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. e du/thir dc ir c uit_1999/203Filed July 16, 1999

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 97-1927

RICHARD J. ANGELICO, M.D., Appellant

v.

LEHIGH VALLEY HOSPITAL, INC.; SAINT LUKE'S
HOSPITAL OF BETHLEHEM PENNSYLVANIA; EASTON HOSPITAL; PANEBIANCO-YIP HEART SURGEONS;

BETHLEHEM CARDIOTHORACIC SURGICAL ASSOCIATES, P.C.; BRIAN M. PETERS, ESQ.; POST & SCHELL, P.C.

Caption amended pursuant to 2/10/98 order

APPEAL FROM THE

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

(D.C. No. 96-cv-02861) District Judge: The Honorable J. Curtis Joyner

ARGUED December 4, 1998

BEFORE: SLOVITER, NYGAARD, and WOOD,* Circuit Judges.

(Filed: July 16, 1999)

___________________________________________________ ______________

* The Honorable Harlington Wood, Jr., Circuit Judge of the United States Court of Appeals for the Seventh Circuit, sitting b y designation.Henry F. Siedzikowski, Esq. (Argued)

Elliott, Reihner, Siedzikowski
& Egan
925 Harvest Drive Union Meeting Corporate Center V Blue Bell, PA 19422

Attorney for Appellant

Richard F. Stevens, Esq. (Argued)

Stevens & Johnson
740 Hamilton Mall Allentown, PA 18101

Edward C. Mengel, Jr., Esq. David E. Edwards, Esq.
White & Williams One Liberty Place, Suite 1800 Philadelphia, PA 19103

Wayne A. Mack, Jr. Duane, Morris & Heckscher 4200 One Liberty Place Philadelphia, PA 19103-7396

Donald H. Lipson, Esq. Tallman, Hudders & Sorrentino

1611 Pond Road The Paragon Centre, Suite 300 Allentown, PA 18104

Mark H. Scoblionko, Esq. Scoblionko, Scoblionko, Muir

& Bartholomew
40 South 5th Street Allentown, PA 18101

Frederick B. Buck, III, Esq.

Rawle & Henderson One South Penn Square The Widener Building Philadelphia, PA 19107

2Jeffrey G. Weil, Esq. (Argued)

Dechert, Price & Rhoads

1717 Arch Street
4000 Bell Atlantic Tower Philadelphia, PA 19103

Attorneys for Appellees

OPINION OF THE COURT

NYGAARD, Circuit Judge.

Dr. Richard Angelico appeals a summary judgment for the defendants, Lehigh Valley Hospital, St. Luke's Hospital of Bethlehem, Pennsylvania, Easton Hospital, the Panebianco-Yip Heart Surgeons, and Bethlehem Cardiothoracic Surgical Associates ("Bethlehem") (collectively, the "hospital defendants") on his an titrust claims. The District Court held that Angelico did n ot have standing to assert antitrust claims because he had not shown an injury to competition. We will reverse and remand for further proceedings.

Angelico also appeals the dismissal of his due proc ess claims under 42 U.S.C. S 1983 against Brian M. Pete rs, Esq., his law firm Post & Schell, P.C., and the fir m's client, Lehigh Valley Hospital (collectively, the "attorney defendants"). Finally, he appeals the District Cour t's sanction in the form of attorney's fees for Peters. We will affirm the dismissal and attorney's fees award.

I. Facts and Procedural History

Angelico is a cardiothoracic surgeon. The three hos pitals are located in the Lehigh Valley area in Pennsylvan ia. Panebianco-Yip and Bethlehem are physician practice groups specializing in thoracic and cardiothoracic surgery in the same area. Angelico began his career in the Lehigh Valley area with a group of cardiovascular speciali sts and
became a member of the active medical staff of Lehi gh Valley Hospital, where he performed cardiothoracic surgery. Just over a year later, Angelico left his original practice

3group, joined Panebianco-Yip as that practice group 's

primary surgeon, and acquired active privileges at St.

Luke's.

