UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

URVASHI B. PATEL, an Individual,

Plaintiff-Appellant,

v.

SCOTLAND MEMORIAL HOSPITAL, a

No. 95-2704

North Carolina Corporation;

W. HARLEY DAVIDSON; GREGORY C.

WOOD,

Defendants-Appellees.

Appeal from the United States District Court

for the Middle District of North Carolina, at Rockingham.

William L. Osteen, Sr., District Judge.

(CA-94-284-3)

Argued: April 3, 1996

Decided: July 10, 1996

Before WIDENER, MURNAGHAN, and WILLIAMS,

Circuit Judges.

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Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: Clifford Neil Ribner, Tulsa, Oklahoma, for Appellant.

Peter J. Covington, SMITH, HELMS, MULLISS & MOORE, L.L.P.,

for Appellees. ON BRIEF: Denise S. Cline, MOORE &

VAN ALLEN, Raleigh, North Carolina, for Appellant. James H.
Guterman, Maurice O. Green, SMITH, HELMS, MULLISS &

MOORE, L.L.P.; George C. Covington, KENNEDY, COVINGTON,

LOBDELL & HICKMAN, L.L.P., Charlotte, North Carolina, for

Appellees.

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Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

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OPINION

PER CURIAM:

Urvashi B. Patel, plaintiff-appellant, filed a lawsuit against Scotland Memorial Hospital ("SMH"), Harley Davidson, SMH's Chief of

Staff during most of the time the events at issue occurred, and Gregory Wood, who was promoted to be SMH's Chief Administrator during the relevant time period, (collectively "the defendants"), alleging

a violation of the Sherman Antitrust Act § 1, 15 U.S.C. § 1 (1988).

Additionally, she raised numerous state law claims--namely, a violation of North Carolina's antitrust laws, tortious interference with contractual relations, intentional infliction of severe emotional distress,

and breach of contract. The district court dismissed four of the five

claims for failure to state a claim upon which relief could be granted

and subsequently dismissed the remaining claim for lack of subject

matter jurisdiction. Patel appeals the district court's dismissal of her

claims as well as its refusal to allow her to amend her complaint a

second time. Federal jurisdiction is based both on federal question

jurisdiction, 28 U.S.C. § 1331 (1988), and diversity-of-citizenship

jurisdiction, 28 U.S.C. § 1332 (1988). For the following reasons, we

affirm.

I.

In 1988, Patel entered into the first of a series of contracts with

SMH. Under her contract, she agreed to serve as the Medical Director

of the Department of Anesthesiology at SMH, to provide 24-hour

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anesthesiology services to SMH, and to direct SMH's certified registered nurse anesthetists ("CRNAs"). In return, SMH agreed not to

enter into any other similar contracts.1 With the help of CRNAs, Patel

was able to supervise anesthesiology services in multiple operations

simultaneously and to build a lucrative practice, earning as much as

$750,000 per year.

As a condition of her contract, Patel agreed to pass her medical

boards in anesthesiology within two years. Patel, however, failed to

pass her boards within two years. Consequently, SMH notified her in

October 1990 of its intent to terminate her contract, but allowed her

temporarily to maintain her privileges under the contract. Subsequently, on March 27, 1991, SMH terminated the contract and withdrew Patel's contract privileges. While SMH allowed Patel to

maintain staff privileges and to practice anesthesiology at the hospital,

it forbade all CRNAs from working with her. CRNAs were allowed,

however, to work with all other doctors with staff privileges.

The loss of the use of CRNAs meant that Patel could not maintain

the practice she had built by superving the anesthesiology in numerous operations simultaneously. She was forced to cancel contracts she

had with other physicians to provide anesthesiology services and she

experienced a dramatic loss of income in her practice.

Patel filed a lawsuit against SMH, Davidson, and Wood alleging:

(1) a Sherman Antitrust Act § 1 violation, 15 U.S.C. § 1; (2) a violation of North Carolina's antitrust laws; (3) tortious interference with

contractual relations; (4) intentional infliction of severe emotional distress; and (5) breach of contract. Patel asked for and was granted permission to amend her complaint once.

