1999 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-16-1999

Angelico v. Lehigh Valley Hosp

Precedential or Non-Precedential:

Docket 97-1927

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1999

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 1999 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"Angelico v. Lehigh Valley Hosp" (1999). 1999 Decisions. Paper 203.

http://digitalcommons.law.villanova.edu/thirdcircuit_1999/203
Filed 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 by 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 

 2 
 Jeffrey 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 antitrust 

claims. The District Court held that Angelico did not 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 process 

claims under 42 U.S.C. S 1983 against Brian M. Peters, 

Esq., his law firm Post & Schell, P.C., and the firm's client, 

Lehigh Valley Hospital (collectively, the "attorney

defendants"). Finally, he appeals the District Court'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 hospitals 

are located in the Lehigh Valley area in Pennsylvania. 

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 specialists and 

became a member of the active medical staff of Lehigh 

Valley Hospital, where he performed cardiothoracic surgery. 

Just over a year later, Angelico left his original practice 

 3 
group, 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 privileges 

at both Lehigh Valley and St. Luke's until January of 1991, 

when he requested that his active privileges at Lehigh 

Valley be reduced to "courtesy" privileges, which allowed 

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 to apply for 

staff privileges at Easton. Easton, however, informed 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 contract. 

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 because 

the hospital willfully failed to provide him with competent 

surgical support and that he was therefore constructively 

terminated. He further contends that the hospital 

defendants had a sufficient share of the relevant market to 

control it and that they conspired to eliminate him as a 

competitor through "various predatory acts," including 

circulating defamatory remarks regarding his interpersonal 

and patient care skills. Angelico claims that his courtesy 

privileges at Lehigh Valley were improperly terminated 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. Specifically, he 

claims that the hospital defendants engaged in exclusive 

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 violation of 

section 2 of the Sherman Act, 15 U.S.C. S 2. He seeks treble 

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

Angelico also argues that the attorney defendants violated 

his constitutional rights through their use of the state 

subpoena process and that the District Court improperly 

assessed attorney's fees against him. 

The District Court dismissed Angelico's claims against 

the attorney defendants and granted the attorney 

defendants' motion for sanctions. See Angelico v. Lehigh 

Valley Hosp., Inc., No. Civ.A. 96-2861, 1996 WL 524112 

(E.D. Pa. Sept. 13, 1996) ("Angelico I"). On Angelico's 

antitrust claims, the District Court granted a motion by the 

hospital defendants for limited discovery on the issues of 

antitrust standing and antitrust injury. Following discovery, 

the court granted the hospital defendants summary 

judgment on the antitrust claims, holding that Angelico had 

failed to establish standing to pursue them. See Angelico v. 

Lehigh Valley Hosp., Inc., 984 F. Supp. 308 (E.D. Pa. 1997) 

("Angelico II"). 

The District Court noted that Angelico suffered significant 

lost income but held that "an injury to Dr. Angelico 

personally does not confer standing upon him without a 

showing that his absence from the relevant product and 

geographic markets injured competition and/or the 

consumers of cardiothoracic surgical services in these 

markets." Id. at 313. Focusing on the effect of Angelico'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 negative 

impact on price." Id. at 314. Based on these findings, the 

District Court concluded that Angelico had not "suffered 

the type of injury that the antitrust laws were designed to 

prevent . . . [or] that Dr. Angelico is the most efficient 

enforcer of those laws." Id. 

On appeal, Angelico argues that the District Court erred 

by: (1) holding that he failed to establish antitrust standing 

because he could not show an effect on the prices, quantity 

or quality in the relevant market; (2) failing to declare that 

the hospital defendants' acts were illegal "per se"; (3) 

holding that he failed to state a section 1983 claim upon 

which relief could be granted against the attorneys for 

 5 
Lehigh Valley, and (4) imposing sanctions against him 

without holding a hearing. We have plenary review of the 

antitrust standing question, see McCarthy v. Recordex 

Serv., Inc., 80 F.3d 842, 847 (3d Cir. 1996), and of the 

summary judgment on Angelico's claims against the 

hospital defendants. See Bixler v. Central Pa. Teamsters 

Health & Welfare Fund, 12 F.3d 1292, 1297 (3d Cir. 1993). 

We review an assessment of attorney's fees for abuse of 

discretion if the court applied the correct legal standard. 

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 injury that 

is required for a plaintiff to have standing to bring an 

antitrust claim from the anticompetitive market effect 

element of a claim under section 1, which is also generally 

referred to as "antitrust injury." 

