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Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 

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FI LED 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

United States C.ourt of Appeals 

Tenth Circuit 

AUG 15 1989 

ROBERT L. HOECKER 

Clerk 

COLORADO CHIROPRACTIC COUNCIL, 

a Colorado nonprofit corporation; 

Plaintiff-Appellant, 

and 

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) 

) 

) 

) 

) 

) 

TIMOTHY D. CONWELL, D.C.; DENNIS P. ) 

NIKITOW, D.C.; GEORGE E. SPRINGER, JR., ) 

D.C.; DALE BAIRD, D.C.; DANIEL K. BAIRD,) 

D.C.; JIM BONDAROVICH, D.C.; ) 

DOUGLAS BURKE, D.C.; ) 

WILLIAM BURSON, D.C.; BERNARD BUSCH, ) 

D.C.; JON PAUL CARMICHAEL, D.C.; ) 

JAMES DAVIS, D.C.; WILLIAM F. DUCHAINE, ) 

D.C.; PAUL FARBER, D.C.; PAULE. ) 

FINEGAN, D.C.; JOSEPH GALLEGOS, D.C.; ) 

RICHARD E. GARDE, D.C.; TERRY GEAR, ) 

D.C.; D. L. HELBERG, D.C.; D. J. ) 

HENNESSEY, D.C.; DARRYL HOBSON, D.C.; ) 

ROBERT D. JACKSON, D.C.; SUSAN L. LEVY, ) 

D.C.; ROBERT MASTELLER, D.C.; EDWARD A. ) 

MORSE, D.C.; MICHAEL J. NEHRING, D.C.; ) 

RICHARD M. NUZZI, o.c.; MICHAEL w. ) 

PARRISH, D.C.; BERNARD M. PRESSER, ) 

D.C.; JEFFREY PRYSTUPA, D.C.; ) 

TIMOTHY W. RAY, D.C.; R. M. REED, ) 

D.C.; KENNON RUDE, D.C.; CRAIG RUMMELL, ) 

D.C.; GENE SAAVEDRA, D.C.; ) 

KENNETH $PRESSER, D.C.; ALVIN STJERHOLM,) 

D.C.; SUSAN STRADER, D.C.; ) 

MICHAEL SWENSON, D.C.; VICI SWENSON, ) 

D.C.; MICHAEL A. TRUPPO, D.C.; ) 

BARBARA WALTERS, D.C.; WILLIAM WHITE, ) 

D.C.; RALPH WIGGINS, D.C.; MARK M. ) 

WOLFF, D.C.; MICHAEL C. VANARIA, D.C.; ) 

R. BRADLEY ZISCH, D.C., ) 

Plaintiffs, 

v. 

PORTER MEMORIAL HOSPITAL, a Colorado 

corporation; SAINT ANTHONY HOSPITAL 

SYSTEMS, a Colorado corporation; 

HUMANA OF DELAWARE, INC., a Delaware 

corporation; THE COMMUNITY HOSPITAL 

ASSOCIATION, a Colorado corporation; 

HUMANA OF AURORA, INC., a Colorado 

corporation; LONGMONT UNITED HOSPITAL 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

No. 86-2774 

(D.C. No. 86-F-562) 

(D. Colo.) 

(650 F. Supp. 231) 

Appellate Case: 86-2774 Document: 01019975912 Date Filed: 08/15/1989 Page: 1 
• ASSOCIATION: MERCY MEDICAL CENTER OF ) 

DURANGO, a Colorado corporation: ) 

SAINT FRANCIS HOSPITAL SYSTEMS, ) 

a Colorado corporation: ST. THOMAS ) 

MORE HOSPITAL & PROGRESSIVE CARE CENTER,) 

a Colorado corporation, ) 

) 

Defendants-Appellees. ) 

ORDER AND JUDGMENT* 

Before MOORE, SETH, and TACHA, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a): 10th Cir. R. 34.1.9. 

submitted without oral argument. 