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1 As alleged in her complaint, Patel's contract provided that she was "to

serve as the Medical Director of the Department of Anesthesiology at

SMH, supervise its certified registered nurse anesthetists ("CRNAs") and

provide twenty-four hour per day three-hundred-sixty-five days-per-year

coverage of anesthesiology services for SMH, in exchange for which

SMH agreed not to make any similar contractual agreement to any other

anesthesiologist `for the medical direction of CRNAs.'" Complaint ¶ 7,

amended complaint ¶ 7, and proposed second amended complaint, ¶ 7.

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The district court dismissed all claims against the defendants under

Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim

upon which relief could be granted, with the exception of the breach

of contract claim against SMH. Patel subsequently requested permission to amend her complaint a second time. The district court denied

her motion to file a second amended complaint on the grounds that

the amendment would be futile. The district court also dismissed the

remaining contract claim for lack of subject matter jurisdiction, and

dismissed the lawsuit. Patel appealed.

II.

Patel argues that the district court erred by: (1) dismissing her

Sherman Antitrust Act, state antitrust, tortious interference with contract, and intentional infliction of emotional distress claims for failure

to state a claim upon which relief could be granted; (2) refusing to

allow her to amend further her complaint; and (3) refusing to exercise

its supplemental jurisdiction over her breach of contract claim against

SMH. We address each argument in turn.

A. Rule 12(b)(6) Dismissals

We review dismissals pursuant to Rule 12(b)(6) of the Federal

Rules of Civil Procedure de novo. Estate Constr. Co. v. Miller &

Smith Holding Co., 14 F.3d 213, 217 (4th Cir. 1994). In conducting

our review of a Rule 12(b)(6) dismissal, we construe the factual allegations in the nonmoving party's complaint as true. We will affirm

"only if it appears that the plaintiff[ ] would not be entitled to relief

under any facts which could be proved in support of[her] claim." Id.

at 218 (citation omitted). Thus, we do not evaluate whether Patel has

established any facts in comparison to those alleged by the defendants, but rather examine whether, if all the facts she alleged were

true, she could make out her claims.

1. Sherman Act § 1 Claim

Patel argues that Davidson, Wood, and SMH conspired in violation

of the Sherman Antitrust Act § 1, 15 U.S.C.§ 1, to prevent her from

using CRNAs, which were essential to her practice. She concedes that

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SMH, Davidson, and Wood had a right to terminate her contract

based on her failure to pass the Boards. Her claim is based, thus, only

on the defendants' decision to disallow CRNAs from working with

her, which she contends was motivated by a malicious intent to

destroy her practice.

Section one of the Sherman Antitrust Act prohibits combinations

or contracts in restraint of trade.2 In order to survive the defendants'

Rule 12(b)(6) motion on a § 1 claim, Patel must allege facts which,

if proven true, would establish the necessary elements of a Sherman

Act § 1 violation: (1) an agreement between at least two legally distinct persons or entities; and (2) that the agreement imposed an unreasonable restraint on trade. Estate Constr., 14 F.3d at 220-21. Patel's

amended complaint fails to allege adequately those two elements.

a. Agreement to Conspire

Unilateral action is not considered actionable under§ 1 of the Sherman Act. Thus § 1 applies only to concerted action. Monsanto Co. v.