A. Antitrust Standing 

Section 4 of the Clayton Act, 15 U.S.C. S 15, provides 

that "any person who shall be injured in his business or 

property by reason of anything forbidden in the antitrust 

laws may sue therefor in any district court of the United 

States . . . without respect to the amount in controversy, 

and shall recover threefold the damages by him sustained, 

and the cost of suit, including a reasonable attorney's fee." 

Id. Antitrust standing, however, is narrower than the 

statute's wording indicates. See Associated Gen. Contractors 

of Cal. v. California State Council of Carpenters , 459 U.S. 

519, 103 S. Ct. 897 (1983) ("AGC"); II Phillip E. Areeda & 

Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust 

Principles and Their Application P 360, at 192 (rev. ed. 1995) 

("The limitations on antitrust standing are only hinted at by 

the simple and apparently broad language of S4 of the 

Clayton Act."). 

An antitrust injury is an " `injury of the type the antitrust 

laws were intended to prevent and that flows from that 

which makes the defendants' acts unlawful.' " Cargill, Inc. v. 

Monfort, Inc., 479 U.S. 104, 109, 107 S. Ct. 484, 489 (1986) 

(citing Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 

 6 
477, 489, 97 S. Ct. 690, 697 (1977)); see also In re Lower 

Lake Erie Iron Ore Antitrust Litig., 998 F.2d 1144, 1163 n.9 

(3d Cir. 1993) (standing analysis involves consideration 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 focus is 

broader than the injury suffered by the potential plaintiff. 

Although a showing of antitrust injury is necessary, it is 

"not always sufficient[ ] to establish standing under 

[section] 4, because a party may have suffered antitrust 

injury but may not be a proper plaintiff under [section] 4 

for other reasons." Cargill, 479 U.S. at 110 n.5, 107 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 antitrust 

 violation and the harm to the plaintiff and the intent by 

 the defendant to cause that harm, with neither factor 

 alone conferring standing; (2) whether the plaintiff 's 

 alleged injury is of the type for which the antitrust laws 

 were intended to provide redress; (3) the directness of 

 the injury, which addresses the concerns that liberal 

 application of standing principles might produce 

 speculative claims; (4) the existence of more direct 

 victims of the alleged antitrust violations; and (5) the 

 potential for duplicative recovery or complex 

 apportionment of damages. 

In re Lower Lake Erie Iron, 998 F.2d at 1165-66 (citing 

AGC, 459 U.S. at 545, 103 S. Ct. at 912). We hold that, 

applying these factors, Angelico has standing to challenge 

the alleged conspiracy, boycott and monopoly. 

First, because no discovery was allowed on the issue, we 

must assume Angelico's allegation that the defendants 

acted in concert and with an anticompetitive motive, i.e., 

conspired, is true. Following this assumption, Angelico's 

harm clearly resulted from the conspiracy that prevented 

him from competing in the market and thereby earning a 

living. At this stage, therefore, the causal 

connection/defendant intent element of the standing

analysis is satisfied. 

 7 
Turning to the second element, whether Angelico's 

alleged injury is of the type the antitrust laws were 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 individual 

physicians, alleging similar claims under sections 1 and 2 

of the Sherman Act. The district court dismissed the 

claims, and we reversed, holding that Brader, as a potential 

competitor shut out of a market by a purported group 

boycott, had alleged the type of injury protected by the 

antitrust laws. We stated: "the type of injury alleged by 

Brader (the loss of income due to an inability to practice in 

the relevant market area) is directly related to the illegal 

activity in which the defendant allegedly engaged: a 

conspiracy to exclude Brader from the relevant market." Id. 

at 877.1 Angelico, like Brader, alleges a concerted effort to 

exclude him from the market for cardiothoracic surgery and 

his injury flows directly from this action. See In re Lower 

Lake Erie, 998 F.2d at 1164 n. 14 ("Because the [plaintiffs] 

themselves were direct competitors of the [defendants] and 

because they were injured by the conspiracy's goal to 

preclude them from market entry, no standing problem is 

posed by their quest for damages."); Fuentes v. South Hills 

_________________________________________________________________ 

1. Appellees assert that only persons with the same interests as 

consumers have standing under the antitrust laws and 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 the protection of 

competition 

 not competitors . . . . The injury should reflect the 

anticompetitive 

 effect either of the violation or of anticompetitive acts made 

possible 

 by the violation. It should, in short, be the 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 antitrust laws are 

intended to protect competition rather than competitors does not mean 

that a competitor is never a proper antitrust plaintiff. Indeed, 

protecting 

a competitor's ability to compete from a conspiracy, the sole purpose of 

which is to decrease competition by eliminating that competitor, is 

clearly in the interest of competition. 

