NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

____________ N o. 09- 2105

____________ R IC H A R D H . M C C U L L O U G H ; H O L L Y A . M C C U L L O U G H , A p p e llan ts

v. Z IM M E R , IN C .; Z IM M E R H O L D IN G S , IN C .; S T R Y K E R O R T H O P E D IC S , IN C ; S T R Y K E R , IN C ; ZI M M ER- RANDA LL ASS OCI ATE S , I NC.

____________ O n A p p ea l from the U n it ed S tat es D istri ct C o u rt f o r th e W e ste rn D istric t o f P e n n sy lv a n ia ( D . C . N o. 08- 01123) D i s tr i ctJ udge: H onor abl e A r thurJ . Schw ab

____________ Subm i t t ed U nderT hi r d C i r cui tL A R 34. 1( a)

M ay19, 2010 B e f o re : F U E N T E S , H A R D IM A N a n d N Y G A A R D , C i r cui tJudges .

( Fi l ed: J une 1, 2010)

____________ OPI NI ON O F THE COURT

____________2

H A R D IM A N , C i r cui tJudge . R i chard an d H oll yM cC ull ou gh , hu sband and w i fe, sued f i ve o f t he n at i on ’s l argest m anufa ctur er s of or thopedi c devi ces , al l egi ng vi ol at i ons of fe der al and s t at e l aw . T he M cC ul l oughs appea l fr om an or derof the D i s tr i ctC our tdi s m i s s i ng thei ramended compl ai ntforfai l ur e t o s t at e a c l ai m . W e w i l l aff i r m , l ar gel yforthe r eas ons art i cul at ed bythe D i s tr i ctC our ti n i t s thor ough opi ni on.I. B ecause w e w ri t e for the p art i es, w e recoun ton l ythe essenti al fact s. A. D efe ndant s Z i m m er , I nc. , D epuyO rthopaedi cs , I nc. , B i om et , I nc. , Sm i th & N ephew , I nc. , and Str ykerO r thopedi cs , I nc. ar e compet i ng m anufa ctur er s of s ur gi cal or thopedi c devi ces thatt ogetheracc ountforappr oxi m at el y95% of the U ni t ed St at es m arketi n s uch pr oduct s . I n 2007, a D epart m entof J us t i ce i nves t i gat i on r evea l ed that f ro m a t lea st 2 0 0 2 u n til 2 0 0 6 , ea c h d e f e n d a n t in d iv id u a llyp a id k ick b a c k s a n d b rib e s to or thopedi c s ur geons t o i nduce them t o us e i t s pr oduct s . A l though the compani es engage d i n si m i l ar s chem es, the invest i gati on did not s ug gestthat theyhad coll ud ed o r otherw i se c o o rd in a ted th e ir ill icit c o n d u c t. D e f e n d a n ts a v o id e d c rim in a l li a b ili tyb ya g re e in g to im p le m e n t n e w c o rp o ra te c o m p lia n c e p ro c e d u re s a n d to s u b m it to f e d e ra l m o n ito ri n g . F ou r of the co m pan i es al so agreed to paya t otal of $ 31 1 m i l l i on i n fines.3

T he M cC ul l oughs averr ed thattheycompet ed di r ect l yw i th D efe ndant s begi nni ng i n 1988. T he s our ce of thi s compet i t i on, acc or di ng t o the M cC ul l oughs , w as the fa ctt hat theyp o sses sed ex clus ive c o n tr ac ts w ith D ef en d an ts’ co m p eti tors, inclu d ing S u lzerM edi ca, I nc. ( Sul zer ) , t o demonstr at e, di s tr i but e, and s ervi ce s ur gi cal or thopedi c devi ces i n w es t ern Penns y l vani a, eas t ern O hi o, and W es tV i r gi ni a. T he M cC ul l oughs al l eged that th e b rib e s a n d k ick b a c k s p a id b yD e f e n d a n ts h a rm e d th e ir b u sin e ss a n d e v e n tu a lly e x c lu d e d th e m f

ro m th e su rg ica l o rth o p e d ic d e v ice m a rk e t in th e ir sa les ter rito ryin vi ol at i on of the fe der al ant i trus tl aw s . Speci fi cal l y , theyal l eged thatD efe ndant s vi ol at ed § 1 o f th e S h e r ma n Ac t , 1 5 U. S . C. § 1 , a n d § 2 ( a ) o f th e Ro b i n s o n - P a t ma n Ac t , 1 5 U. S . C. § 1 3 ( a ) , wh i c h g a v e th e m a p r i v a t e r i g h to f a c t i o n u n d e r§ 4 o f

