we think by the clear language of the court's order that there is no failure to comply specifically the court's order said if prime health care wishes it may file its amended complaint failure to do so may may exactly well that's that's that's a little shot over the bow in terms of a warning well it may or may not be and i think the the operative thing is that the plain language of the orders as if they wish and that is not mandatory language you have plenty of orders that when you have an amended complaint they say you shall file by this particular day by this particular deadline and this crazy so you're saying that if i understand that the if there's nothing there to indicate that the and you're dismissed with prejudice and then you take it straight up on appeal on the merits you don't have to reach the forty one rule forty one factors yes i think that's exactly how the plain language of the order appeared  i think wish is and that distinguishes this from the other cases below clearly is an option it's not mandatory language so we don't think that there could be a failure but you waited two minds and then you pleased clearly to say the least but you're right the court said i think in its opinion that there was two months that one of their going to the bridge and we briefed it below and so we're talking settlement the plaintiffs or rather the defendants know you know that we're going to choose to stand on our on our complaints so i think the first question that the court one day matter because you waited past thirty days to start your settlement or while the settlement talks were after one day after thirty days right i don't recall but i'll take that representation i don't think it does but i think the operative word or the operative legal issue here is the language of the court's order is the threshold issue one is if you wish you can do it and i think if you look at the you case especially footnote four of the you are case it talks in generally about you know forty one b dismissals in the context of filing amended complaints and you know the court the ninth circuit said in footnote four a plaintiff has a right to simply allow the complaint to be dismissed you know that's not a case of range then we had the edwards vs marne park case which suggests that oh yeah you can do that but call a court up and tell them that's right as i said and because you didn't call a court up and tell them then you can dismiss with prejudice edwards i think at the very end does suggest that so i think if anything the case law certainly your issue is still good law edwards i would argue really is focusing on the propriety of the four furtak factors which i'll get to in a second so if you go through the furtive factors which i suspect you're going to get to and they you don't give notice and then the court is now weighing the appropriate factors and does then what is my standard to me you did not call the chord they went through the court went through the furtive factors pretty carefully even citing for dick weighing each factor and sand at the end out of five weigh heavily in favor of dismissal bye bye i think there are three tiers of this and now one is whether the forty one b should even apply to first in the first place particularly given the permissive language of the court's order the second one is what you well i don't don't know why it does it just says you can do what you want to do i think marin agrees you can do what you want to do it just says if you don't want to do anything call up the good court and tell him i don't want to do anything but this particular order said if you wish go ahead and f dismissal of the complaint with prejudice this one says if you wish to file your complaint i mean there's clearly hours as optional language not the mandatory language as well in the plain of their dismissal was appropriate and yours holds and clearly the case and you are the court did get to the underlying dismissal the twelve b dismissal factors even though it found the forty one b but  and we're going to say you lose anyway so but you're saying forty that and here that's difference yes that we can say we could say you lose on the forty one block which i looked at which says you haven't got to go through the merits you can use do it if you're going to do it on abuse if you scratch and standard in your dismissing you don't have to go through the merits and then i got to unpublished decisions which follow eldridge so if you're going to say i got to go through the merits of i got to send this on lon because i got two cases i can try to distinguish your issue which is what eldridge did or i can say boy you all who tried awful hard but i don't know how to think about may have to i mean i sitting here i'm hesitant to tell your daughter what to do but i think you're a scholarly i mean i i think you are clearly states that you can look at the merits of it but you're saying eldridge's you know counsels to the contrary well and i'm kind of like my colleague here so we're going to go with forty one bead we're going to say we really should and i have this case because it's not been prosecuted but guess what now go at under the covers and see what this is about well you say it's not the prosecutor remember forty one b applies the to circumstances failure to comply with a court order or failure to prosecute and look rule forty one point one is the failure to prosecute standard  that's six months so other argument there wasn't a six month trigger here before the case was ultimately dismissed so i don't think it can be a fair way to prosecute cases or rationale as well ok i understand argument so moving into the twelve the rule twelve areas of this missile the first issue that the court dismissed on is saying that there was not an adequate section one conspiracy pled  that agreement an agreement was made it's not a probability requirement the judge sitting in a ruling over the twelve b six motion may not think the proof is probable and he may think that recovery is remote unlikely but you just have to plead factual facts that suggest a conspiracy is plausible what the court did here is it said no the standard is you must plead facts which exclude the possibility of independent action that's the old did exactly what the supreme court counsels at trial court shouldn't