In 1989, Angelico resigned from Panebianco-Yip and established his own practice. He maintained his pri vileges at both Lehigh Valley and St. Luke's until January of 1991, when he requested that his active privileges at Leh igh Valley be reduced to "courtesy" privileges, which a llowed him to perform only a limited number of operations there each year. He maintained his courtesy privileges at Lehigh Valley until October 15, 1995.

In March 1994, Angelico notified St. Luke's that he was resigning his staff privileges. He then attempted t o apply for staff privileges at Easton. Easton, however, inform ed him that it had adopted a temporary moratorium on applications in its newly established heart program because it was considering whether to award an exclusive co ntract. Later, Easton informed Angelico that it had awarded an exclusive contract to another surgeon from outside of the region.

Angelico asserts that he resigned from St. Luke's b ecause the hospital willfully failed to provide him with c ompetent surgical support and that he was therefore construc tively terminated. He further contends that the hospital
defendants had a sufficient share of the relevant m arket to control it and that they conspired to eliminate him as a competitor through "various predatory acts," includ ing circulating defamatory remarks regarding his interp ersonal and patient care skills. Angelico claims that his c ourtesy privileges at Lehigh Valley were improperly termina ted as a part of this conspiracy and that he has now been "blackballed" by the three hospitals.

Angelico sued the three hospitals and two practice groups, alleging that they had violated the Sherman Act by conspiring to eliminate him as a competitor. Specif ically, he claims that the hospital defendants engaged in excl usive dealing and a group boycott in violation of section 1 of the Sherman Act, 15 U.S.C. S 1, and that they control a dominant (monopoly) share of the market in violatio n of section 2 of the Sherman Act, 15 U.S.C. S 2. He see ks treble

4damages under section 4 of the Clayton Act, 15 U.S. C. S 15.

Angelico also argues that the attorney defendants v iolated his constitutional rights through their use of the state subpoena process and that the District Court improp erly assessed attorney's fees against him.

The District Court dismissed Angelico's claims agai nst the attorney defendants and granted the attorney defendants' motion for sanctions. See Angelico v. L ehigh Valley Hosp., Inc., No. Civ.A. 96-2861, 1996 WL 524 112 (E.D. Pa. Sept. 13, 1996) ("Angelico I"). On Angeli co's antitrust claims, the District Court granted a moti on by the hospital defendants for limited discovery on the is sues of antitrust standing and antitrust injury. Following discovery, the court granted the hospital defendants summary judgment on the antitrust claims, holding that Ange lico had failed to establish standing to pursue them. See An gelico v. Lehigh Valley Hosp., Inc., 984 F. Supp. 308 (E.D. P a. 1997) ("Angelico II").

The District Court noted that Angelico suffered sig nificant lost income but held that "an injury to Dr. Angelic o personally does not confer standing upon him withou t a showing that his absence from the relevant product and geographic markets injured competition and/or the consumers of cardiothoracic surgical services in th ese markets." Id. at 313. Focusing on the effect of Ang elico's removal on the market, the court found "no evidence " that there were any fewer competing surgeons or that the quality of cardiothoracic care had been reduced by his absence, see id., and "insufficient evidence of a n egative impact on price." Id. at 314. Based on these findin gs, the District Court concluded that Angelico had not "suf fered the type of injury that the antitrust laws were des igned to prevent . . . [or] that Dr. Angelico is the most ef ficient

enforcer of those laws." Id.

On appeal, Angelico argues that the District Court erred by: (1) holding that he failed to establish antitru st standing because he could not show an effect on the prices, quantity or quality in the relevant market; (2) failing to d eclare that the hospital defendants' acts were illegal "per se" ; (3) holding that he failed to state a section 1983 clai m upon which relief could be granted against the attorneys for

5Lehigh Valley, and (4) imposing sanctions against h im

without holding a hearing. We have plenary review o f the antitrust standing question, see McCarthy v. Record ex Serv., Inc., 80 F.3d 842, 847 (3d Cir. 1996), and o f the summary judgment on Angelico's claims against the hospital defendants. See Bixler v. Central Pa. Team sters Health & Welfare Fund, 12 F.3d 1292, 1297 (3d Cir. 1993). We review an assessment of attorney's fees for abus e of discretion if the court applied the correct legal s tandard. See In re Tutu Wells Contamination Litig., 120 F.3d 368, 387 (3d Cir. 1997).