th e Cl a yt o n Ac t , 1 5 U. S . C. § 15( a) . T he M cC ul l oughs al s o al l eged thatD efe ndant s vi ol at ed the ci vi l as pectof the R acke t eerI nfl uence d and C orruptO r gani zat i ons A ct( R I C O ) , 18 U . S. C . §§ 1962, 1964. F i nall y , theircom plai nt i ncluded several P enn sy l van i a st at e l aw cl ai m s. B. A ft eri t s i ni t i al r evi ew of the compl ai nt , the D i s tr i ctC our tor der ed the M cC ull ou gh s t o am pli fytheirR IC O al l egati on s byfi l i ng a detai l ed “R IC O case sta tem e n t.” D e f

e n d a n ts s u b se q u e n tlyf

iled a m o tio n to d ism iss p u rsu a n t to F e d e ra l R u le of C i vi l Pr ocedur e 12( b) ( 6) forfai l ur e t o s t at e a c l ai m . A ft erhear i ng or al ar gum ent , t he D i s tr i ctC our tgr ant ed D efe ndant s ’ m ot i on butal l ow ed the M cC ul l oughs l eave t o amend thei rcompl ai nt . I n doi ng s o, the D i s tr i ctC our tcandi dl yexpl ai ned thatthe M cC ul l oughsA f ter th e D istric t C o u rt d ism iss e d th e M c C u llo u g h s’ in iti a l co m p lain t, de f e n d a n ts 1 D epuyO r thopaedi cs , I nc. , B i om et , I nc. , and Sm i th & N ephew , I nc. s ett l ed w i th the M cC ul l oughs . O nl yZ i m m er , I nc. , St rykerO r thopedi cs , I nc. and thei ras s oci at ed ent i t i es rem ai n as def

end ants . W e hav e descri bed these factor s as: 2 ( 1) the ca us al connec t i on betw een the ant i trus tvi ol at i on and the harm t o the pl ai nt i ff a nd the i nt entbythe def endantt o caus e thatharm , w i th nei ther f a c to r a lo n e c o n f

e rrin g sta n d in g ; (2 ) w h e th e r th e p lain tiff ' s a lleg e d in

ju ryis of the type forw hi ch the ant i trus tl aw s w er e i nt ended t o pr ovi de r edr es s ; ( 3) the di r ectnes s of the i nj ury , w hi ch addr es s es the conc erns thatl i ber al appl i cat i on of s t andi ng pr i nci pl es m i ghtpr oduce s pecul at i ve cl ai m s ; ( 4) the exi s t ence of m or e di r ectvi ct i m s of the al l eged a nt i trus tvi ol at i ons ; and ( 5) the pot ent i al fordupl i cat i ve r ecove ryorcompl ex apport i onm entof dam ages. I n r e Low erLake Eri e I

r on O r e Ant i tr us tLi t ig. , 998 F. 2d 1144, 1165- 66 ( 3d C i r . 1993)

4 had notadequa t el yal l eged s t andi ng underei therthe C l ayt on A ctorR I C O . T he D i s tr i ct Co u r ta l s o e x p l a i n e d th a tth e c o mp l a i n twa s d e f i c i e n ti n r e g a r d t o th e e x i s t e n c e o f a RI CO ent erpr i s e. 1 Fol l ow i ng the D i s tr i ctC our t ’ s i ni t i al deci s i on, the M cC ul l oughs fi l ed an a m ended compl ai nt . D efe ndant s fi l ed a s econd mot i on t o di s m i s s underR ul e 12( b) ( 6) , w hi ch the D i s tr i ctC our tagai n gr ant ed. T he D i s tr i ctC our thel d the M cC ul l oughs l acke d s t andi ng becau se theyhad no tsuffered a co gn i zable ant i trusti njuryat tri bu t able t o D efen dan t s’ al l eged c onduct . T he D i s tr i ctC our tal s o hel d thatthe r el evantfac t or s i dent i fi ed bythe Supr eme C our ti n A ss o c ia tedG e n e ra l C o n tra c to rs o f C a lif o rn ia v . C a lif

o rn ia S ta te C ou ncil of C arpen t ers , 45 9 U . S . 51 9, 53 7-545 (1983 ), m i l i t at ed ag ai nstfi nd i ng anti trust st and i ng on these facts . 2( ci t i ng A s s oci at ed G en. , 4 5 9 U . S . at 54 5 ).