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

addressing standing directly, but noting that similar 

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 Angelico from 

the assumed conspiracy is clearly direct (and substantial). 

Angelico's injury is the direct result of the alleged 

conspiracy. In contrast, the harm to consumers is less 

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 highly 

unlikely to sue for a loss of this type. Finally, there is no 

potential for duplicative recovery or complex apportionment 

of damages, see, e.g., Illinois Brick Co. v. Illinois, 431 U.S. 

720, 97 S. Ct. 2061 (1977), because Angelico's injury 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 competitor 

who was simply harmed by strong competition. Rather, 

Angelico has asserted facts indicating that he was harmed 

by a conspiracy with an illegal anticompetitive intent. He 

has standing because he has asserted an injury of "the type 

the antitrust laws were designed to prevent" flowing from 

"that which makes the defendants' acts unlawful." Cargill, 

479 U.S. at 109, 107 S. Ct. at 489. Because the District 

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, prohibits 

"contracts, combinations or conspiracies `in restraint of 

trade.' " City of Pittsburgh v. West Penn Power Co., 147 F.3d 

_________________________________________________________________ 

2. The District Court erred by incorporating the issue of anticompetitive 

market effect into its standing analysis, confusing antitrust injury with 

an element of a claim under section 1 of the Sherman Act, 15 U.S.C. S 1, 

which prohibits "contracts, combinations or conspiracies `in restraint of 

trade.' " The court's approach may have been the result of the similar 

"antitrust injury" label which is applied to the injury component of 

antitrust standing analysis and to the marketplace harm element under 

section 1. 

 9 
256, 267 (3d Cir. 1998). To establish a section 1 claim 

under the rule of reason test,3 plaintiffs must prove, 

 (1) that the defendants contracted, combined, or 

 conspired among each other; (2) that the combination 

 953<!>or conspiracy produced adverse, anti-competitive 

 effects within relevant product and geographic 

 markets; (3) that the objects of and the conduct 

 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). The second 

element may be satisfied in two ways: 

 The plaintiff may satisfy this burden by proving the 

 existence of actual anticompetitive effects, such as 

 reduction of output, increase in price, or deterioration 

 in quality of goods and services. Due to the difficulty of 

 isolating the market effects of the challenged conduct, 

 however, such proof is often impossible to make. 

_________________________________________________________________ 

3. We reject Angelico's assertion (citing Klors, Inc. v. Broadway-Hale 

Stores, Inc., 359 U.S. 207, 212 (1959)) that the hospital 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 Arizona 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 cases under this 

section, 

while the second, "per se" analysis, applies only to "agreements whose 

nature and necessary effect are so plainly anticompetitive that no 

elaborate study of the industry is needed to establish their illegality." 

National Soc'y of Prof. Eng'rs v. United States, 435 U.S. 679, 692, 98 S. 

Ct. 1355, 1365 (1978). 

Group boycotts or concerted refusals to deal are not always per se 

violations of the Sherman Act; rather, the analysis turns on the facial 

effects of the challenged practice. See Northwest Wholesale Stationers, 

Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 105 S. Ct. 2613 

(1985). Similar cases involving medical professionals 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 and rejecting 

application of per se analysis to a doctor's claims under section 1 and 

citing, in the footnote, Lie v. St. Joseph Hosp., 964 F.2d 567, 570 (6th 

Cir.1992), and other cases holding that rule of reason analysis is 

normally applied to claims by physicians in the position of Angelico). We 

see no reason to depart from this approach. 

 10 
 Accordingly, the courts allow proof of the defendant's 

 "market power" instead. Market power--the ability to 

 raise prices above those that would prevail in a 

 competitive market--is essentially a " `surrogate for 

 detrimental effects.' " 

Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1367 (3d 

Cir. 1996) (citations omitted); see also VII Phillip 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 market 

effect, we will not address that evidence because it is 

appropriate that the District Court reconsider it within the 

legal framework we have outlined.4 This will give the court 

the opportunity to address Angelico's claim that he need 

not show actual anticompetitive market effect in this 

instance because of the Appellees' alleged market power.5 

_________________________________________________________________ 

4. We note in this regard that Angelico's counsel conceded at oral 

argument that he did not need further discovery into the element of 

marketplace harm. 

