also undergoing a pre-litigation panel

review process during which the statute of limitations is tolled. This difference is crucial because

2225 P.3d 273 (N.M. 2001).

23Id. at 282.

Page 9 of 13

while a state law requiring a plaintiff to give notice of claim does not clearly conflict with

EMTALA’s statute of limitations, an express tolling provision such as Utah’s certainly may in

some circumstances. Thus, Hardy and Draper can ultimately be harmonized with Power and

Bird by recognizing that the simple state law notice-of-claim provisions at issue there were not

inconsistent with EMTALA. As the District Court for the District of Colorado persuasively

explained in Bird,

Hardy and Draper are distinguishable from the circumstances presented here because
unlike the notice-of-claim statute in [CIGA], the statutes in Hardy and Draper only
require timely notice and do not mandate further compliance with any pre-suit
procedures. Therefore, Hardy and Draper did not address tolling provisions similar to
those found in [CIGA], which I conclude are in conflict with EMTALA’s statute of
limitations. I thus find that [CIGA] is more analogous to the Virginia notice-of-claim
statute in Power which contained similar tolling provisions.24

Here, as in Power and Bird, the pre-litigation claim screening requirements – with their

attendant tolling provisions – do pose a potential direct conflict with EMTALA’s statute of

limitations and are therefore preempted by EMTALA.

Plaintiffs would also have the court hold that EMTALA’s two-year statute of limitations

is tolled until the discovery of the conduct giving rise to the injury, just as it is under state law.

Plaintiffs reiterate their “incorporation” arguments and raise equitable concerns in support of this

position. But any state law provision about “tolling until discovery” directly conflicts with the

plain language of 42 U.S.C. § 1395dd(d)(2)(C), which provides that EMTALA’s limitations

period begins to run from the “date of the violation.” And as for plaintiffs’ argument that it

would be unfair to more seriously injured patients not to toll EMTALA’s statute of limitations

24Bird,121 F.Supp.2d at 1324 n.1 (internal citations omitted).

Page 10 of 13

until discovery of violations, some potential unfairness is inherent in the very conception of a

statute of limitations. That unfairness to the plaintiff must, of course, be balanced against the

need for defendants to know in a timely way whether they will be sued. In enacting EMTALA,

Congress certainly could have expressly provided for tolling of the limitations period until

discovery of the conduct giving rise to the injury. The fact that it chose not do so likely reflects

an attempt to strike the proper balance between the harm to patients and the legitimate concern

providers have in being able to predict their potential liabilities for insurance and other reasons.

In any event, the weighing of the competing concerns is for Congress, and not this court, to

tackle.

Finally, plaintiffs argue that failure to allow tolling of EMTALA’s two-year statute of

limitations until the date of discovery of the injury would violate their rights to due process and

equal protection under the 14th Amendment to the United States Constitution. The court will not

address the merits of these dubious arguments for lack of adequate briefing of the issues.

III.

Plaintiffs’ Motion to Amend the Complaint

Plaintiffs have moved to amend their complaint to add facts establishing that Mr. Merce

was incapacitated until July 7, 2002, and thus could not have discovered the EMTALA violation

prior to that date. But because the court has already rejected plaintiffs’ argument that

EMTALA’s statute of limitation runs from the date of discovery of the injury instead of from the

date of the violation, plaintiffs’ amendment, even if allowed, would not prevent dismissal of the

EMTALA claims and would thus be futile.25 Because plaintiffs’ proposed amendment would be

25See Watson v. Beckel, 242 F.3d 1237 (10th Cir. 2001).

Page 11 of 13

futile, leave to amend need not be granted26 and p la in ti ffs’ mo tion to amend is, accordingly,

denied.

IV.

Sevier Valley Hospital’s and Utah Valley Regional Medical Center’s Motion to Dismiss
Plaintiff’s EMTALA claims

IHC Health Services, Inc., doing business as both Sevier Valley Hospital and Utah Valley

Regional Medical Center, have also filed a motion to dismiss plaintiffs’ EMTALA claims on

statute of limitations grounds. They filed this motion after briefing and oral argument on Drs.

Pope and Greenwood’s motion had been completed. Although the court fails to see why the

reasoning of this opinion would not apply with equal force to this later-filed motion to dismiss,

the court nonetheless gives plaintiffs three weeks in which to either oppose the motion to dismiss

or to indicate their lack of objection to dismissal of the remaining EMTALA claims.

Conclusion

Because plaintiffs’ EMTALA claims were not filed until more than two years after the

date of the alleged violations of the act, and because the court finds that EMTALA does not

incorporate state law pre-litigation claim screening requirements and that its two-year limitations

period begins to run from the date of the alleged violations, plaintiffs’ EMTALA claims were

26See Foman v. Davis, 371 U.S. 178 (1962).

Page 12 of 13

untimely filed and defendants Pope and Greenwood’s motion to dismiss (9-1; 12-2) is

GRANTED. Because the proposed amendment would be futile, plaintiffs’ motion to amend the

complaint (14-1) is DENIED. The case will proceed, of course, on the state law medical

malpractice claims.

DATED this _____ day of December, 2004.

BY THE COURT:

_______/S/________________
Paul G. Cassell
United States D istr ict Judge

Page 13 of 13

Mendez-Arriola v. White Wilson Med. Ctr. (Summary)

DISCRIMINATION, RETALIATION, BREACH OF CONTRACT

Mendez-Arriola v. White Wilson Med. Ctr., No. 3:09cv495/MCR/EMT (N.D. Fla. Aug. 25, 2010)

The United States District Court for the Northern District of Florida denied a medical clinic’s motion for a more definite statement and granted in part and denied in part its motion to dismiss various discrimination and breach of contract claims brought by a radiologist.