T h e D istric t C o u rt h a d ju risd ictio n o v e r th e a n titru st a n d R IC O c laim s p u rsu a n t to 3 2 8 U. S . C. § 1 3 3 1 a n d s u p p l e me n t a l j u r i s d i c t i o n o v e rth e s t a t e l a w c l a i ms u n d e r2 8 U. S . C. 5 T he D i s tr i ctC our tal s o i dent i fi ed numer ous pr obl ems w i th the s ubs t ance of the M c C u llo u g h s’ a n titru st a lleg a tio n s. E x p lain in g th a t th e “ e ss e n c e o f a S e c tio n 1 c laim [underthe Sherm an A ct ] i s the exi s t ence of an a gr eement [, ] ” the D i s tr i ctC our tobs erved thatthe M cC ul l oughs “have notal l eged thatD efe ndant s act ed i n conce r t . ” The D i s tr i ct C our tfur therfound thatthe M cC ul l oughs notonl yfai l ed t o pl ead a ny“ant i compet i t i ve e f f e c ts o n th e re lev a n t m a rk e t[ ,]” a s th e S h e rm a n A c t re q u ire s, b u t als o n e g lec ted to defi ne the r el evantm arketpr oper l yi n the fi r s ti ns t ance . T he D i s tr i ctC our tal s o di s m i s s ed the M cC ul l oughs ’ R obi ns on- Pat m an A ctcl ai m , fi ndi ng thatal though the coupl e ar gued theyhad pr oper l ypl ed a c om m er ci al br i berycl ai m underSect i on 2( c) , thei ramended co m p lai n t al lege d o n lyil lega l pri ce d iscri m ination u n d er S ec ti o n 2 (a). T h e M cC u ll o u g h s’ R IC O all eg ati o n s w ere d ef ici en t as w ell . T h e D istri ct C o u rt hel d the M cC ul l oughs fai l ed t o al l ege the exi s t ence of a RICO ent erpr i s e w i th s uffi ci ent s peci fi ci tybeca us e nei therthei ramended compl ai ntnorthei rR I C O cas e s t at ement expl ai ned how D efe ndant s “ar e or gani zed i nt o a cohe s i ve uni ti nvol ved i n gr oup act i on. ” Fur therm or e, the M cC ul l oughs di d notaverthatthe s uppos ed ent erpr i s e exi s t ed i n d e p e n d e n to f

th e a l l e g e d r a c k e t e e r i n g a c t i v i ty. A ft erdi s m i s s i ng al l fede r al cl ai m s , the D i s tr i ctC our tdecl i ned s uppl ement al j ur i s di ct i on overthe coupl e’ s r emai ni ng s t at e l aw cl ai m s . T hi s appea l fol l ow ed. 3§ 1367. W e have appel l at e j ur i s di ct i on under28 U . S. C . § 1291. T he M cC ul l oughs ar gue

thatthe D i s tr i ctC our terr ed bydi s m i s s i ng thei rs t at e l aw cl ai m s beca us e i tal s o had di ver s i tyj ur i s di ct i on. T heyar e mi s t aken. D i ver s i tyj ur i s di ct i on “under28 U . S. C . § 1332

. . . r equi r es compl et e di ver s i tyof the part i es ; thati s , no pl ai nt i ff c an be a ci t i zen of the s a m e s ta te a s a n yo f

th e d e f e n d a n ts .” G randU

nion Su perm arket

s v. H. E . L ockh art M g m t. , 316 F. 3d 408, 410 ( 3d C i r . 2003) . T he amended compl ai nt , how ever , al l eges t hat the M cC ull ou gh s and Z i m m er- R and al l A ssoci at es, Inc. are bot h P enn sy l van i a res i den t s. 6 II. T h e M c C u llo u g h s c laim th e D istric t C o u rt e rre d in v a rio u s re sp e c ts w h e n it di s m i s s ed thei rant i trus tand R I C O cl ai m s . W e r evi ew de novo the D istri ct C o u rt ’s d ism iss a l o f

p lain tiff s’ a m e n d e d c o m p lain t f o r f a ilu re to sta te a c laim p u rsu a n t to R u le 1 2 (b )( 6 ). P hi l l i

ps v. C ount

y of A l l egheny , 5 1 5 F . 3 d 2 2 4 , 2 3 3 (3d C ir . 2 0 0 8 ).