II. The Antitrust claims

In this case, we must distinguish the antitrust inj ury that is required for a plaintiff to have standing to bri ng an antitrust claim from the anticompetitive market eff ect element of a claim under section 1, which is also g enerally referred to as "antitrust injury."

A. Antitrust Standing

Section 4 of the Clayton Act, 15 U.S.C. S 15, provi des that "any person who shall be injured in his busine ss or property by reason of anything forbidden in the ant itrust laws may sue therefor in any district court of the United States . . . without respect to the amount in contr oversy, and shall recover threefold the damages by him sust ained, and the cost of suit, including a reasonable attorn ey's fee." Id. Antitrust standing, however, is narrower than t he statute's wording indicates. See Associated Gen. Co ntractors of Cal. v. California State Council of Carpenters , 459 U.S. 519, 103 S. Ct. 897 (1983) ("AGC"); II Phillip E. A reeda & Herbert Hovenkamp, Antitrust Law: An Analysis of An titrust Principles and Their Application P 360, at 192 (rev . ed. 1995) ("The limitations on antitrust standing are only hi nted at by the simple and apparently broad language of S4 of t he Clayton Act.").

An antitrust injury is an " `injury of the type the antitrust laws were intended to prevent and that flows from t hat which makes the defendants' acts unlawful.' " Cargi ll, Inc. v. Monfort, Inc., 479 U.S. 104, 109, 107 S. Ct. 484, 4 89 (1986) (citing Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S.

6477, 489, 97 S. Ct. 690, 697 (1977)); see also In r e Lower

Lake Erie Iron Ore Antitrust Litig., 998 F.2d 1144, 1163 n.9 (3d Cir. 1993) (standing analysis involves consider ation of
"the nexus between the antitrust violation and the plaintiff 's harm" and "whether the harm alleged is of the type for which Congress provides a remedy"). The fo cus is broader than the injury suffered by the potential p laintiff. Although a showing of antitrust injury is necessary , it is "not always sufficient[ ] to establish standing und er [section] 4, because a party may have suffered anti trust injury but may not be a proper plaintiff under [sec tion] 4 for other reasons." Cargill, 479 U.S. at 110 n.5, 1 07 S. Ct.

at 489 n.5.

Drawing on AGC, we have stated the factors to be employed in a standing analysis under section 4 of the Clayton Act. These are:

(1) the causal connection between the antitr ust violation and the harm to the plaintiff and the intent by the defendant to cause that harm, with neith er factor alone conferring standing; (2) whether the p laintiff 's alleged injury is of the type for which the antitrust laws were intended to provide redress; (3) the di rectness of the injury, which addresses the concerns tha t liberal application of standing principles might pro duce speculative claims; (4) the existence of mor e direct victims of the alleged antitrust violations; and (5) the potential for duplicative recovery or comple x apportionment of damages.

In re Lower Lake Erie Iron, 998 F.2d at 1165-66 (ci ting AGC, 459 U.S. at 545, 103 S. Ct. at 912). We hold t hat, applying these factors, Angelico has standing to ch allenge the alleged conspiracy, boycott and monopoly.

First, because no discovery was allowed on the issu e, we must assume Angelico's allegation that the defendan ts acted in concert and with an anticompetitive motive , i.e., conspired, is true. Following this assumption, Ange lico's harm clearly resulted from the conspiracy that prev ented him from competing in the market and thereby earnin g a living. At this stage, therefore, the causal connection/defendant intent element of the standing analysis is satisfied.