do is looked at the conspiracy that was pled novelistic only but in particular segment it isolated  the slate clean and then went on to sort of the fact finder finding their own interpretation of what these isolated facts were well what the court said was designed or standard and i guess i want to see if you disagree it seems to me the court was saying there are not enough alleged here to get there if i look at the candle i don't know whether there was enough alleged here but after you get through it looked at these facts over here that was a subset and then went and proceeded to act as a fact finder i think when you look at the myriad of cases story baka whether it's the watson carpet out of the six or circuit which said that there are often several plausible explanation the court's job at the rule twelve stages and to ferret out which of the ones is most plausible the interesting news case from the second circuit evergreen from the first circuit the erie county case and there's actually another case that was issued after a briefing here that wasn't cited in the supplemental letters and that's out of the fourth circuit it's the s d three l l c black and decker case where the court talks pretty much exactly about what happened here but what the court should have done is actually look holistically and if i could spend two minutes on the facts of when it was hatched in these meetings and and you also emphasize this is trial the sex just give us some time to get some discovery and then we'll be able to but because of the planning standard here don't you know what do you have more than the mean sexually happening you don't have any but you know if you if you have some people there that were saying some things that would be more conspiratorial with that one but how fall head on well that's always good and here's the ark of the conspiracy the seed of the conspiracy was planted in the one nine hundred eighty s when congress changed the medicare medicaid reimbursement scheme from a cost plus to a flat rate we know what happened in the eighty's where in eighty nine to ninety of our complaint they decided that they needed to work together ok may seem innocuous enough right here what happened in one nine hundred ninety five which was a complete one hundred eighty degree reversal all of a sudden the union started targeting another individual they targeted columbia h c a with a corporate campaign in one thousand nine hundred five same stuff we saw back in to the beginning in two thousand and nine two thousand and ten with crime they called it their code colombia campaign and it was a corporate campaign where they attacked and they tried to get them to adopt a higher cost union model labor standard here ok not sitting in isolation what then happened was in one thousand nine hundred seventy written agreement that was between kaiser and the unions it said fairly innocuous the one could read in isolation this is to expand permanent members and current in new markets another agreement in two thousand with a reaffirmation in two thousand and two what happened in that period you start seeing acts where these the union and kaiser  acting against their own interest for example kaiser permanente supported legislation that would increase in their staffing ratios what does that mean it means it's going to increase their cost doesn't make sense ok you can look at isolation which is what judge curial did below and said well that's part of the given sake of the labor process not his job to do that make that call two thousand and five two thousand and five there's a meeting they announce and they say it's in our complaint paragraph one twenty eight the purpose here is to transition from a labor management partnership ok labor management partnership where you get the statutory exemptions and certain activities protected their own words the transition from a labor management partnership to a health care partnership what also is happening at this time you had columbia h c a in ninety five in two thousand when they met and had another agreement part of the agreement was to assess the critical threats facing kaiser they did the same thing to tenet in the early two thousand and two capitulated by two thousand and three they did the same thing at the same time to see h w in the early two thousand see h w decided to play ball with them then you have the meeting where they say we're moving into a health care partnership and then they have meetings more agreements and other grima in two and we're going to go after them to protect kaiser's space in the relevant market and so they went on their corporate campaign against crime and we list in detail the some of the business attacks that were undertaken by the union and why this is all ok so before we start the clock let me find out how you want to know by july i'm i'm david frederick for the kaiser defendants and also present for twelve minutes in the mr small for union defendants for eight minutes ok that's twenty minutes so you can tell time thank you ok i'd like to make two quick points on the merits that should easily dispose of this case and lead to affirm it's before addressing the rule forty one issue there are two fatal flaws that affect all four antitrust complaints first is that there is no plausible allegation of injury to competition as opposed to crime as a competitor and the second there is no plausible allegation that kaiser with only fifteen hospitals in a market of one hundred twenty five has market power both of those elements have to be plausibly alleged for primed to be able to sustain legally it's anti trust claims all four of them so you can affirm on the ground that the district court properly ruled that as to those two elements there were insufficiently plausible allegations i'd be happy to go into them through the merits they weren't addressed today but they are absolutely fatal to primes antitrust case and you can affirm on those two grounds alone without addressing some of the more difficult agreement you have use in rule forty one i have the numbers right kaiser has what about twelve percent of the relevant hospital market in that area that's correct ok because there's one hundred twenty five hospitals kaiser owns twelve percent is that right that's correct and under any reported decision that we