The cause is therefore ordered 

This is an appeal from an order of the district court 

dismissing the plaintiffs' action and imposing sanctions against 

them in an antitrust suit arising out of the defendants' alleged 

conspiracy to deprive certain chiropractors from obtaining staff 

privileges at several Colorado hospitals. The plaintiffs in this 

case are the Colorado Chiropractic Council (the Council), a 

nonprofit corporation representing the interests of members of the 

chiropractic profession within the State of Colorado, and over 

forty individual chiropractors practicing in various communities 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

2 

Appellate Case: 86-2774 Document: 01019975912 Date Filed: 08/15/1989 Page: 2 
· within the state (the individual plaintiffs). The district court 

found that both the individual plaintiffs and the Council lacked 

standing to assert the alleged antitrust violations, and it 

awarded Rule 11 sanctions to the defendants, finding the action to 

be a clear abuse of the judicial process. The plaintiffs now 

appeal, contending that these rulings were in error. 

As a preliminary matter, this court has granted the 

defendants' motion to dismiss the individual plaintiffs pursuant 

to Torres v. Oakland Scavenger Co., 108 S. Ct. 2405 (1988). 

Consequently, we do not reach the issue of the individual 

plaintiffs' standing to assert this action. We affirm the 

district court's judgment as to the Council's standing; however, 

we reverse its imposition of sanctions against the Council. 

The basic facts of this controversy are set out in the 

district court's opinion in Colorado Chiropractic Council v. 

Porter Memorial Hospital, 650 F. Supp. 231 (D. Colo. 1986). We 

review only those which are necessary to our discussion of this 

appeal. The plaintiffs' claims in this case arise out of a letter 

sent on February 3, 1986, to approximately thirty Colorado 

hospitals. The letter was drafted by plaintiffs' counsel and 

provided that its purpose was "to formally request, at this time, 

that hospital staff privileges [at the recipient hospital] be 

granted to doctors of chiropractic in general, and specifically to 

[several of the plaintiff doctors]." The letter further advised 

that, as a result of a recent decision in the Seventh Circuit, 1 

1 See Wilk v. American Medical Ass'n, 719 F.2d 207 (7th Cir. 

1983)~ert. denied, 467 U.S. 1210 (1984), on remand, 671 F. Supp. 

(continued on next page) 

3 

Appellate Case: 86-2774 Document: 01019975912 Date Filed: 08/15/1989 Page: 3 
subject to certain defenses, 

any hospital restriction against [the provision of staff 

privileges to] the chiropractic profession in general 

will be declared unlawful and unenforceable, and any 

organization(s) and/or individual(s) responsible for the 

past promulgation and/or implementation of the 

restriction will be liable for triple the actual damages 

sustained by any chiropractor who has been the victim of 

the restriction. 

Finally, the letter offered the services of the plaintiffs' 

counsel for the formulation of appropriate internal procedures and 

regulations for admission of chiropractors to the hospital's 

staff. 

Of the numerous hospitals to which this letter was sent, 

approximately twenty responded that they were willing to discuss 

the extension of staff privileges to the chiropractic profession. 

The remaining hospitals either made no response at all, indicated 

that limited staff privileges would be available under certain 

conditions, unilaterally denied the plaintiffs request, or by some 

other action indicated an unfavorable response. 2 The plaintiffs 

(continued from previous page) 

1465 (N.D. Ill. 1987). In Wilk, a jury returned a verdict against 

the plaintiff chiropracto~who had alleged that the American 

Medical Association (AMA), other medical associations, and several 

physicians had conspired to eliminate the chiropractic profession 

by engaging in a group boycott sanctioned by the AMA's 

promulgation of an ethical principle prohibiting AMA members from 

professionally associating with chiropractors. On appeal, the 

Seventh Circuit remanded for a new trial on the grounds that 

certain jury instructions were erroneous. 719 F.2d at 229. On 

remand, the plaintiffs withdrew their claim for damages and 

requested only injunctive relief, resulting in trial to the court. 

The court held that certain of the defendants, including the AMA, 

had illegally conspired to boycott the chiropractic profession, a 

violation of S 1 of the Sherman Act. 671 F. Supp. at 1471. 

2 

St. 

did 

Defendants Humana of Delaware, Inc., Humana of Aurora, Inc., 

Francis Hospital Systems, and Mercy Medical Center of Durango 

not respond to counsel's letter. Defendant Porter Memorial 

(continued on next page) 

4 

Appellate Case: 86-2774 Document: 01019975912 Date Filed: 08/15/1989 Page: 4 
then filed the instant action against these hospitals, alleging 

that they had systematically excluded the chiropractic profession 

as a whole from obtaining staff privileges at their hospitals. 