Spray-Rite Serv. Corp., 465 U.S. 752, 761 (1984). "Proof of concerted

action requires evidence of a relationship between at least two legally

distinct persons or entities." Oksanen v. Page Memorial Hosp., 945

F.2d 696, 702 (4th Cir. 1991) (en banc), cert. denied, 502 U.S. 1074

(1992). Under the doctrine of intraenterprise immunity, courts generally find that a company cannot conspire with its officers or employees because of the unity of economic interest between the company

and its employees. Copperweld Corp. v. Independence Tube Corp.,

467 U.S. 752, 769-71 (1984).

We have previously found that where the hospital staff acts as an

agent of the hospital, the Board of Trustees of a hospital and the medical staff comprise a single entity and, therefore, are immune from

Sherman Act § 1 lawsuits. Oksanen, 945 F.2d at 699, 703. Contra

Bolt v. Halifax Hosp. Medical Ctr., 891 F.2d 810, 818-19 (11th Cir.),

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2 Section 1 provides, in pertinent part:

Every contract, combination in the form of trust or otherwise, or

conspiracy, in restraint of trade or commerce among the several

States, or with foreign nations, is declared to be illegal.

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cert. denied, 495 U.S. 924 (1990) (rejecting the rule that a hospital

cannot conspire with its medical staff for purposes of § 1 liability).3

We reasoned that a hospital and its staff have a unity of interest in

seeking to provide and upgrade the quality of patient care. Oksanen,

945 F.2d at 703. "Far from being a competitor with the hospital, the

medical staff [i]s in fact a natural component of the hospital's management." Id. Similarly, here, we conclude that SMH and its medical

staff could not conspire with one another in violation of Sherman Act

§ 1 where the staff acted as the hospital's agent.

Patel seeks to distinguish Oksanen by arguing that Davidson and

Wood did not act as agents of the hospital when they conspired to

direct SMH's CRNAs not to work with her. We are not convinced.

Members of the hospital staff, especially those with administrative

positions, such as Chief Administrator, clearly have responsibilities to

ensure adequate and quality care by the staff at the hospital, protect

against malpractice, ensure efficient operation, cut costs, and the like.

Staffing decisions and directives by the staff, and particularly the

Chief of Staff or Chief Administrator, to that end are made as agents

of the hospital. Patel had failed to meet the conditions of her contract.

Thus, SMH and its agents had reasons to terminate her contract and

to restrict her access to hospital resources.

Patel also argues that an exception to the intraenterprise immunity

doctrine applies. Where the individuals on the medical staff have an

independent personal stake in obtaining the objectives of the alleged

conspiracy, intraenterprise immunity does not apply. Id. at 705. In

Oksanen we explicitly limited the personal stake exception, however,

to include only instances where the individual conspiring has a personal financial interest in the conspiracy independent of the principal

--here SMH. Id.; see also Siegel Transfer, Inc. v. Carrier Express,

Inc., 54 F.3d 1125, 1136-37 (3d Cir. 1995) (exception to intraenterprise conspiracy doctrine arises "only where an agent acts to further

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3 The Eleventh Circuit has rejected expressly our holding in Oksanen,

reasoning that the agency relations in the corporate context are different

from those in a hospital where it finds that staff members are distinct and

independent from the hospital. See also Oltz v. St. Peter's Community

Hosp., 861 F.2d 1440, 1450 (9th Cir. 1988) (rejecting application of intraenterprise immunity doctrine to the hospital context).

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his own economic interest in a marketplace actor which benefits from

the alleged restraint and causes his principal to take the anticompetitive actions"); Pink Supply Corp. v. Hiebert, Inc., 788 F.2d 1313,

1318 (8th Cir. 1986) (personal stake exception applies only where

agent of employer has "an economic stake in the gain to be realized

from the anticompetitive conspiracy"). None of the defendants had a

direct economic interest in Patel's status at SMH or competed with

her. Thus, the personal stake exception does not apply.