7Turning to the second element, whether Angelico's

alleged injury is of the type the antitrust laws we re meant to redress, we conclude that the injury he suffered , when shut out of competition for anticompetitive reasons , is indeed among those the antitrust laws were designed to prevent. In Brader v. Allegheny General Hospital , 64 F.3d 869 (3d Cir. 1995), a doctor sued a hospital and in dividual physicians, alleging similar claims under sections 1 and 2
of the Sherman Act. The district court dismissed th e claims, and we reversed, holding that Brader, as a potential competitor shut out of a market by a purported grou p boycott, had alleged the type of injury protected b y the antitrust laws. We stated: "the type of injury alle ged by Brader (the loss of income due to an inability to p ractice in the relevant market area) is directly related to th e illegal activity in which the defendant allegedly engaged: a conspiracy to exclude Brader from the relevant mark et." Id. at 877.1 Angelico, like Brader, alleges a concerted effort to exclude him from the market for cardiothoracic surg ery and his injury flows directly from this action. See In re Lower Lake Erie, 998 F.2d at 1164 n. 14 ("Because the [pl aintiffs] themselves were direct competitors of the [defendan ts] and because they were injured by the conspiracy's goal to preclude them from market entry, no standing proble m is posed by their quest for damages."); Fuentes v. Sou th Hills

___________________________________________________ ______________

1. Appellees assert that only persons with the same interests as consumers have standing under the antitrust laws an d cite Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488 (1977), in which the Supreme Court stated:

The antitrust laws . . . were enacted for th e protection of competition not competitors . . . . The injury should re flect the anticompetitive
effect either of the violation or of anticom petitive acts made possible by the violation. It should, in short, be th e type of loss that the claimed violations . . . would be likely to cause.

429 U.S. 477, 488-89, 97 S. Ct. 690, 697 (internal quotes omitted) (emphasis added). Nevertheless, the fact that the a ntitrust laws are intended to protect competition rather than competi tors does not mean that a competitor is never a proper antitrust plain tiff. Indeed, protecting a competitor's ability to compete from a conspiracy , the sole purpose of which is to decrease competition by eliminating tha t competitor, is clearly in the interest of competition.

8Cardiology, 946 F.2d 196, 202 (3d Cir. 1991) (not

addressing standing directly, but noting that simil ar allegations by a doctor were sufficient to state a claim and to avoid a motion to dismiss).

Angelico also satisfies the third, fourth andfifth elements of the AGC standing analysis. The injury to Angelic o from the assumed conspiracy is clearly direct (and subst antial). Angelico's injury is the direct result of the alleg ed conspiracy. In contrast, the harm to consumers is l ess direct because it will only arise from higher costs or poorer treatment that result from the removal of a strong competitor from the market. A consumer would be hig hly unlikely to sue for a loss of this type. Finally, t here is no potential for duplicative recovery or complex appor tionment of damages, see, e.g., Illinois Brick Co. v. Illino is, 431 U.S. 720, 97 S. Ct. 2061 (1977), because Angelico's inju ry has not been passed along to others.

In sum, we hold that Angelico has standing. This is not a case, however, in which we grant standing to a co mpetitor who was simply harmed by strong competition. Rather
, Angelico has asserted facts indicating that he was harmed by a conspiracy with an illegal anticompetitive int ent. He has standing because he has asserted an injury of " the type the antitrust laws were designed to prevent" flowin g from
"that which makes the defendants' acts unlawful." C argill, 479 U.S. at 109, 107 S. Ct. at 489. Because the Dis trict Court's determination was based on its premise that Angelico did not have standing, we must remand the cause.2

B. Anticompetitive market effect

Section 1 of the Sherman Act, 15 U.S.C. S 1, prohib its "contracts, combinations or conspiracies `in restra int of trade.' " City of Pittsburgh v. West Penn Power Co. , 147 F.3d

___________________________________________________ ______________

2. The District Court erred by incorporating the is sue of anticompetitive market effect into its standing analysis, confusing antitrust injury with
an element of a claim under section 1 of the Sherma n Act, 15 U.S.C. S 1, which prohibits "contracts, combinations or conspir acies `in restraint of trade.' " The court's approach may have been the re sult of the similar "antitrust injury" label which is applied to the in jury component of antitrust standing analysis and to the marketplace harm element under
section 1.