have found on  antitrust dealing with i there are agreements to restrain trade or monopolization twelve percent doesn't cut it and when you look further at the allegations of kaiser's ability to control output effect prices affect com titian there is nothing in this complaint that would suggest that a player like kaiser has that ability to do those things in an anti competitive way it simply is a play legend you're saying if now if there are any other questions about those two elements i'm happy to talk about the agreement issue or to go into the rule forty one issue this is an abuse of discretion standard and i think that after the district court two different judges have looked at this complaint the original complaint in the first minute complaint and had explained in very good detail the failure to plead all of the requisite elements of the antitrust claim the district court signaled quite clearly that unless prime was going to amend within thirty days the complaint was going to be dismissed with prejudice prime did nothing and it did it did not notify the district court of what its  until after some period of of weeks and several months and then after the unions had filed for a dismissal of the rule forty one it was only at that point the prime four came forward and said hey we're going to take our appeal to the ninth circuit i think the district court is was well within its discretion in applying the furtak factors and decide if you were the trigger that this or court wasn't doing anything tell it was doing other cases and not really paying attention to the deadlines and you were the trigger by filing your motion on the forty one day that's right that's right otherwise the case would have sat there and all they were to it wasn't just it was sitting there in terms of the district court of the relevant to vote as i understand you were talking settlement yes i think that it is fair judge or a cough within the confines of what i can talk about settlement in an open court that parties talk to each other all the time there is an e mail exchange suggesting that there would be some discussions but i think the important point is that from the district courts perspective in the man i'm management of that stock it in prosecuting cases to have been resolved the question before is was the district court acting outside it's discretion in the siding enough is enough well i don't see too much prejudice to you for the time period i mean it's not like it's not like this thing has become you know r i p and that the witnesses have died and you know anything it's not very long i that stat is certainly true but this court's cases have said that when there is no explanation ever given for the delay the prejudice to the defense is going to be presumed so just looking at the six but either way it was off the court's docket well it's not off the course docket until somebody over sorts but nothing's happening it's not as if the court is being accurate it's interfering with the court's handling of other  matters that is certainly true but at least this is this tical matter is this court is aware of things matter to the administrative office and district courts i think properly have the discretion to manage their dockets in the way that they deem a ppropriate consistent with well that was of concern to the court of statistical about or that the court could have called up as opposed to waiting for the other side to call up and say what do you go to do the  it's really hard for me to see how there was any prejudice to the feds had any real sense i hear what you say about presumption and of course it wasn't a disposition on the merits so far as the fourth the clock starts to run well you know we sitting here as a very experienced district judge how you would have weighed the rule forty one factors in a lot of this circumstance before you is relevant certainly whether you're viewing what the district courts explained rationale in its opinion as an abuse of discretion i think is a different question but i think you know i understand believe me i believe that abuse of discretion standard is right up there with the first amendment and buttering are all part but there still are some limits i understand and i'm not here and the reason i started my argument with the two merits points that i think  absolutely fatal is that the court can readily go past the rule forty one question without having to get you unmatched in what i think in your ish to be fair was a very unusual situation because in your show the district court had not explained anywhere why it had dismissed the complaint and so when this court had the rule forty one issue on appeal it first went through all the furtak factors and he concluded that the rule forty one dismissal was appropriate but i think conscientiously the judges that were on that panel thought it was appropriate to explain to the public why this complaint was fatally flawed and was dismissible and so it therefore then went into a discussion of the factors as to why the complaint should be dismissed that appears to be the only case from this court that we have found under rule forty one that actually goes into the merits after the rule forty one dismissal factors have been analyzed and i think because of that anomalous situation it is one that can be readily explained not as a mandate for the court to look into the merits but simply as an explanation given the unusual facts and circumstances of have particular case you know if i could turn back to the merits for a second one of the things that i think is striking about the argument about this agreement is quite fantastical to suppose that an antitrust conspiracy against crime and crimes competitors started sixteen years before prime even injured this market but that's what the allegation was as represented by coun this vertical rule or reason it is vertical rule of reason because under league in we are talking about the channel that is is it's going up and down here their assertion is that the conspiracy is between the unions  they're they're not limiting it to vertical are they well i don't think they have a plausible allegation that it could be horizontal in light of the fact that we're talking about kaiser's work force but in any event we're talking about rule of reason classic under the