A. T he doctr i ne of a nt i trus ts t andi ng ens ur es thata “pl ai nt i ff i s a pr operpartyt o br i ng a pr i vat e ant i trus tact i on. ” G ul f s tr eam I I I A s s oci at es , I

nc. v. G ul

f s tr eam A er os

pace Corp. , 995 F. 2d 425, 429 ( 3d C i r . 1993) ( quot i ng A s s oci at ed G en. , 459 U . S. at535 n. 31) (in ter n a l q u o tatio n m a rk s o m itt e d ). B e c a u se it i s a th re sh o ld re q u ire m e n t to b rin g su it u n d e r t h e C la yto n A c t, s ee Ci t y of P i t t s bur gh v. W . P enn Pow erC o. , 147 F. 3d 256, 264- 6 5 (3d C ir . 1 9 9 8 ), w e turn firstto the M cC u ll o u g h s’ co n tention that the D istri ct C o u rt err ed w hen i theld theyl acked st and i ng t o p ursue theiranti trustcl ai m s. A s w e di d i n C i t

y of P i t t s bur gh , s ee 14 7 F . 3d at26 5, the D i stri ctC ou rtfi rs t c o n sid e re d w h e th e r th e M c C u llo u g h s h a d a lleg e d a n “ a n titru st in ju ry ” th a t w a s c a u sa lly co n n ec ted to D ef

en d an ts’ all eg ed an ti co m p eti ti v e c o n d u ct. In d o ing so , the D istri ct C o u rtT he M cC ul l oughs cl ai m s t andi ng bas ed mer el yupon the al l eged l i nk betw een 4 theirl ostprofi t s, sal es, and m arketshare and D efen dan t s’ i l l egal cond uct. T heyal so co n tend D ef

en d an ts’ an ti tru st violati o n s w ere inten d ed to d ri v e b u sine sses li k e the ir s fr om the mar ket . W e have emphasi zed that“nei thercaus at i on i n thi s but - fors ens e noran al l egat i on of i m pr operm ot i ve i s s uffi ci entt o ‘ enabl e anycompl ai ntt o w i ths t and a mot i on t o di s m i s s . ’ ” G r egor

y M kt g. , 787 F. 2d at95 ( quot i ng A s s oci at ed G en. , 4 5 9 U . S . at 53 7 ).

7 r ecogni zed thattypi cal l y , a “pl ai nt i ff w ho i s nei thera compet i t ornora cons um eri n the re lev a n t m a rk e t d o e s n o t su f f e r a n titru st in

ju ry ” a n d th e re f

o re lac k s s tan d in g to b rin g su it u n d e r t h e a n titr u s t la w s . Schuylki l lE ner gy Res. , I

nc. v. P a. P ow er& Li

ghtC o. , 113 F. 3d 405, 415 ( 3d C i r . 1997) ( quot i ng V i nciv. W as t e M gm t . , I nc. , 8 0 F . 3 d 1 3 7 2 , 1 3 7 6 (9th C ir . 1 9 9 6 )). T he M cC ul l oughs ar gue thatbeca us e theys om et i m es pur chas ed pr oduct s fr om c o m p e tit o rs o f

D e f e n d a n ts f o r d e m o n stra tio n a n d re sa le p u rp o se s, th e yw e re b o th c o m p e tit o rs a n d c o n su m e rs in th e re lev a n t m a rk e t. W e a g re e w ith th e D istric t C o u rt, how ever , thatthe bal ance of thei ral l egat i ons es t abl i s hed the coupl e onl yas comm i s s i onbas ed s al es r epr es ent at i ves w ho di d bus i nes s w i th compet i t or s and cons um er s i n the ma r k e tf o rs u r g i c a l o r th o p e d i c d e v i c e s , n o ta s c o mp e t i t o r s o rc o n s u me r s th e ms e l v e s . As m ere i nterm ediar i es i n the supp l ychain, the M cC ull ou gh s suffered no cog nizabl e anti trust in ju ry a s a re s u lt o f

D e f e n d a n ts ’ a lle g e d a n tic o m p e titiv e c o n d u c t. See B art on & P i t t i no s, I nc. v. Sm i thkl i ne Beecham C or p. , 1 1 8 F .3 d 1 7 8 , 1 8 4 (3 d C ir. 1 9 9 7 ); G r egor y M kt g. C or p. v. W akef er n Food C or

p. , 7 8 7 F . 2 d 9 2 , 9 5 -97 (3d C ir . 1 9 8 6 ). 48

T he M cC ul l oughs al s o ci t e s ever al cas es hol di ng thatpl ai nt i ffs w ho w er e nei ther compet i t or s norcons um er s i n the r el evantm arketnonethel es s had ant i trus ts t andi ng b e c a u s e th e irin

ju ri e s w e re “ in e x tr ic a b ly in te rt w in e d ” w ith a lle g e d a n titr u s t v io la tio n s . See, e. g. , C a rp et G ro u