9256, 267 (3d Cir. 1998). To establish a section 1 c laim

under the rule of reason test,3 plaintiffs must pro ve,

(1) that the defendants contracted, combined , or conspired among each other; (2) that the com bination 953<!>or conspiracy produced adverse, anti-competi tive

effects within relevant product and geograph ic markets; (3) that the objects of and the con duct pursuant to that contract or conspiracy were illegal; and (4) that the plaintiffs were injured as a proximate result of that conspiracy.

Tunis Bros., 952 F.2d at 722 (citations omitted). T he second element may be satisfied in two ways:

The plaintiff may satisfy this burden by pro ving the existence of actual anticompetitive effects, such as reduction of output, increase in price, or d eterioration in quality of goods and services. Due to the difficulty of isolating the market effects of the challeng ed conduct, however, such proof is often impossible to m ake.

___________________________________________________ ______________

3. We reject Angelico's assertion (citing Klors, In c. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 212 (1959)) that the ho spital defendants' acts should be held illegal per se. Courts follow one of two lines of analysis to assess the validity of section 1 claims. See Ari zona v. Maricopa County Med. Soc'y, 457 U.S. 332, 342-47, 102 S. Ct. 2466, 2472-74 (1982). The first, "rule of reason" analysis, applies in most c ases under this section, while the second, "per se" analysis, applies only t o "agreements whose nature and necessary effect are so plainly anticomp etitive that no elaborate study of the industry is needed to establ ish their illegality." National Soc'y of Prof. Eng'rs v. United States, 43 5 U.S. 679, 692, 98 S. Ct. 1355, 1365 (1978).

Group boycotts or concerted refusals to deal are no t always per se violations of the Sherman Act; rather, the analysis turns on the facial effects of the challenged practice. See Northwest W holesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 105 S. Ct. 2613 (1985). Similar cases involving medical professiona ls have utilized the "rule of reason" analysis. See Betkerur v. Aulthman Hosp. Ass'n, 78 F.3d 1079, 1088-93 & n. 9 (6th Cir. 1996) (discussing an d rejecting application of per se analysis to a doctor's claims under section 1 and citing, in the footnote, Lie v. St. Joseph Hosp., 9 64 F.2d 567, 570 (6th Cir.1992), and other cases holding that rule of rea son analysis is normally applied to claims by physicians in the pos ition of Angelico). We see no reason to depart from this approach.

10Accordingly, the courts allow proof of the d efendant's

"market power" instead. Market power--the ab ility to raise prices above those that would prevail in a competitive market--is essentially a " `surr ogate for
detrimental effects.' "

Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 13 67 (3d Cir. 1996) (citations omitted); see also VII Philli p E. Areeda, Antitrust Law: An Analysis of Antitrust Principles and Their Application P 1511, at 429 (1986).

Although the District Court considered Angelico's proffered evidence of an actual anticompetitive mar ket effect, we will not address that evidence because i t is appropriate that the District Court reconsider it w ithin the legal framework we have outlined.4 This will give t he court the opportunity to address Angelico's claim that he need not show actual anticompetitive market effect in th is instance because of the Appellees' alleged market p ower.5

___________________________________________________ ______________

4. We note in this regard that Angelico's counsel c onceded at oral argument that he did not need further discovery int o the element of marketplace harm.

We likewise decline the hospital defendants' sugges tion that we affirm the District Court's holding on the ground that Ang elico failed to properly define or prove the relevant product and g eographic markets
because the District Court did not address the issu e. See Angelico II, 984 F. Supp. at 313 (assuming for the purposes of the l imited motion for summary judgment that the relevant product market w as "cardiothoracic surgical services" and that the relevant geographic market was "the greater Lehigh Valley consisting of Carbon, Monroe, Lehigh, Northampton and Schuylkill Counties").