league and  supreme court decision because they're essential allegation as i understand it it is quite incoherent if you think about it from an antitrust perspective is that by conspiring with its labor force kaiser was intending to harm every conceivable competitor in the market and thereby claim an op your claim a position of monopolization from what has been acknowledged is a rather modest market share that's just a fantastical and completely implausible assertion and what the what this leads into the twamley point is that what prime is seeking to do is to take essentially it's on happiness at some contractual disagreements between kaiser and prime for repaying when some of the cup ties are patients got health care services at prime hospitals in transform that into an antitrust case which the supreme court in twamley said we're going to look really hard at claims of antitrust particularly in these circumstances where there are very plausible explanations for why business entities have done what they have done kaiser has made determinations to work collaboratively to the extent that  or i would just say generally that when we're talking about health care services it is certainly right and appropriate for entities in the market to be making comments about what they deem to be quality care i think they said something that kaiser told them to call a nurse before they go to a doctor and that is a situation where in a managed care scenario kaiser i think is well within its business judgment to ask its patients to say hey can we double check that you actually need to go to the emergency room they happen to be you know expensive they're busy they're flooded call a nurse practitioner have a nurse talk to you about your condition and determine do you need to go to the hospital five minutes from your house or maybe you could take a little bit more time make an appointment go to kaiser and have it done in an economical way that is completely legitimate business decision and it's probably one that would lead to sound health care that i think we could all agree is a plausible explanation for why kaiser would be asking for that kind of situation if i if i determine that i must reach the merits why should i do it why not return it to the district court who did it best of good with the rule forty one analysis and let it to side the case because it has it's decided the merits but it did not decide the merits of this particular matter you believe i do believe they have jeff smith in here is why prime made the decision after the second dismissal of its complaint that it really was going to rest on that complaint if you are you know further allegations that the rule forty one joe your analysis is it made the merits because it made a decision on a b six decision that's correct it was dismissed the second i want to make sure there was  yes they have they amended their complaint after it had been dismissed the first time i understand they dismissed this complaint the second time with a very long decision going through all the elements this is now two district judges who have looked at these basic allegations and it was only when prime never came forward and said hey we are intending to rest on this and take an appeal and test these allegations in the ninth circuit that the whole rule forty one issue came up so i think judge smith you do not need to send this back and you should you should not send  because prime by its conduct and its litigation behavior has concluded this is the best they have so there would nope be no good purpose served by sending this back to the district court for one more take on what are a lot of sprawling allegations that ultimately can't make up what are crucial elements of any antitrust claim on all four other counts ok do either of you have any additional questions all right so i'll give you your eight minutes but litigation all of which is protected by the nor pennington right direct lobbying your honour's of government is absolutely immune there is no sham exception for direct lobbying of the government that is the court's decision in franchise realty now your honor mention the septicemia us assets were done those were prepared by you h w and the first thing what happened the out so there were three investigations that ensued after the yes yeah you gave these reports to government entities one by health and human services one by the california attorney general and one by the california department of public health the only allegation in the complaint is that one of the investigations by the california department of public health had terminated the other as we know it have continued as to the one that was terminated by the california department of public health what we know from the record contrary specifically to the allegations that primate in this case is that the hearing officer on review of the record determined that in fact up coding was a concern and referred that concern to another agency for investigation the only part of the charges that was dropped was a very specific and limited charge against crime with respect to its medical record keeping nothing to do with the up coding charge or the possibility that there was a health care problem at prime hospitals and so we have no exoneration here are through any government investigation so that's that's the situation and in fact  does attempt to show the falsity of what's in those reports but they don't even begin to show that your honor under any standard whether the court were to apply rule eight or rule nine b or as we believe the actual malice standard because of the fact that prime are seeking damages to its reputation so the first thing that crime tries to do is point to a center for disease control recommendation which by the way came out much after the conduct question and to say the c d c recommended that the right way to deal with septicemia is to aggressively treat it even before the diagnosis is made but here are the study that the sci you and your h w did was of septicemia diagnoses nothing to do with whether there was aggressive treatment earlier it's how often this blood infection was being diagnosed by private and they had very very high rates of infection which led you to raise the question just to raise the question now let me ask about the forty one b