Case Name: R. Anthony MARRESE and Michael R. Treister, Plaintiffs-Appellees, v. AMERICAN ACADEMY OF ORTHOPAEDIC SURGEONS, Defendant-Appellant
Court: United States Court of Appeals for the Seventh Circuit
Jurisdiction: United States
Decision Date: 1984-01-03
Citations: 726 F.2d 1150
Docket Number: Nos. 81-2671, 83-2683
Parties: R. Anthony MARRESE and Michael R. Treister, Plaintiffs-Appellees, v. AMERICAN ACADEMY OF ORTHO-PAEDIC SURGEONS, Defendant-Appellant.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 726
Pages: 1150–1183

Head Matter:
R. Anthony MARRESE and Michael R. Treister, Plaintiffs-Appellees, v. AMERICAN ACADEMY OF ORTHO-PAEDIC SURGEONS, Defendant-Appellant.
Nos. 81-2671, 83-2683.
United States Court of Appeals, Seventh Circuit.
Argued Feb. 26, 1982.
Reargued En Banc Sept. 20, 1983.
Decided Jan. 3, 1984.
As Corrected Jan. 10, 1984.
See also 78 Ill.App.3d 746, 33 Ill.Dec. 501, 396 N.E.2d 1225.
D. Kendall Griffith, Hinshaw, Culbertson, Moelmann, Hoban & Fuller, Chicago, Ill, for defendant-appellant.
Michael T. Sawyier, Foss, Schuman & Drake, John J. Casey, Chicago, Ill., for plaintiffs-appellees.
Before CUMMINGS, Chief Judge, and PELL, BAUER, WOOD, CUDAHY, ESCH-BACH, POSNER, COFFEY and FLAUM, Circuit Judges.

Opinion:
POSNER, Circuit Judge.
These consolidated appeals present important questions relating to the scope of the doctrine of res judicata in our system of dual state and federal courts, and to the responsibilities of federal district judges in controlling pretrial discovery.
In 1976 the American Academy of Ortho-paedic Surgeons, a private association, rejected the plaintiffs' applications for membership, without a hearing or a statement of reasons. The plaintiffs sued the Academy in an Illinois state court, claiming among other things that the common law of Illinois and the Illinois constitution required the Academy to grant a hearing on their applications and to use reasonable standards in deciding whether to accept the applications. The plaintiffs made no claim under Illinois antitrust law; nor did they, at that time, bring a federal antitrust suit.
The Illinois Appellate Court ordered Dr. Treister's complaint dismissed for failure to state a claim, noting that membership in the Academy is not an "economic necessity," Treister v. American Academy of Orthopaedic Surgeons, 78 Ill.App.3d 746, 755-56, 33 Ill.Dec. 501, 508, 396 N.E.2d 1225, 1232 (1979), and the Illinois Supreme Court denied leave to appeal, 79 Ill.2d 630 (1980). Though alleged to confer professional advantages, membership in the Academy is not required for practicing as an orthopaedic surgeon or obtaining hospital staff privileges. Both plaintiffs are certified to practice orthopaedic surgery and have staff privileges at several hospitals.
Dr. Marrese was not a party to the appeal, but his suit was stayed pending Treis-ter's appeal and was dismissed after Treis-ter lost his appeal.
After losing in the Illinois Appellate Court, Dr. Treister (joined by Dr. Marrese) brought this suit in federal district court for damages and injunctive relief under section 1 of the Sherman Act, 15 U.S.C. § 1. The complaint alleged that the Academy is "a monopoly in its field, possessed of substantial power to control the market for orthopaedic surgical services," and that the plaintiffs were refused membership because they compete too vigorously with existing members of the Academy. The Academy moved to dismiss the complaint on the ground that the judgment in the plaintiffs' state-court action against the Academy was res judicata in the present suit. The motion was denied. 496 F.Supp. 236 (N.D.Ill.1980), on reconsideration, 524 F.Supp. 389 (N.D.Ill. 1981). The Academy asked the district judge to certify his denial for an immediate appeal under 28 U.S.C. § 1292(b), arguing that whether the suit was barred by res judicata was a controlling question of law. The judge refused and pretrial discovery began. The plaintiffs asked the Academy to produce its files relating to all denials of membership applications between 1970 and 1980. The Academy refused. When it persisted in its refusal after the district judge issued an order to produce, the judge held the Academy in criminal contempt and fined it $10,000. See Fed.R.Civ.P. 37(a)(2), 37(b)(2)(D).