5. Moreover, a finding of no anticompetitive market effect would not suffice to dispose of Angelico's claim under sectio n 2 of the Sherman Act. See Mahone v. Addicks Util. Dist., 836 F.2d 921, 93 9 (5th Cir. 1988) ("[P]roving an injury to competition is not an elem ent of a monopolization-based antitrust claim."). It is suff icient to note that it
remains for the District Court to further assess th ese issues at the summary judgment stage. See Brader, 64 F.3d at 876 ("[T]he adequacy of a physician's contentions regarding the effect o n competition is typically resolved after discovery, either on summa ry judgment or after trial.").

11III. The section 1983 claim

Angelico asserts that the District Court erred by h olding that he failed to state a claim upon which relief c ould be granted against the attorney defendants under secti on 1983. This claim arises out of the litigation of a related state court suit that was resolved during the cours e of this litigation. Geoffrey Toonder, a cardiothoracic surg eon, sued Lehigh Valley Hospital, claiming that it improperly denied Toonder an "active manpower slot" that would have b een filled by Angelico. See Toonder v. Lehigh Valley Ho sp., No. Civ.A. 94-E-18 (Pa. Ct. of Common Pleas May 31, 199 5) [the "Toonder litigation"]. Toonder was represented by the same attorneys who represent Angelico. Lehigh Valle y, through its attorneys -- defendants Peters and hisf irm, Post & Schell, P.C. -- subpoenaed various members o f St. Luke's staff, seeking information regarding Angelic o's resignation from that hospital. Angelico claims tha t, through the use of the subpoenas, the attorney defe ndants violated his constitutionally protected property an d liberty
interests. The District Court dismissed these claim s. See Angelico I, 1996 WL 524112.

Under 42 U.S.C. S 1983, Angelico must show that the attorney defendants acted under the color of state law and denied him a federally protected constitutional or statutory right. See Lugar v. Edmondson Oil Co., 457 U.S. 922 , 930, 102 S. Ct. 2744, 2750 (1982); Jordan v. Fox, Rothsc hild, O'Brien & Frankel, 20 F.3d 1250, 1264 (3d Cir. 1994 ). Because Angelico sued private individuals for actio ns taken in their roles as attorneys, he must point to some action that is "fairly attributable" to the state. Lugar, 457 U.S. at 937, 102 S. Ct. at 2753. To do this, Angelico must show (1) that the attorney defendants' acts were "the exerci se of some right or privilege created by the State or by a rule of conduct imposed by the state or by a person for who m the State is responsible" and (2) that the attorney def endants may fairly be said to be state actors. Id.

A person may be found to be a state actor when (1) he is a state official, (2) "he has acted together with o r has obtained significant aid from state officials," or (3) his conduct is, by its nature, chargeable to the state. Id. at 937, 102 S. Ct. at 2753-54. The Supreme Court noted that

12"[w]ithout a limit such as this, private parties co uld face

constitutional litigation whenever they seek to rel y on some state rule governing their interactions with the co mmunity surrounding them." Id. at 937, 102 S. Ct. at 2754.

Attorneys performing their traditional functions wi ll not be considered state actors solely on the basis of t heir position as officers of the court. See, e.g., Polk County v. Dodson, 454 U.S. 312, 318, 102 S. Ct. 445, 450 (198 1) ("[A] lawyer representing a client is not, by virtue of b eing an officer of the court, a state actor `under color of state law' within the meaning of S 1983."); Barnard v. Young, 720 F.3d 1188, 1189 (10th Cir. 1983) ("[P]rivate attorn eys, by virtue of being officers of the court, do not act u nder color of state law within the meaning of section 1983."). Angelico asserts, however, that the attorneys acted as state officers in issuing the subpoenas because the "state subpoen a procedures now empower the attorneys, as officers o f the state, to use subpoenas to seize property without a hearing before a state court judge and without participatio n by the sheriff." Appellant's Br. at 44. Angelico, however, offers no authority to support this statement. Nor does Penns ylvania law provide any indication that attorneys have been granted elevated powers to use subpoenas.6

___________________________________________________ ______________

6. The Pennsylvania Rules of Procedure state:

(a) A subpoena is an order of the court comm anding a person to attend and testify at a particular time and place. It may also require the person to produce documents or things wh ich are under the possession, custody or control of that perso n.