p Int’l v. O rien tal R u gIm

p . A ss’n , 2 2 7 F .3 d 6 2 , 7 7 (3 d C ir . 2 0 0 0 ). I n thos e ca s es , how ever , the harm s uffe r ed bythe pl ai nt i ff w as typi cal l yan “i nt egr al ” or o th e rw is e “ n e c e s s a ry st e p in e f f e c tin g th e e n d s o f

th e a lle g e d ” a n tic o m p e titiv e c o n d u c t. B l ue Shi eld of

V i r gi ni a v. McC r eady , 457 U . S. 465, 479 ( 1982) . T hus , i n Steam f i t t ers LocalU ni on N o. 420 W el f ar e Fund v. P hi l l i

p Mor r is , I

nc. , w e r ej ect ed a c l ai m bys ever al uni on heal thcar e funds thattheyhad s t andi ng t o br i ng ant i trus tcl ai m s agai ns tt obacc o co m p an ies fo r w ith h o lding saf er p rod u cts fro m the m ark et, w h ich in clud ed w o rke rs co v ere d b ythe f

u n d s. 1 7 1 F . 3 d 9 1 2 , 9 2 3 (3d C ir . 1 9 9 9 ). T h o u g h the f u n d s w ere t angent i al l yharm ed bythe s cheme beca us e the w or ker s ’ heal thcar e cos t s w er e hi gher overt i m e, thei ri nj ur i es w er e noti nextr i cabl yi nt ertw i ned w i th the ant i trus tvi ol at i ons beca us e “the t obacc o compani es . . . coul d have a chi eved thei ral l eged a i m s w i thoutt he exi s t ence of the Funds orthe r el at i ons hi p betw een the Funds and s m oker s . ” Id . So t oo her e, w her e the i nj urys uffe r ed bythe M cC ul l oughs w as notan i nt egr al asp ec t of D ef en d an ts’ all eg ed sch em e. R athe r, as th e D istri ct C o u rtrec o g n ized , an yh arm t o the coupl e’ s bus i nes s w as a bypr oductof the i l l egal ki ckbac ks and br i bes pai d by D efe ndant s t o num er ous doct or s and hos pi t al s . A ccor di ngl y , w e agr ee w i th the D i s tr i ct9

C ou rtthat the M cC ull ou gh s’ i njuryw as not s o inext ri cablyi ntertw i ned w i th D efen dan t s’ a n t i c o mp e t i t i v e c o n d u c tth a tth e yh a d s t a n d i n g t o b r i n g a n a n t i tru s tc l a i m. Fi nal l y , the M cC ul l oughs cont end thattheyhad ant i trus ts t andi ng beca us e tw o of the fi ve A ss o c ia tedG e n e ra l f a c to rs s u p p o rte d su c h a f in d in g . S p e c if

ica lly , the c o u p le ar gues thatther e ar e no more di r ectvi ct i m s of D efe ndant s ’ ant i compet i t i ve conduc tand thatthei rs ui tr ai s es l i t t l e r i s k of compl ex apport i onm entof damages ordupl i cat i ve re c o v e ry. See Ass oci at ed G en. , 459 U . S. at543- 45. W e hav e m ade itabu nd antl ycl ear, ho w ever, that a cogn i zable ant i trusti njuryi s a n ec essa ryp rec u rsor to a n ti tru st st an d ing , reg ard less o f w h ethe r oth er A s s oci at ed G ener al f a c to rs s u p p o rt s u c h a f

in d in g . See Barton & Pi t t i nos , 11 8 F . 3d at18 4 n . 9 (“B ecause [pl ai nt i ff] fai l s the ant i trus ti nj uryr equi r ement , i tw oul d l ack s t andi ng even i f the other [A s s oci at ed G ener al ] f

a c to rs f a v o re d it. ” ). In d e e d , w e h a v e d ire c ted d istric t co u rts to c o n sid e r th e th re sh o ld iss u e o f a n titru st in

ju rya t th e o u tse t, be c a u se “ [ i]f a n titru st in

ju ryis notfound, fur theri nqui r yi s unnece s s ary . ” C i t y of P i t t s bur gh , 147 F. 3d at265. A s n o ted a b o v e, th e M cC u ll o u g h s fa il ed to p lead a re d ressa b le an ti tru st i n jury beca us e theyw er e nei thercompet i t or s norcons um er s i n the pert i nentm arket . N orw as a n yh a rm to th e irb u s in e s s in e x tr ic a b ly in te rt w in e d w ith D e f e n d a n ts ’ a lle g e d c o n d u c t.Fur therm or e, as the D i s tr i ctC our tfound, the A ss o c ia tedG e n e ra l fac t or s ci t ed by 5 th e M c C u llo u g h s o f

f e r th e m n o re a l su p p o rt. T h e m a n u f a c tu re rs w h o c o m p e ted d ire c tly w i th D efe ndant s and l os tm arkets har e as a r es ul tof thei ral l eged a nt i compet i t i ve conduct