They claimed the defendants' actions were in violation of sections 

one and two of the Sherman Antitrust Act, 15 U.S.C. §§ 1, 2 

(1982), as a conspiracy in restraint of trade and a 

monopolization. The plaintiffs requested treble damages and 

injunctive relief under sections four and sixteen of the Clayton 

Act, 15 U.S.C. §§ 15, 26 (1982). 

Each defendant thereafter moved for dismissal of the action 

or, in the with alternative, for summary judgment and for the 

award of sanctions. 3 Several defendants supported their motion 

with an affidavit stating that none of the individual plaintiffs 

had ever applied for staff privileges. Two defendants presented 

evidence that temporary staff privileges had been extended to 

certain chiropractors in the past. The plaintiffs responded with 

the affidavit of Dr. Michael c. Parrish, president of the Council, 

(continued from previous page) 

Hospital replied simply that the plaintiffs' applications would 

not be considered. Defendant Saint Anthony Hospital Systems 

indicated that limited privileges for staff affiliates, such as 

chiropractors, were available upon the request of one of the 

hospital's clinical departments, although no request had been made 

to date. Defendant Longmont United Hospital Association replied 

that it had determined that chiropractors would not be extended 

staff privileges. Defendant Saint Thomas More Hospital initially 

responded favorably, but then allegedly refused to provide the 

necessary application forms. Defendant Community Hospital 

Association (Boulder Community Hospital) likewise was at first 

receptive to counsel's letter, but later declined to enter into a 

stipulation outlining its agreement to consider chiropractors for 

staff privileges. 

3 Defendants Porter Memorial Hospital, Longmont United Hospital 

Association, and Mercy Medical Center requested such relief in 

their complaint. 

5 

Appellate Case: 86-2774 Document: 01019975912 Date Filed: 08/15/1989 Page: 5 
which stated, inter alia, that no allopathic hospital in Colorado 

had ever extended hospital privileges to any chiropractor, that 

the February 3 letter was sent to "each of the hospitals in 

Colorado where any doctor of chiropractic had specifically 

requested that application be made[,]" and that the favorable 

response received from approximately twenty of these hospitals 

indicated that the letter could be construed as a good faith 

request for hospital staff privileges. 

On the basis of these materials, the district court dismissed 

the action as to all defendants. It ruled that dismissal was 

warranted as to the individual plaintiffs because, in order to 

have article III standing and standing under federal antitrust 

law, "each of the forty-six individual plaintiffs must allege that 

he or she made a good faith attempt to obtain staff privileges at 

defendant hospitals or similar access .•• [and] each defendant 

must allege that they were denied such access.'' 650 F. Supp. at 

235. Further, it held that the Council lacked standing because it 

had not alleged any injury arising out of the claimed antitrust 

violations and it had no business or property which could possibly 

be affected by such an injury. 4 Id. at 236. Finally, the court 

assessed Fed. R. Civ. P. 11 sanctions against the plaintiffs, 

finding that their complaint was frivolous and intended to coerce 

and intimidate the defendants. Id. at 237-240. 

4 Although the district court's order dismissing the cause of 

action was couched in terms of a grant of summary judgment, see 

id. at 236 n.2, we construe it as a dismissal for lack of 

jurisdiction based on standing and ripeness. It therefore does 

not operate as an adjudication on the merits and the dismissal is 

without prejudice. See Fed. R. Civ. P. 4l(b). 

6 

Appellate Case: 86-2774 Document: 01019975912 Date Filed: 08/15/1989 Page: 6 
As noted above, due to a defect in the notice of appeal, we 

lack jurisdiction over the dismissal of this action as to the 

individual plaintiffs. We do, however, retain jurisdiction over 

the Council. The Council contends in this appeal that the 

district court erred by denying it standing because section 

sixteen of the Clayton Act expressly permits an action for 

injunctive relief to be brought by an association. It also 

asserts that the imposition of sanctions was unwarranted. As 

standing is an issue of law to be determined by the court, Motive 

Parts Warehouse v. Facets Enters., 774 F.2d 380, 389 (10th Cir. 

1985), we review the district court's ruling on this 

novo. We review the district court's imposition 

sanctions for an abuse of discretion, Adamson v. Bowen, 

668, 672 (10th Cir. 1988). 

issue de 

of Rule 11 

855 F.2d 

The Council's primary argument rests on§ 16 of the Clayton 

Act, which provides that "[a]ny person, firm, corporation, or 

association" is entitled to bring an action for injunctive relief 

for a violation of the antitrust laws, 15 U.S.C. § 26 (emphasis 

added). Although the Council concedes that it does not have 

standing with respect to the damages claim, it argues that the 

clear language of the Clayton Act permits an association to bring 

an antitrust action for injunctive relief. We agree; however, we 

conclude that Council has failed to meet an essential prerequisite 

to associational standing. 