No. 81-2671 is the Academy's appeal from the contempt judgment. A panel of this court reversed'the judgment more than a year ago, 692 F.2d 1083 (1982), but rehearing en banc was granted and the panel decision was vacated (the practice in this circuit when rehearing en banc is ordered, see Circuit Operating Procedure 5(f)). However, the order granting rehearing en banc was later vacated and the original panel issued a new decision, again reversing the judgment of contempt, but on a narrower ground. 706 F.2d 1488, 1489 (1983). Rehearing en banc was again sought and granted, and the second panel decision was vacated. Shortly before the rehearing, Judge Plunkett, to whom the case in the district court had been reassigned from Judge Shadur, certified Judge Shadur's order denying the Academy's motion to dismiss the complaint on the ground of res judicata for immediate appeal under section 1292(b). The plaintiffs questioned Judge Plunkett's jurisdiction to issue such a certification in light of the pendency of the appeal from the contempt judgment. But a motions panel of this court held that he had jurisdiction, authorized the appeal (which is No. 83-2683), and ordered it consolidated with No. 81-2671 for the en banc hearing.
The jurisdictional ruling was correct. The Academy's appeal from the contempt judgment did not bring the whole case up to this court but just the contempt proceeding, a collateral branch of the case. The rest of the case remained (and remains) pending in the district court before Judge Plunkett. The contempt judgment itself was appealable under 28 U.S.C. § 1291. Bray v. United States, 423 U.S. 73, 96 S.Ct. 307, 46 L.Ed.2d 215 (1975).
We begin with No. 83-2683. As the main purpose of the doctrine of res judicata is to protect a defendant from being worn down by a plaintiff who sues him over and over again for the same allegedly wrongful conduct, a plaintiff may not sue the defendant on one theory and having lost try again on a different one. E.g., Federated Department Stores v. Moitie, 452 U.S. 394, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981); Mandari-no v. Pollard, 718 F.2d 845, 849-50 (7th Cir.1983); Bunker Ramo Corp. v. United Business Forms, Inc., 713 F.2d 1272, 1277 (7th Cir.1983); Lee v. City of Peoria, 685 F.2d 196, 198 (7th Cir.1982); Harper Plastics, Inc. v. Amoco Chemicals Corp., 657 F.2d 939, 945 (7th Cir.1981). But that is what the plaintiffs have been doing in this case. After being denied membership in the Academy almost eight years ago, they sued the Academy in state court under a variety of theories. Although they could have alleged a violation of the Illinois Antitrust Act, § 3(2), Ill.Rev.Stat.1981, ch. 38, § 60-3(2), they did not; and although they could have brought a federal antitrust suit in federal court at the same time and joined their state law claims as pendent claims, they did not do that either. They waited till they had lost their state lawsuits and only then — after four years of litigating in state court the lawfulness of the denial of their membership applications — did they bring suit. No reason has-been given or appears why they did not bring an antitrust suit, state or federal or both, at the time of their initial suits. The plaintiffs assert that the Academy's antitrust liability is clearly established by Klor's, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d 741 (1959) — a case that had been on the books for 17 years when the initial suits were filed.
But we are told that there is a technical obstacle to applying the doctrine of res judi-cata here: the plaintiffs could not have joined a Sherman Act claim with their state law claims in a suit brought in state court because federal courts have exclusive jurisdiction to enforce the federal antitrust laws. This proposition can be questioned. No statute purports to make the federal courts' jurisdiction over federal antitrust suits exclusive; compare 28 U.S.C. § 1338(a), which makes the jurisdiction of the federal courts in patent and copyright cases "exclusive of the courts of the states," with 15 U.S.C. § 15, 26. And it is hard to understand why state courts should be thought less competent to enforce the federal antitrust laws than the federal civil rights laws — which they have jurisdiction concurrently with the federal courts to enforce, Martinez v. California, 444 U.S. 277, 283 n. 7, 100 S.Ct. 553, 558 n. 7, 62 L.Ed.2d 481 (1980) — particularly when state courts can adjudicate federal antitrust defenses with preclusive effect on questions of fact under the doctrine of collateral estoppel in a subsequent federal antitrust suit. Lyons v. Westinghouse Elec. Corp., 222 F.2d 184, 188, 189 (2d Cir.1955); RX Data Corp. v. Department of Social Services, 684 F.2d 192, 196-97 and n. 4 (2d Cir.1982); Calvert Fire Ins. Co. v. American Mutual Reinsurance Co., 600 F.2d 1228, 1236 n. 18 (7th Cir.1979) (dictum). We nevertheless accept, as settled law that only the Supreme Court can at this late date reconsider, that the plaintiffs could not have brought their Sherman Act suit in an Illinois state court. See Blumenstock Bros. Advertising Agency v. Curtis Publishing Co., 252 U.S. 436, 440-41, 40 S.Ct. 385, 386-87, 64 L.Ed. 649 (1920); General Investment Co. v. Lake Shore & Mich. S. Ry., 260 U.S. 261, 287, 43 S.Ct. 106, 117, 67 L.Ed. 244 (1922); Kurek v. Pleasure Driveway & Park Dist., 583 F.2d 378, 379 (7th Cir.1978) (per curiam). But see Note, Exclusive Jurisdiction of the Federal Courts in Private Civil Actions, 70 Harv.L.Rev. 509, 510 n. 13 (1957).