* * *

(b) A subpoena may be used to command a pers on to attend and to produce documents or things only at

(1) a trial or hearing in an action or proc eeding pending in the
court, or

(2) the taking of a deposition in an action or proceeding pending
in the court.

(c) A subpoena may not be used to compel a p erson to appear or to produce documents or things ex parte before an attorney, a party or a representative of the party.

Pa. R. Civ. P. 234.1 (emphasis added).

13As we said in Jordan, "[b]efore private persons can be

considered state actors for purposes of section 198 3, the state must significantly contribute to the constitu tional deprivation, e.g., authorizing its own officers to invoke the force of law in aid of the private persons' request ." 20 F.3d at 1266. Angelico claims that by issuing a subpoena
, private attorneys use "the same compulsive powers o f the state." Appellant's Br. at 45. We disagree. In Jord an, attorneys, on behalf of a client, entered a judgmen t by confession and then executed on that judgment. See id. at 1264-67. We held that an "entry of the judgment is not a state action involving the force of law to an exten t sufficient to hold that private persons become state actors." Id. at 1266. Then, focusing on the role of the sheriff, a state official, in the execution of the judgment, we stat ed:

a private individual who enlists the compuls ive powers of the state to seize property by executing on a judgment without pre-deprivation notice or h earing acts under color of law and so may be held l iable under
section 1983 if his acts cause a state offic ial to use the state's power of legal compulsion to deprive another of property.

Id. at 1267 (emphasis added).

In dismissing Angelico's claim, the District Court properly applied Jordan by focusing on the distinction betwe en the potential for state involvement and actual state
involvement.

Although plaintiff notes that there are pote ntial legal consequences attached to failure to obey a s ubpoena which might ultimately involve invoking the assistance of state officials, such possibility serves only to highlight the difference between resorting t o an available state procedure and actually using state officials to enforce or carry out that proce dure. The potential for involving the coercive power o f the state likewise exists when a judgment by confessio n is entered, yet . . . a private party is not co nverted into a state actor as long as the assistance of sta te officials remains merely a potential threat. It is onl y when, and if, such potential is realized that a privat e party may be

14converted into a state actor for purposes of satisfying

the state action element of a S 1983 claim.

Angelico I, 1996 WL 524112, at *2. The court's anal ysis is sound and consistent with the Supreme Court's analy sis in Lugar. We hold, therefore, that an attorney does no t become a state actor simply by employing the state' s subpoena laws. See Barnard, 720 F.3d at 1189 ("If a n attorney does not become a state actor merely by vi rtue of instigating state court litigation, then the attorn ey does not become a state actor merely by employing state auth orized subpoena power." (citations omitted)). Angelico's s ection 1983 claim against the attorney defendants therefor e fails.7

IV. Sanctions

In the same order in which it dismissed the section 1983 claims, the District Court agreed to award sanction s to the attorney defendants in the form of attorney's fees. See Angelico I, 1996 WL 524112. In his complaint, Angel ico stated his antitrust claims against "all defendants ," thereby including the attorney defendants as defendants to the antitrust claims. Angelico declined to dismiss the charges against them despite their verbal request that he d o so. Only after the attorney defendants filed their moti on to dismiss, addressing the antitrust claims, did Angel ico voluntarily dismiss these claims. Angelico's counse l then informed the attorney defendants that the antitrust claims had not been intentionally asserted against them. F ollowing a motion for sanctions and the filing of an affidav it of costs

___________________________________________________ ______________

7. Because Angelico has not demonstrated that the a ttorney defendants were state actors, we need not address the balance of the section 1983 analysis. We also reject Angelico's claim that his due process rights were violated by the attorney defendants' actions in reg ards to the subpoenas. Finally, we reject Angelico's allegation that the D istrict Court engaged

in improper fact finding. This allegation apparently r efers to the District Court's understanding that no actual state official s were called upon to enforce the subpoenas in the Toonder litigation. Ho wever, the District Court was entitled to take judicial notice of the f acts of that decision.