We likewise decline the hospital defendants' suggestion that we affirm 

the District Court's holding on the ground that Angelico failed to 

properly define or prove the relevant product and geographic markets 

because the District Court did not address the issue. See Angelico II, 984 

F. Supp. at 313 (assuming for the purposes of the limited motion for 

summary judgment that the relevant product market was "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 section 2 of the Sherman Act. 

See Mahone v. Addicks Util. Dist., 836 F.2d 921, 939 (5th Cir. 1988) 

("[P]roving an injury to competition is not an element of a 

monopolization-based antitrust claim."). It is sufficient to note that it 

remains for the District Court to further assess these issues at the 

summary judgment stage. See Brader, 64 F.3d at 876 ("[T]he adequacy 

of a physician's contentions regarding the effect on competition is 

typically resolved after discovery, either on summary judgment or after 

trial."). 

 11 
III. The section 1983 claim 

Angelico asserts that the District Court erred by holding 

that he failed to state a claim upon which relief could be 

granted against the attorney defendants under section 

1983. This claim arises out of the litigation of a related 

state court suit that was resolved during the course of this 

litigation. Geoffrey Toonder, a cardiothoracic surgeon, sued 

Lehigh Valley Hospital, claiming that it improperly denied 

Toonder an "active manpower slot" that would have been 

filled by Angelico. See Toonder v. Lehigh Valley Hosp., No. 

Civ.A. 94-E-18 (Pa. Ct. of Common Pleas May 31, 1995) 

[the "Toonder litigation"]. Toonder was represented by the 

same attorneys who represent Angelico. Lehigh Valley, 

through its attorneys -- defendants Peters and hisfirm, 

Post & Schell, P.C. -- subpoenaed various members of St. 

Luke's staff, seeking information regarding Angelico's 

resignation from that hospital. Angelico claims that, 

through the use of the subpoenas, the attorney defendants 

violated his constitutionally protected property and liberty 

interests. The District Court dismissed these claims. 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, Rothschild, 

O'Brien & Frankel, 20 F.3d 1250, 1264 (3d Cir. 1994). 

Because Angelico sued private individuals for actions 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 exercise of 

some right or privilege created by the State or by a rule of 

conduct imposed by the state or by a person for whom the 

State is responsible" and (2) that the attorney defendants 

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 or 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 could face 

constitutional litigation whenever they seek to rely on some 

state rule governing their interactions with the community 

surrounding them." Id. at 937, 102 S. Ct. at 2754. 

Attorneys performing their traditional functions will not 

be considered state actors solely on the basis of their 

position as officers of the court. See, e.g., Polk County v. 

Dodson, 454 U.S. 312, 318, 102 S. Ct. 445, 450 (1981) ("[A] 

lawyer representing a client is not, by virtue of being 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 attorneys, by 

virtue of being officers of the court, do not act under 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 subpoena 

procedures now empower the attorneys, as officers of the 

state, to use subpoenas to seize property without a hearing 

before a state court judge and without participation by the 

sheriff." Appellant's Br. at 44. Angelico, however, offers no 

authority to support this statement. Nor does Pennsylvania 

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 commanding a person to 

 attend and testify at a particular time and place. It may also 

require 

 the person to produce documents or things which are under the 

 possession, custody or control of that person. 

 * * * 

 (b) A subpoena may be used to command a person to attend and to 

 produce documents or things only at 

 (1) a trial or hearing in an action or proceeding 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 person 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). 

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

considered state actors for purposes of section 1983, the 

state must significantly contribute to the constitutional 

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 of the 

state." Appellant's Br. at 45. We disagree. In Jordan, 

attorneys, on behalf of a client, entered a judgment 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 extent 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 stated: 

 a private individual who enlists the compulsive powers 

 of the state to seize property by executing on a 

 judgment without pre-deprivation notice or hearing 

 acts under color of law and so may be held liable under 

 section 1983 if his acts cause a state official 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 between the 

potential for state involvement and actual state 

involvement. 