— s uch as Sul zer— undoubt edl ys uffe r ed harm thatw as m or e di r ectthan the cou ple’ s l ostcom m i ssi on s. M oreove r, al l ow i ng bo th D efen dan t s’ com peti t ors and t ho se com peti t ors’ sal espeop l e t o b ri ng separat e anti trustcl ai m s w ou l d p res ent a s ub st anti al ri sk of d up l i cat i ve recov eryand requi re an un du l ycom plex app ort i on m ent of dam ages. Ev e n i f th e yh a d e s t a b l i s h e d a n t i tru s ts t a n d i n g , th e M c Cu l l o u g h s ’ a n t i tru s tc l a i ms 6 w oul d fai l on the mer i t s . A l though the “e s s ence ” of a cl ai m under§ 1 of the Sherm an A ct “i s the exi s t ence of an a gr eement [, ] ” G or don v. Lew is t on H os p. , 423 F. 3d 184, 207 ( 3d C i r . 2005) ( ci t at i ons om i t t ed) , the M cC ul l oughs have a l l eged no f act s s ugges t i ng that D e f e n d a n ts a g re e d to a c t in c o n c e rt . S e e B e ll A tla n tic C o rp . v. T w o m b ly , 550 U . S. 544, 565 n. 10. ( 2007) ( expl ai ni ng thata compl ai ntw hi ch “ment i oned no s peci fi c t i m e, pl ace , orper s on i nvol ved i n t he al l eged c ons pi r aci es ” w as defi ci entbeca us e i tdi d notal l ege w ho “s uppos edl yagr eed, orw hen and w her e the i l l i ci tagr eementt ook pl ace ”) . N orhave th e M c C u llo u g h s d e f

in e d th e re lev a n t m a rk e t w ith a n yre f e re n c e to th e ru le o f

re a so n a b le in te rc h a n g e a b ility o r c ro s s -e la s tic ity o f d e m a n d , a s a § 1 c la im re q u ir e s . S e e Q u e e n C ity P iz z a, I nc. v. D om i no’s P iz

z a, I nc. , 124 F. 3d 430, 436 ( 3d C i r . 1997) . Fi nal l y , though t he coupl e ar gue on appe al thattheypl ed a c om m er ci al br i berycl ai m underSect i on 2( c) of the R obi ns on- Pat m an A ct , thei ramended compl ai ntactual l yal l eged i l l egal pr i ce d isc rim in a tio n u n d e r S e c tio n 2 (a ), a c laim th e yh a v e n o w a b a n d o n e d . W e th u s a g re e w ith th e D istric t C o u rt th a t th e a m e n d e d c o m p lain t w o u ld f a ll w e ll sh o rt o f

sta tin g a p lau sib le c laim f o r re lief o n th e m e rits e v e n if

th e M c C u llo u g h s h a d sta n d in g to b rin g a p riv a te a n titru st a c tio n u n d e r th e C layt o n A c t. 10 B e c a u s e th e y h a v e f

a i l e d t o a l l e g e a n t i tru s ti n j u ry a b in iti o , the r emai ni ng A s s oci at ed G e n e ra l f

a c to rs a re irre lev a n t. 5 Forthes e r eas ons , w e w i l l aff i r m the D i s tr i ctC our t ’ s fi ndi ng thatthe M cC ul l oughs l acke d s t andi ng t o s ue underthe C l ayt on A ctforD efe ndant s ’ al l eged vi ol at i ons of the S herm an an d R ob i nson -Pat m an A ct s. 6T h e M c C u llo u g h s’ la c k o f sta n d in g to b rin g a n a n titru st a c tio n lik e w ise p re v e n ts 7 them from pur s ui ng thei rR I C O cl ai m s . T he Supr eme C our thas ext ended much of the A ss o c ia tedG e n e ra l a n a lysis f o r a n titr u s t s ta n d in g to R IC O c a s e s . See H olm es v. Sec. I nves t orP r ot . C or