The radiologist was a shareholder employee of the clinic and acquired a partnership interest in the entity that owned the property on which the clinic was located. Over time, the radiologist claimed that her work conditions deteriorated because of her “female gender and the Clinic’s perception that she was mentally or psychologically disabled.” Eventually, the radiologist was summarily suspended for 90 days. She was not granted a hearing. Shortly after asserting a belief that the clinic was violating federal and state discrimination laws by, among other things, conditioning her return to work on a psychological examination, the radiologist was fired.

The radiologist filed suit claiming that the clinic and associated entities and persons violated state and federal discrimination laws, retaliated against her for complaining about the suspected discrimination, and breached their contract with her. The court made numerous rulings on the parties’ motions. Most significantly, the court allowed the radiologist’s claim that the clinic required that she submit to a medical examination, which was neither job-related nor consistent with business necessity, to proceed, acknowledging that such a claim was separate from her federal disability discrimination claim. However, under Florida state law, there was no authority for a separate medical examination claim. Accordingly, that claim was dismissed. The court also concluded that any waiver that may have been contained in the Bylaws was ineffective because “an employee’s rights under the ADA may not be prospectively waived.”

Additionally, the district court denied the defendants’ motion to dismiss the radiologist’s claim for breach of the clinic bylaws. According to the court, the clinic offered no evidence to counter the radiologist’s allegations that the clinic violated the due process protections therein by failing to invite her to discuss, explain or refute the charges after she was advised of the charges.

Lastly, the radiologist’s claim of breach of fiduciary duty as to the clinic was dismissed because the radiologist’s claim focused on her termination as an employee of the clinic and the duty owed to her was only in her capacity as a shareholder, not an employee.

Merce v. Greenwood

EMTALA

Merce v. Greenwood, No. 2:04-CV-00610 PGC (D. Utah Dec. 17, 2004)

A
patient suffered injuries soon after being treated and discharged from a hospital’s
emergency room. Over two years later, he brought a lawsuit against two of
the treating physicians for violations of EMTALA’s anti-dumping provisions.
The United States District Court for the District of Utah granted the physicians’
motions to dismiss, finding that EMTALA’s two-year statute of limitations
period is not altered by provisions of state law such as pre-litigation screening
requirements. Also, the court noted that the statute begins to run on the
date of the violation, not when the violation is discovered. The court also
observed that, "oddly,
neither [physician] has raised a straightforward challenge to plaintiffs’ EMTALA
claim against him: namely, that under the plain language of the Act, only hospitals
can be sued for violations."

Mercatus Group, LLC v. Lake Forest Hosp. (Summary)

ANTITRUST

Mercatus Group, LLC v. Lake Forest Hosp., No. 10-1665 (7th Cir. May 26, 2011)

The United States Court of Appeals for the Seventh Circuit upheld summary judgment in favor of a hospital that was sued for allegedly violating federal antitrust laws. The suit was brought by a corporation that planned to construct a physician center that would compete with the hospital. The physician center alleged that the hospital mounted a public relations campaign laced with misrepresentations and designed to convince the community board to deny the request to develop the project. It also claimed that the hospital improperly offered incentives to two hospital-affiliated physician groups to keep them from relocating their practices to the physician center.

The court concluded that the hospital’s efforts to lobby the community board, acting in a legislative capacity, and its campaign to sway the public were immunized from antitrust liability under free speech principles dealing with the hospital’s right to petition the government for redress. Similarly, the hospital’s “derogatory” comments about the physician center to other businesses in the community and warnings to the physician center’s hospital partner to “stay out of its territory,” when not backed by any coercive conduct, were not actionable under the federal antitrust laws.

Lastly, the court found that the hospital’s conduct in attempting to retain physicians that the physician center was trying to lure away did not constitute actual or attempted monopolization under federal antitrust laws. According to the court, absent predatory conduct by the hospital, there could be no antitrust liability in the hospital trying to retain the business of its physicians and “the Hospital had no duty to step aside and allow [the physician center] to make off with its physicians, patients, and revenue.”

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Mengelson v. Ingalls Health Ventures

Mengelson v. Ingalls Health Ventures

Mercatus Group, LLC v. Lake Forest Hosp. (Full Text)

Mercatus Group, LLC v. Lake Forest Hosp. (Full Text)

Mercy Hosp., Inc. v. Baumgardner

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Mercer v. HCA Health Serv. of Tennessee, Inc. (Summary)

Mercer v. HCA Health Serv. of Tennessee, Inc. (Summary)

Mercatus Group, LLC v. Lake Forest Hosp. (Full Text)

Mercatus Group, LLC v. Lake Forest Hosp. (Full Text)

Mercy Hosp., Inc. v. Baumgardner

Mercy Hosp., Inc. v. Baumgardner

Merce v. Greenwood

Merce v. Greenwood

Mendez-Arriola v. White Wilson Med. Ctr. (Summary)

Mendez-Arriola v. White Wilson Med. Ctr. (Summary)

Merce v. Greenwood

Merce v. Greenwood

Mercatus Group, LLC v. Lake Forest Hosp. (Summary)

Mercatus Group, LLC v. Lake Forest Hosp. (Summary)