The plaintiffs could, however, have joined with their other state claims a claim under the Illinois Antitrust Act, and if that Act is materially identical to the Sherman Act their failure to do so bars this suit under Nash County Bd. of Educ. v. Biltmore Co., 640 F.2d 484, 487-93 (4th Cir.1981). The Attorney General of North Carolina had brought a state antitrust suit against a number of dairy companies. After final judgment was entered in that suit, a local board of education (held to be in privity with the state attorney general) brought a federal antitrust suit against the same defendants. The federal suit involved the identical facts and was brought under a federal antitrust statute that was worded identically to the state antitrust statute. The Fourth Circuit held the federal suit barred by res judicata.
Nash is supported by Justice Holmes' opinion for the Supreme Court in Becher v. Contorne Laboratories, Inc., 279 U.S. 388, 391-92, 49 S.Ct. 356, 357-58, 73 L.Ed. 752 (1929), by academic authority, see Currie, Res Judicata: The Neglected Defense, 45 U.Chi.L.Rev. 317, 347-48 (1978), by the statement in Moitie that res judicata " 'should be cordially regarded and enforced by the courts,' " 452 U.S. at 401,101 S.Ct. at 2429, quoting Hart Steel Co. v. Railroad Supply Co., 244 U.S. 294, 299, 37 S.Ct. 506, 508, 61 L.Ed. 1148 (1917), and by the practical need to contain the enormous growth of litigation in both state and federal courts by insisting that people litigate their claims in an economical and parsimonious fashion — a consideration emphasized in Moitie, see 452 U.S. at 401,101 S.Ct. at 2429. True, there is much authority that is at least superficially contrary. See, e.g., Abramson v. Pennwood Investment Corp., 392 F.2d 759, 762 (2d Cir.1968); Clark v. Watchie, 513 F.2d 994, 997 (9th Cir.1975); Hayes v. Solomon, 597 F.2d 958, 984-85 (5th Cir. 1979); RX Data Corp. v. Department of Social Services, supra, 684 F.2d at 198; Restatement (Second) of Judgments § 26, illustration 2 (1980). Cf. Kurek v. Pleasure Driveway & Park Dist., supra, 583 F.2d at 379. See generally 18 Wright, Miller & Cooper, Federal Practice and Procedure § 4470 (1981). But it is mainly pre-Nash and pre-Moitie; we have found no decision that expressly rejects Nash, and, most important, no case that involves the precise situation in Nash — a state law that is a mirror image of federal law. Hayes v. Solomon, for example, emphasizes the difference between the state and federal statutes involved in that case. See 597 F.2d at 984. And in the recent case of Turf Paradise, Inc. v. Arizona Downs, 670 F.2d 813, 818 n. 1 (9th Cir.1982), the conduct challenged under federal antitrust law was outside the scope of the state antitrust law, so Nash was inapplicable.