p. , 5 0 3 U .S . 2 5 8 , 2 6 7 -7 0 (1 9 9 2 ); Steam f i t t ers , 1 7 1 F .3 d a t 9 3 2 . A p lain tiff lac k s s tan d in g to su e u n d e r R IC O w h e re , as h e re , h e su f f e rs in ju ryth a t is o n ly in d ir e c tly re la te d to a d e f e n d a n t’ s a lle g e d m is c o n d u c t. See H olm es , 503 U . S. at268- 69; Steam f i t t ers , 1 7 1 F .3 d a t 9 3 2 -3 3 . A c c o rd in g ly , ev e n if th e M c C u llo u g h s h a d p ro p e rly al l eged the es s ent i al el ement s of a RICO cl ai m , theyw oul d l ack s t andi ng t o s ue under R IC O f o r t h e s a m e re a s o n s th e yla c k s ta n d in g to s u e u n d e r t h e C la yto n A c t. See Steam f i t t ers , 171 F. 3d at932 ( “[M ] uch, ( i f notal l ) of w hatw e have s ai d . . . i n our di s cus s i on of ant i trus ts t andi ng appl i es t o the [pl ai nt i ff’ s ] R I C O cl ai m s . ”) . A l though t he Di s tr i c tCo u r td i d n o tc o n s i d e rwh e th e rth e M c Cu l l o u g h s h a d s t a n d i n g t o b r i n g a RI CO c la im , w e m a ya f

f ir m f o r a n yre a s o n s u p p o rt e d b yth e re c o rd . D o n a h u e v . G a v in , 280 F . 3 d 3 7 1 , 3 7 2 n . 2 (3d C ir . 2 0 0 2 ). 11 B. Th e M c Cu l l o u g h s n e x tc l a i m th e Di s tr i c tCo u r te rr e d i n d i s mi s s i n g th e i rRI CO cl ai m s . W e agr ee w i th t he D i s tr i ctC our t , how ever , thatthe M cC ul l oughs ’ amended compl ai ntfai l ed t o al l ege c ert ai n es s ent i al el ement s of a RICO caus e of a ct i on. 7 T he M cC ul l oughs acknow l edge thattheym us tpl ead the exi s t ence of an

“ e n te rp ri s e ” to s ta te a c la im u n d e r § 1 9 6 2 (c ) o f R IC O . A n “ e n te rp ri s e is a n e n tity, . . . a gr oup of per s ons as s oci at ed t ogetherfora comm on purpos e of e ngagi ng i n a cour s e of conduct . ” U

n itedS ta tes v . T

u rk e tte , 452 U . S. 576, 583 ( 1981) . I ns t ead of cl ai m i ng that D efe ndant s qual i fyas an ent erpr i s e, the M cC ul l oughs ar gue thatthe s ur geons , hos pi t al admi ni s tr at or s , and otherent i t i es thatal l egedl yr ece i ved br i bes and ki ckbac ks fr om D e f e n d a n ts a re th e re lev a n t en terp rise f o r R IC O p u rp o se s. B e c a u se D e f e n d a n ts “part i ci pat e[d] . . . i n the conduc tof [thi s ] ent erpr i s e’ s aff ai r s thr ough a patt ern ofT he M cC ul l oughs ci t e Sevil l e Industri al M ach i nery C orp. v. So uthm ost 8 Machi ner

y C or p. , w her e w e hel d thatthe pl ai nt i ff ne ed notaff i r m at i vel ypl ead the thr ee es s ent i al attr i but es of a RICO ent erpr i s e as l ong as i tal l eged thatan ent erpr i s e exi s t ed. 74 2 F . 2d 78 6, 79 0 (3d C i r. 19 84 ). W e do ub tthat the co nclusoryal l egati on of en t erpr i se thatw e ac cept ed i n Sevi l l e w oul d pas s m us t erunderthe pl eadi ng r equi r ement s art i cul at ed bythe Supr eme C our ti n T w o m b ly , 550 U . S. at555- 63, and A s hcr of tv. I qbal , 1 2 9 S .C t. 1937, 1949- 50 ( 2009) . U ndert oday ’ s pl eadi ng s t andar ds , the “f or m ul ai c r eci t at i on of the el ement s of a” R I C O cl ai m thatw e al l ow ed i n S e v ill e lik e lyw o u ld b e in su f f icie n t to “s t at e a c l ai m t o r el i ef thati s pl aus i bl e on i t s fac e. ” T w o m b ly , 5 5 0 U .S . a t 5 5 5 , 5 7 0 . M or eover , the al l eged RICO ent erpr i s e i n Sevi l l e i nv olved t w o ex i st i ng corporat e enti t i es, s ee 742 F. 2d at788, w hi ch i ndi cat ed thatthe put at i ve or gani zat i on w as ongoi ng and had both a dec i s i onm aki ng hi er ar chyand an e xi s t ence s epar at e and apartfr om anyi l l egal a c tiv ity . H e re , b yc o n tra st, th e M c C u llo u g h s im p lau sib lya lleg e th a t co m p e tin g d o c to rs in thr ee di ffe r ents t at es qual i fyas an ent erpr i s e. 12 r acke t eer i ng act i vi ty ”— i . e. , r egul ar l ypay i ng br i bes