motion since i don't have a lot of time with you did you file it or and did they join you did kaiser join your or did you just file it we filed it and i believe kaiser joined in it so the unions filed the motion that part i'm certain why don't i look at that from the standpoint that you filed forty one b sanctions in the middle of settlement negotiations had some contacts at that time your honor i personally was not involved or even aware of them comply after two months with a court order directing them either to file an amended complaint or under the case law give notice of the fact that they were not going to do that they had an obligation to proceed one way or another well i as i don't really i don't see how you could've possibly been that prejudiced but that being said we you you agree with your with kaiser do you not that even if we judges reaching the same conclusion in proper opinions analyzing the issues and now it's before this court i think primus had plenty of process i do want to mention two other quick things one up hill with mr frederick just argued which is the lack of any allegation here your honour's that there has been harm to competition as opposed to harm to prime in fact even the harm to prime is very vaguely in weekly plett here and believe that's not even sufficient but it's not enough just for prime to allege that it was harmed by any of the conduct which is protected here by the way to your pennington and the non statutory labor exemption and by the pleadings and birds but even if prime were injured there is no harm to competition here allege and that goes to two things that's whether there is any trust claim that's been pledged here at all number one and number two to take this case outside the non statutory labor exemption prime would have to show that the conspiracy caused a direct insubstantial restraint in a business market and that to its failure now eighteen years ago although at the time the complaint was fifteen years ago and at some point you're under the failure of there were to be any exit from this market in fact you have allegations to the contrary by prime itself that it's a thriving competitor that it's growing it has success in the market has a superior business model that all of those factors also undermine any credibility that there is this conspiracy to competitors when that hasn't happened in fifteen years all right here on overtime at this point so unless my colleagues have any questions you're not thinking about all right i'll give you three minutes  for we took a little extra time with the other side so that i just knew the answer so we spent a lot of time here arguing about facts and what they really mean and explaining the allegations and lights most favorable to them and having them what they did below it's not the job of the rule twelve stage about the long nature of the conspiracy we took action when the guns of the conspiracy through and against us the fact that they had done it in two thousand and two thousands with tennant columbia you know c h w so on and so forth so now say well it's been going on for a long time i can't believe they're going to try to hold us to this spirit of conspiracy that's fifteen years no when the conspiracy started acting against us we took action any trust injury we talked about arrivals cost premier especially construction conduct causing increased prices reduced output reduced quality reduce choice that's an interesting injury that's the west in allegheny case that's the third circuit this circuit rebel oil conduct is any competitor of under the sherman act when it harms allocative efficiency or raises price of goods above competitive competitive levels or diminishes their quality our complaint is replete with facts that tell exactly how this conspiracy does raising a competitor's price the whole object of the conspiracy impose the union labor model on nonunion shops so they can keep the conspiracy going we talk about the garden grove example and pay paragraph fifty six of the complaint where the average labor cost for a nonunion thirty percent for union their garden grove sixty percent double of course that raises costs the other conduct of the conspiracy all designed to raise our costs refusing to pay prime prime working physician work that done for kaiser patients raises our costs increase prices that gets passed down to the consumer that's any trust injury of fifty seven seconds move to market power market power market share is not the only evidence your honor barber says abbott labs you can prove market power by strength of competition barriers to entry nature of the any competitive conduct the last two or the allegations concerning significant barriers to entering the mark well the allegations are you know first of all i look very toughly at both of the questions councils just affecting competition i'll go read again what you said about acting competition frank didn't find very many facts and found a lot of allegations generally but i didn't find facts but i'll look at them again when i looked at the sherman act section two i said there's nothing in here about there being any market power monopoly power in this relevant market and furthermore i don't find anything in here about allegations concerning the significant barriers to entering the market building a hospital with a regulatory and significant both i couldn't find what was your second question or what are the allegations concerning the significant barriers to entering the market  have to allege and i frankly couldn't find it i looked at what you do in section one because i have to teach about it and frankly i saw a lot of general allegations which to puffery i don't believe we really get to the early stuff and so i'm going to re read your stuff but it looks concentrate on section two ok barriers to entry we say that others lack the ability to increase output because of a hospital and it's difficult to do that when you have a static institution a static bed with a certain number of beds and rooms and a hospital in the regulatory burdens that you have to overcome that's a paragraph thirty four the complaint high cost and regulatory requirements for both establishing be sure i understand your position do you agree that if we were to find that the rule forty one dismissal had been improviden