See Oneida Motor Freight, Inc. v. United Jersey Bank, 8 48 F.2d 414, 416 n.3 (3d Cir. 1988); 5A Charles A. Wright & Arthur R. Mi ller, Federal Practice and Procedure S 1364, at 479 n.36 (2d ed. 1990).

15by the defendants, a Motion to Vacate, Reconsider o r

Certify Pursuant to 28 U.S.C. S 1292(b) by Angelico , and a response thereto by the attorney defendants, the Di strict Court awarded $1,000 to attorney Peters for his cos ts in preparing to defend the withdrawn antitrust claims against
him and his firm.8

Awarding attorney's fees as a means of sanctioning a party is within the District Court's inherent power . See Chambers v. NASCO, Inc., 501 U.S. 32, 45, 111 S. Ct . 2123, 2133 (1991). The District Court can assess attorney 's fees when a party has acted in bad faith. See Chambers, 501 U.S. at 45, 111 S. Ct. at 2133. Here the District C ourt found that Angelico and his attorneys acted in bad faith by failing to dismiss the antitrust claims against the attorney defendants, by mischaracterizing the defendants' pl eadings, and by failing to inform the court of a significant change in the Toonder litigation (its dismissal). See Angelic o v. Lehigh Valley Hosp., No. Civ.A.96-2861, Order (E.D. Pa. No v. 1, 1996). The District Court applied the correct legal standard
to determine whether sanctions were in order and ca refully stated the acts by Angelico's counsel upon which th e order
is based.9

Although, "like other sanctions, attorney's fees ce rtainly should not be assessed lightly or without fair noti ce and an opportunity for a hearing on the record," Roadway E xpress, Inc. v. Piper, 447 U.S. 752, 767, 100 S. Ct. 2455, 2464 (1980), we have not interpreted the "opportunity fo r a hearing on the record" discussed by the Supreme Cou rt to require an evidentiary hearing in every case. See R ogal v.

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8. The original decision stated that the court woul d award "modest monetary sanctions" and required the attorney defen dants to submit a record of their costs. Upon receiving the submissio ns, the District Court found that the costs were far greater than it had a nticipated and elected to award only the $1,000.

9. We reject Angelico's assertion that the attorney defendants should have realized that they were not subject to the ant itrust claims because it implies that the nonfiling side should bear the burden of an allegedly inadvertent pleading mistake. The attorney defendan ts requested that the claims against them be dropped. The fact that t he attorney defendants did not specifically address the antitru st claims does not serve as an escape hatch for the defendants.

16American Broad. Cos., 74 F.3d 40, 44 (3d Cir. 1996) ; see

also G.J.B. & Assocs. v. Singleton, 913 F.2d 824, 8 30 (10th Cir. 1990) (while counsel generally deserve an oppo rtunity to brief the issue, the imposition of sanctions doe s not necessarily mandate an oral or evidentiary hearing) . Rather, the concept of due process is flexible and whether a hearing is required depends upon the circumstances. See Rog al, 74 F.3d at 44. Application of this flexible standard i s generally
left to the District Court's discretion. See Jones v. Pittsburgh Nat'l Corp., 899 F.2d 1350, 1359 (3d Cir . 1990) (noting that this approach "permits some cases to b e disposed of on the record").

Here, the District Court decided that further factf inding was unnecessary. Appellant had both fair notice of the charges and an opportunity to respond because the m otion for sanctions was made along with attorney defendan ts' motion to dismiss. All of the acts by Angelico and his counsel that were at issue were part of the record and could be considered without an evidentiary hearing. We
find no abuse of discretion.10

V. Conclusion

We conclude that the District Court did not err by dismissing the section 1983 claims against the atto rney defendants, and that it was well within its conside rable discretion when it imposed sanctions. Angelico, how ever, has standing to assert his antitrust claims, and we will remand the cause for further proceedings.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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10. In addition, the District Court made additional findings of bad faith. In choosing not to sanction Appellant for this othe r conduct, the court doubtless took into account that it was already san ctioning him for the
antitrust claims.

17