 Although plaintiff notes that there are potential legal 

 consequences attached to failure to obey a subpoena 

 which might ultimately involve invoking the assistance 

 of state officials, such possibility serves only to 

 highlight the difference between resorting to an 

 available state procedure and actually using state 

 officials to enforce or carry out that procedure. The 

 potential for involving the coercive power of the state 

 likewise exists when a judgment by confession is 

 entered, yet . . . a private party is not converted into a 

 state actor as long as the assistance of state officials 

 remains merely a potential threat. It is only when, and 

 if, such potential is realized that a private party may be 

 14 
 converted 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 analysis is 

sound and consistent with the Supreme Court's analysis in 

Lugar. We hold, therefore, that an attorney does not 

become a state actor simply by employing the state's 

subpoena laws. See Barnard, 720 F.3d at 1189 ("If an 

attorney does not become a state actor merely by virtue of 

instigating state court litigation, then the attorney does not 

become a state actor merely by employing state authorized 

subpoena power." (citations omitted)). Angelico's section 

1983 claim against the attorney defendants therefore fails.7 

IV. Sanctions 

In the same order in which it dismissed the section 1983 

claims, the District Court agreed to award sanctions to the 

attorney defendants in the form of attorney's fees. See 

Angelico I, 1996 WL 524112. In his complaint, Angelico 

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 do so. 

Only after the attorney defendants filed their motion to 

dismiss, addressing the antitrust claims, did Angelico 

voluntarily dismiss these claims. Angelico's counsel then 

informed the attorney defendants that the antitrust claims 

had not been intentionally asserted against them. Following 

a motion for sanctions and the filing of an affidavit of costs 

_________________________________________________________________ 

7. Because Angelico has not demonstrated that the attorney 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 regards to the subpoenas. 

Finally, we reject Angelico's allegation that the District Court engaged 

in 

improper fact finding. This allegation apparently refers to the District 

Court's understanding that no actual state officials were called upon to 

enforce the subpoenas in the Toonder litigation. However, the District 

Court was entitled to take judicial notice of the facts of that decision. 

See 

Oneida Motor Freight, Inc. v. United Jersey Bank, 848 F.2d 414, 416 n.3 

(3d Cir. 1988); 5A Charles A. Wright & Arthur R. Miller, Federal Practice 

and Procedure S 1364, at 479 n.36 (2d ed. 1990). 

 15 
by the defendants, a Motion to Vacate, Reconsider or 

Certify Pursuant to 28 U.S.C. S 1292(b) by Angelico, and a 

response thereto by the attorney defendants, the District 

Court awarded $1,000 to attorney Peters for his costs 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 Court 

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' pleadings, 

and by failing to inform the court of a significant change in 

the Toonder litigation (its dismissal). See Angelico v. Lehigh 

Valley Hosp., No. Civ.A.96-2861, Order (E.D. Pa. Nov. 1, 

1996). The District Court applied the correct legal standard 

to determine whether sanctions were in order and carefully 

stated the acts by Angelico's counsel upon which the order 

is based.9 

Although, "like other sanctions, attorney's fees certainly 

should not be assessed lightly or without fair notice and an 

opportunity for a hearing on the record," Roadway Express, 

Inc. v. Piper, 447 U.S. 752, 767, 100 S. Ct. 2455, 2464 

(1980), we have not interpreted the "opportunity for a 

hearing on the record" discussed by the Supreme Court to 

require an evidentiary hearing in every case. See Rogal v. 

_________________________________________________________________ 

8. The original decision stated that the court would award "modest 

monetary sanctions" and required the attorney defendants to submit a 

record of their costs. Upon receiving the submissions, the District Court 

found that the costs were far greater than it had anticipated 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 antitrust claims because 

it implies that the nonfiling side should bear the burden of an allegedly 

inadvertent pleading mistake. The attorney defendants requested that 

the claims against them be dropped. The fact that the attorney 

defendants did not specifically address the antitrust claims does not 

serve as an escape hatch for the defendants. 

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

also G.J.B. & Assocs. v. Singleton, 913 F.2d 824, 830 (10th 

Cir. 1990) (while counsel generally deserve an opportunity 

to brief the issue, the imposition of sanctions does 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 Rogal, 74 

F.3d at 44. Application of this flexible standard is 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 be 

disposed of on the record"). 

Here, the District Court decided that further factfinding 

was unnecessary. Appellant had both fair notice of the 

charges and an opportunity to respond because the motion 

for sanctions was made along with attorney defendants' 

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 attorney 

defendants, and that it was well within its considerable 

discretion when it imposed sanctions. Angelico, however, 

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 

_________________________________________________________________ 

10. In addition, the District Court made additional findings of bad faith. 

In choosing not to sanction Appellant for this other conduct, the court 

doubtless took into account that it was already sanctioning him for the 

antitrust claims. 

 17