In Hunt v. Washington State Apple Advertising Commission, 432 

U.S. 333 (1977), the Supreme Court set forth the test for 

7 

Appellate Case: 86-2774 Document: 01019975912 Date Filed: 08/15/1989 Page: 7 
determining whether an association has standing to bring an action 

as a representative of its constituents. 

[A]n association has standing to bring suit on behalf of 

its members when: (a) its members would otherwise have 

standing to sue in their own right; (b) the interests it 

seeks to protect are germane to the organization's 

purpose; and (c) neither the claim asserted nor the 

relief requested requires the participation of 

individual members in the lawsuit. 

Id. at 343. We assume for the purposes of argument that the 

second and third elements of the Hunt test are met by the Council 

in this case. We conclude, however, that the first element, that 

the Council members would have standing to assert the action in 

their own right, has not been demonstrated. 

In Farnell v. Albuquerque Publishing Co., 589 F.2d 497 (10th 

Cir. 1978), this court set forth the requirements for standing 

under federal antitrust law. 

To establish standing to maintain a private 

anti-trust action in this Circuit, a plaintiff must meet 

a two-pronged test. First, he must allege injury to his 

"business or property" within the meaning of the Act 

and, second, he must show proximate causation that the 

injury directly resulted from a violation of the 

anti-trust laws. 

Id. at 500; see also Motive Parts Warehouse v. Facet Enters., 774 

F.2d at 389. We believe there is little question that the 

allegations in the complaint support a showing of the requisite 

injury to the Council members' business or property resulting from 

the claimed antitrust violations. The more difficult problem is 

whether they have indicated sufficient proximate causation to 

establish that these _parties would themselves have standing to 

sue. 

8 

Appellate Case: 86-2774 Document: 01019975912 Date Filed: 08/15/1989 Page: 8 
The district court, in considering this issue with respect to 

the individual plaintiffs, ruled that in refusal to deal in a case 

such as this, each of the individual plaintiffs must have made a 

specific demand for staff privileges and that demand must have 

been refused before causation can be established. We agree with 

the district court that under some circumstances, a plaintiff's 

failure to make a specific demand for a product or service can be 

fatal to his action. See, e.g., Cleary v. National Distillers & 

Chem. Corp., 505 F.2d 695, 697 (9th Cir. 1974); Greensboro Lumber 

Co. v. Georgia Power Co., 643 F. Supp. 1345, 1369-70 (N.D. Ga. 

1986); Windy City Circulating Co. v. Charles Levy Circulating Co., 

550 F. Supp. 960, 964 (N.D. Ill. 1982). 

In this regard, the Council argues that demand was made on 

the defendant hospitals for staff privileges by virtue of the 

February 3 letter. It adds that this is supported by the fact 

that over twenty hospitals accepted this letter as a good faith 

request for privileges. We disagree. While we certainly would 

not go as far as the district court in characterizing the letter 

as a "thinly veiled threat" and a "bold, officious demand," 650 

F. Supp. at 239, neither can we construe it as a specific request 

by the individual plaintiffs for staff privileges. The general 

tenor of this letter, as supported by Dr. Parrish's affidavit, was 

to begin a discussion with the recipient hospitals for the 

formulation of specific guidelines for the admission of doctors of 

chiropractic to the hospitals' staffs. While each letter did 

request admission for one or more of the individual plaintiffs, we 

view this more as an initial request to begin the admission 

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Appellate Case: 86-2774 Document: 01019975912 Date Filed: 08/15/1989 Page: 9 
process. Our understanding of this area leads us to believe that 

much more was required of each applicant before it could be said 

that a good faith application for admission was made. See Weiss 

v. York Hosp., 745 F.2d 786, 796 (3d Cir. 1984), cert. denied, 470 

U.S. 1060 (1985). 