Finally, Patel attempts to limit the holding in Oksanen to the peer

review process only--the process by which the doctor in Oksanen had

been excluded from practicing at a hospital and through which the

doctor alleged the hospital and its staff had effected an illegal restraint

of trade. We find the peer review distinction unhelpful. Where hospital staff acts as an agency of the hospital--whether it is through peer

review or mere staffing decisions regarding efficiency, safety, quality,

or similar issues--there is a unity of interests. That unity is only

destroyed where the staff acts for a personal economic motive outside

of its agency.

b. Antitrust Injury

Patel has also failed to allege adequately facts necessary to demonstrate an antitrust injury. Mere economic injury to Patel alone is insufficient. Instead, Patel must demonstrate an impact on the competition

as a whole within the relevant market. Oksanen , 945 F.2d at 708.4

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4 Patel argues that the exclusion of a single doctor from the market is

sufficient to allege an antitrust injury. We first note that Patel has not

necessarily even been excluded from the relevant market. She has only

been denied the use of CRNAs at SMH. She may still practice anesthesiology at SMH by herself (although her ability to compete is somewhat

hampered because of her inability to use CRNAs). There are no allegations that she has been unable to practice elsewhere because of SMH's

actions. Furthermore, the case law she relies on, Summit Health, Ltd. v.

Pinhas, 500 U.S. 322 (1991), addresses the jurisdictional prerequisite for

filing an antitrust lawsuit. Oksanen, 945 F.2d at 702 n.1. In Oksanen, a

summary judgment ruling, we found that while the jurisdictional prerequisite had been met, the plaintiff still failed to demonstrate an antitrust

injury for purposes of surviving a motion for summary judgment. 945

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There are two methods of demonstrating economic injury. The first

is to demonstrate per se illegal agreements whose effects are so

plainly anticompetitive that no elaborate study of the industry is

needed. National Soc'y of Professional Eng'rs v. United States, 435

U.S. 679, 692 (1978). Patel concedes in her brief that she does not

allege a per se Sherman Act violation.

The second approach is termed "the rule of reason." Id. at 692-93.

Under a rule of reason analysis, the plaintiff must demonstrate an

unreasonable restraint of trade. That requires Patel to allege in her

complaint a relevant market, facts demonstrating that trade was

restrained in that market, and that the defendants played a significant

role in restraining trade. Oksanen, 945 F.2d at 708-09.

Patel alleges that the defendants' actions, which prohibited her

from using CRNAs, destroyed her medical practice. The district court

found, however, that her complaint was completely void of any allegations as to the effect of the defendants' actions on competition in

the market for anesthesiology services, effect on the price of anesthesiology services, or effect on the availability of anesthesiology ser-

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F.2d at 702 n.1, 709. Patel's reliance on Pinhas asks the court, in

essence, to adopt a more lenient standard on a motion to dismiss than is

required on a motion for summary judgment. See Bracken v. Allegheny

General Hosp., 64 F.3d 869, 875-78 (3d Cir. 1995). In effect, she

requests that the court adopt a standard for alleging an antitrust injury

that is similar, if not identical, to the jurisdictional requirement. The

question of federal jurisdiction, however, is distinct from that of whether

the underlying claim which supports jurisdiction fails to state a claim

upon which relief can be granted. Re/Max Internat'l v. Realty One, Inc.,

900 F. Supp. 132, 150 n.10 & 150 (N.D. Ohio 1995). Thus, we have held

that when confronted with a Rule 12(b)(6) motion to dismiss a Sherman

Antitrust Act § 1 claim, "we must determine whether allegations covering all the elements that comprise the theory for relief have been stated

as required." Estate Constr., 14 F.3d at 220 (citation omitted). In an antitrust lawsuit, we require that the plaintiff plead facts in terms that are neither vague nor conclusory. Id. at 220-21. We, therefore, conclude that to

survive a 12(b)(6) motion the plaintiff must allege sufficiently a cognizable antitrust injury, which includes allegations of negative impact on the

relevant market.

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vices to the public. Rather, it found her complaint focused on the

injuries she incurred, not those the competitive market incurred. We

agree.