— the M cC ul l oughs s eek t o hol d them li ab le un d er § 1 9 6 2 (c). T o pr ove the exi s t ence of a RICO ent erpr i s e, a pl ai nt i ff musts how : “( 1) thatthe ent erpr i s e i s an ongoi ng or gani zat i on w i th s om e s or tof fr amew or k form aki ng orcarr y i ng outdeci s i ons ; ( 2) thatthe var i ous as s oci at es funct i on as a cont i nui ng uni t ; and ( 3) thatt he ent erpr i s e be s epar at e and apartfr om the patt ern of ac t i vi tyi n w hi ch i tengage s . ” U ni t ed Stat es v. Ir izarry , 341 F. 3d 273 ( 3d C i r , 2003) ( quot i ng U ni t ed Stat es v. R i ccobe ne , 709 F. 2d 214, 222 ( 3d C i r . 1983) ) . Si m pl yl i s t i ng a s tr i ng of i ndi vi dual s orent i t i es that e n g a g e d i n i l l e g a l c o n d u c t , wi th o u tmo r e , i s i n s u f f i c i e n tt o a l l e g e th e e x i s t e n c e o f a RI CO e n te rp ri s e . S e e Ri c h mon d v . Nat i o n wi d e Cas s e l

, L. P. , 5 2 F . 3 d 6 4 0 , 6 4 6 (7th C ir . 1 9 9 5 ). 8 H er e, the M cC ul l oughs ’ R I C O al l egat i ons s ugges tatm os tthatnum er ous s ur geons thr oughoutthei rs al es t err i t oryr egul ar l yand i ndi vi dual l yr ece i ved i l l egal paym ent s fr omT h e M c C u llo u g h s a lso c o n ten d th a t th e yp ro p e rlya lleg e d a R IC O c o n sp ira c yin 9 vi ol at i on of § 1962( d) . B eca us e thei rcons pi r acycl ai m under§ 1962( d) i s pr edi cat ed sol el yon D efen dan t s’ al l eged viol at i on of § 19 62 (c) , i tl i kew i se fai l s. 13 D efe ndant s . H ow ever , nothi ng i n t hei ramended compl ai ntorR I C O cas e s t at ement pl aus i bl ys ugges t s thatthes e doct or s combi ned as a uni tw i th anys embl ance of an o rg a n iza tio n a l f

ra m e w o rk o r c o m m o n p u rp o se . N o r h a v e th e ya lleg e d f a c ts th a t w o u ld su p p o rt a n in f

e re n c e th a t th is a lleg e d e n terp rise h a d a n ystru c tu re o r e x iste n c e se p a ra te and apartfrom D efen dan t s’ al l eged cri m i nal cond uct. T o the con trary , the M cC ull ou gh s’ a l l e g a t i o n s i n d i c a t e th a tth e d o c t o r s a n d h o s p i t a l s wh o s u p p o s e d l yc o mp r i s e d th e RI CO e n terp rise in f

a c t com pet ed a g a in st o n e a n o th e r in th e m a rk e t f o r su rg ica l o rth o p e d ic s ervi ces . A ccor di ngl y , w e agr ee w i th the D i s tr i ctC our tthatthe M cC ul l oughs ’ amended c o mp l a i n tf

a i l e d t o s t a t e a c l a i m u n d e r§ 1 9 6 2 ( c ) o f RI CO . 9 III . A nt i ci pat i ng the pos s i bi l i tythatw e mi ghtagr ee w i th the D i s tr i ctC our t , the M cC ul l oughs as k us t o r emand t hei rcas e t o al l ow addi t i onal amendm ent s . W e dec l i ne thi s i nvi t at i on beca us e the M cC ul l oughs ’ fai l ur e t o r emedythe s i gni fi cantl egal and fac tual defi ci enci es thatpl ague thei ral l egat i ons — es peci al l yaft err ece i vi ng det ai l ed gui dance fr om the D i s tr i ctC our t

— convi nces us thatanyfur theramendm ent s w oul d be f u tile . S e e Fo m a n v . D a v is , 3 7 1 U .S . 1 7 8 , 1 8 2 (1 9 6 2 ) (e x p lain in g th a t “r e p e a ted f a ilu re to c u re d e f icie n c ies b ya m e n d m e n ts p re v io u slya llo w e d ” su p p o rts a d e n ial o f lea v e to am end ). A ccordi ng l y , w e w i l l affirm the D i stri ctC ou rt ’s j ud gm ent i n all res pects .