The council correctly 

failure to make such a 

notes, however, that a plaintiff's 

demand does not require that the 

plaintiff's antitrust claim be dismissed where the evidence shows 

such a demand would be futile. Zenith Radio Corp. v. Hazeltine 

Research, Inc., 395 U.S. 100, 120 n.15 (1969); Hanover Shoe, Inc. 

v. United Shoe Mach. Corp., 392 U.S. 481, 487 n.5 (1968); 

Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 

699-702 (1962); cf. Weiss v. York Hosp., 745 F.2d at 805-07(each 

member of a plaintiff ciass comprised of osteopathic physicians 

was not required to make a demand for staff privileges insofar as 

the plaintiffs sought injunctive relief). In the above cases, 

futility of a demand to deal was demonstrated by evidence that the 

plaintiffs, or others similarly situated, had engaged in a course 

of dealing which strongly indicated that a future request to deal 

would be met with rejection. To the extent that the district 

court's decision "suggests that demand is an immutable 

requirement, it runs counter to the Supreme Court's caution that 

courts 'should not add requirements to burden the private litigant 

beyond what is specifically set forth by Congress in [the 

antitrust] laws."' Out Front Prods., Inc. v. Magid, 748 F.2d 166, 

169 (3d Cir. 1984)(quoting Radovich v. National Football League, 

352 U.S. 445, 454 (1957)). 

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The Council argues that, in this case, the futility of a 

demand was demonstrated by the defendants' varied responses to the 

letter and by the fact that no chiropractor had ever gained staff 

privileges at a nonchiropractic Colorado hospital. 5 This showing 

simply does not surmount the Council's burden to allege sufficient 

facts to show that a demand for staff privileges by its members 

would have been futile, thereby establishing standing. The cases 

which have found that a demand would have been futile have relied 

on an established course of dealing between the parties or persons 

similarly situated which has justified an inference of futility. 

In this case, at minimum, the Council should have demonstrated a 

similar course of dealing with its members which would have 

justified an inference that the lack of chiropractors gaining 

staff privileges at Colorado hospitals was not simply due to their 

failure to apply for such privileges. Consequently, we conclude 

that the Council has failed to demonstrate that its members would 

have had standing to assert the antitrust claims because it has 

not alleged sufficient facts showing that a demand for dealing 

would have been futile. 

State Apple Advertising 

Under the test of Hunt v. Washington 

Commission, since the individual 

5 The Council additionally cites the statements of its counsel 

regarding his ''investigation" of the allegedly pervasive attitude 

of Colorado hospitals against extending services or staff 

privileges to the chiropractic profession. These statements were 

made by counsel at the October 16, 1986, hearing regarding the 

imposition of sanctions, over three months after district court 

had entered its order granting summary judgment. They are 

obviously outside of the record on summary judgment and therefore 

cannot be considered by us for the purposes of determining the 

Council's standing in this appeal. 

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chiropractors comprising the Council would not have standing, a 

fortiori, the Council lacks standing as well. 432 U.S. at 343. 

The Council also challenges the district court's imposition 

of Rule 11 sanctions against it. Addressing its reasoning for 

assessing sanctions, the court below stated, 

We simply cannot accept the proposition that the 

filing of this lawsuit was reasonable under these 

circumstances. We believe that a reasonable inquiry 

into the facts surrounding this case would have 

disclosed that these plaintiffs had never applied for 

the privileges they sought. While the plaintiffs and 

plaintiffs' counsel may have subjectively believed that 

such application would have been fruitless, we feel that 

a reasonable inquiry of the law would have established 

that this course of action was necessary. 

650 F. Supp. at 238. As we have indicated above, a specific 

demand for staff privileges was not a prerequisite to standing in 

this case, so long as the Council could have demonstrated the 

futility of a demand . for privileges by its individual members. 

The Council's materials in response to the motion for summary 

judgment give some glimmer of such futility, albeit not enough to 

confer standing. Thus, we simply cannot construe the Council's 

actions in filing this case to be as egregious as characterized by 

the district court. 6 In holding the Council to a requirement not 

necessary to its action, we conclude that the district court 

abused its discretion in imposing Rule 11 sanctions against the 

Council in this case. 

6 We likewise disagree with the district court's alternative 

conclusion that "beyond all doubt" the plaintiffs' complaint 

failed to state a cause of action. 650 F. Supp. at 236 n.2. On 

the contrary, had the Council properly alleged sufficient facts to 

show standing, the complaint would have set forth a colorable 

antitrust claim. 

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The judgment of the United States District Court for the 

District of Colorado is AFFIRMED in part and REVERSED in part, and 

the district court's order awarding sanctions to the defendants is 

hereby VACATED. 

ENTERED FOR THE COURT 

PER CURIAM 

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