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