All Patel has alleged is a staffing decision, allegedly based on malice, which the court is not in a position to second guess. Only where

the anticompetitive effects were obvious could Patel rely on her meager pleadings. Oksanen, 945 F.2d at 79. Furthermore, there were

legitimate grounds for the staffing decision--Patel failed to pass her

Boards as required by her contract. Thus, the defendants had reason

to limit Patel's access to the hospital's resources. Repeatedly, courts

have found that a staffing decision by a single hospital as to a single

practitioner, in the absence of harm to the relevant market, does not

constitute an antitrust injury. Oksanen, 945 F.2d at 708-10; BCB

Anesthesia Care, Ltd. v. Passavant Memorial Area Hosp. Ass'n, 36

F.3d 664, 667-69 (7th Cir. 1994) (listing numerous cases). Personal

economic injury alone, e.g., loss of income, is simply not enough to

support a claim under § 1 of the Sherman Act. There must be some

cognizable effect on the competitive market. Thus, we affirm the district court's dismissal of Patel's Sherman Antitrust Act § 1 claim.

2. Remaining State Claims

The district court also dismissed Patel's state antitrust claim, her

tortious interference with contractual relations, and her intentional

infliction of emotional distress claims for failure to state a claim upon

which relief could be granted. We have reviewed those claims and the

record and adopt the reasoning of the district court as to those claims.

B. Rule 12(b)(1) Dismissal

The district court dismissed Patel's one remaining claim against

SMH for lack of subject matter jurisdiction. Patel alleged breach of

contract against the defendants for failure to reimburse her for expenditures she incurred on their behalf. Patel conceded that the claim

applied only to SMH. After the dismissal of Patel's Sherman Act

claim, no federal question jurisdiction remained. After the dismissal

of three of the four remaining state claims, diversity jurisdiction no

longer applied because the sole remaining claim was for $45,000--an

amount insufficient to meet the jurisdictional requirements of diver-

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sity jurisdiction. 28 U.S.C. § 1332(a). SMH therefore moved to dismiss the breach of contract claim under Rule 12(b)(1) of the Rules of

Federal Civil Procedure for lack of subject matter jurisdiction.

The district court refused to exercise its supplemental jurisdiction

over the breach of contract claim and dismissed it without prejudice.

Where the district court has dismissed all claims that conferred federal jurisdiction, it may decline to exercise its supplemental jurisdiction. 28 U.S.C. § 1367(c)(3). Patel contends on appeal, however, that

the district court should have exercised its supplemental jurisdiction

over the breach of contract claim.

We review a refusal to exercise supplemental jurisdiction for abuse

of discretion. Shanaghan v. Cahill, 58 F.3d 106, 112-13 (4th Cir.

1995). Courts generally refuse to exercise supplemental jurisdiction

where the claims conferring jurisdiction were dismissed at a very

early stage and there is no overriding interest in economy or convenience dictating that the federal court retain jurisdiction. CarnegieMellon Univ. v. Cohill, 484 U.S. 343, 350 n.7 (1988); Stetka v. Hunt

Real Estate Corp., 859 F. Supp. 661, 668-69 (W.D. N.Y. 1994).

Indeed, dismissal in such a case is the preferred course of action

unless there are overriding factors in favor of retaining federal jurisdiction. Here, no factors dictated that the court retain its jurisdiction.

Therefore, we conclude that the district court did not abuse its discretion.

C. Refusal to Allow Further Amendments to Complaint

The district court allowed Patel to amend her complaint once. It,

however, refused to allow Patel to amend her complaint a second

time. We review the district court's denial of Patel's second motion

to amend her complaint for abuse of discretion. New Beckley Mining

Corp. v. International Union, United Mine Workers of America, 18

F.3d 1161, 1164 (4th Cir. 1994).

Rule 15(a) of the Federal Rules of Civil Procedure provides that "a

party may amend the party's pleading only by leave of the court or

by written consent of the adverse party" after a responsive pleading

had been served. "[L]eave shall be freely given when justice so

requires." Fed.R.Civ.P. 15(a). Leave, however, need not be granted

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where the proposed amendment would be futile. New Beckley Mining,

18 F.3d at 1164. We have reviewed Patel's proposed second amended

complaint and conclude that the district court's finding that the

amendment would be futile and resulting refusal to allow the amendment were not an abuse of discretion.

For the foregoing reasons, we

AFFIRM.

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