It is not a good argument against Nash that the federal courts have no power to decide for themselves the res judicata effect of a state judgment in a federal suit because 28 U.S.C. § 1738 requires a federal court to give the judgments of a state's courts "the same full faith and credit . as. they have by law or usage in the courts of such State." See Kremer v. Chemical Construction Corp., 456 U.S. 461, 482, 102 S.Ct. 1883, 1898, 72 L.Ed.2d 262 (1982); Allen v. McCurry, 449 U.S. 90, 96, 101 S.Ct. 411, 415, 66 L.Ed.2d 308 (1980). Intended as it was to protect the authority of state courts, section 1738 ought not prevent a federal court from giving a state judgment more effect in a federal suit than the courts of the state would give it in a state suit. See Vestal, Res Judicata/Preclusion by Judgment: The Law Applied in Federal Courts, 66 Mich.L.Rev. 1723,1736-39 (1968), and other references cited in FDIC v. Eckhardt, 691 F.2d 245, 247 (6th Cir.1982). A federal court does not undermine the authority of a state's courts when it holds that a state judgment bars a federal suit. Moreover, the federal courts have an interest independent of the states in preventing someone from litigating in federal court a claim he could have made in state court under state law as part of a state-court suit that he brought previously. But whether or not section 1738 allows a federal court to give a state court's judgment a greater preclusive effect than the state courts themselves would give it (an unsettled question, see, e.g., Wright, The Law of Federal Courts 690-91 (4th ed. 1983)), the statute cannot be used to decide this case. The Illinois courts, although hospitable to claims of res judicata, see Morris v. Union Oil Co., 96 Ill.App.3d 148, 51 Ill.Dec. 770, 421 N.E.2d 278 (1981); Baird & Warner, Inc. v. Addison Industrial Park, Inc., 70 Ill.App.3d 59, 63-65, 26 Ill.Dec. 1, 7-8,387 N.E.2d 831, 837-38 (1979), have not spoken to the Nash issue and will never have occasion to do so, since no federal antitrust suit can be brought in a state court. The issue whether such a suit would be barred by res judicata therefore cannot arise. Section 1738 cannot be used to decide this case.
Another argument that could be made against Nash is that the federal courts' exclusive jurisdiction to enforce federal antitrust law must be based on a judgment that only federal judges can decide antitrust cases intelligently; if so, a plaintiff should not be coerced to bring his antitrust claim in state court under a state counterpart to the federal antitrust statutes. But the state attorney general in Nash was not coerced to sue in state court under state law first; he chose to do so. And similarly the plaintiffs in this case could have brought a federal antitrust suit at the same time as (or instead of) their state suit. Only strategy or misjudgment could have made them wait till a final judgment was entered in the state suit. Moreover, it unduly demeans state judges to say that they cannot administer antitrust principles intelligently. It is also inconsistent with the fact that states such as Illinois have adopted antitrust laws modeled on the federal laws, that the federal antitrust laws have not been held to preempt state antitrust law, as federal labor law, for example, has been held to preempt state labor law, see San Diego Building Trades Council v. Garmon, 359 U.S. 236, 245, 79 S.Ct. 773, 779, 3 L.Ed.2d 775 (1959), and that federal courts give preclusive effect to state court factfindings in antitrust cases. Furthermore, since the doctrine of exclusive federal court jurisdiction over federal antitrust suits can only be intended to benefit defendants (for plaintiffs are always better off having a choice of different courts in which to bring their claims), it would be anomalous to use the doctrine to make an antitrust defendant defend himself a second time against the same claim, based on a new legal theory.
Assuming the Nash case was — as we believe — correctly decided, the next question is whether it is distinguishable from this case. The fact that the plaintiffs here based their state court actions not on the Illinois Antitrust Act but on other provisions of Illinois law does not distinguish the cases. The plaintiffs could have included in their complaints a claim under the Illinois Antitrust Act and that is all that is necessary to bring res judicata into play. Otherwise a plaintiff could bring the same suit over and over again against the same defendant, simply changing legal theories. Our decision in Harper Plastics, Inc. v. Amoco Chemicals Corp., supra, bears on this point. It bars a plaintiff who has not joined his state law claims as pendent claims in a federal suit from suing on them after a final judgment is entered in the federal suit. 657 F.2d at 945-46. Therefore if the Nash County Board of Education had sued the defendants in federal court under federal antitrust law, a subsequent state suit would (in this circuit at least) have been barred.
The Illinois Antitrust Act, however, unlike the state antitrust law in Nash, see 640 F.2d at 488, is not identically worded to the counterpart federal law. The court in Nash did not decide whether a difference in wording between the state and federal statutes would have changed its result. See id. at 490, 492. The question should be answered not in gross but with reference to the specific provisions of the state and federal statutes, read in light of the specific allegations of the complaint. If, applied to the particular case, the state and federal standards are the same, it should not matter that applied to some other case they might be different.
Section 3(2) of the Illinois Antitrust Act forbids conspiracies and other agreements to restrain trade "unreasonably." The Illinois Appellate Court has held that a boycott challenged under this section could never be held to be illegal per se; it would have to be evaluated under the Rule of Reason. Blake v. H-F Group Multiple Listing Service, 36 Ill.App.3d 730, 743, 345 N.E.2d 18, 28 (1976). A conspiracy to fix prices or limit output is, however, illegal per se under the Illinois Antitrust Act, Ill.Rev.Stat.1981, ch. 38, § 60-3(1); see People ex rel. Scott v. College Hills Corp., 91 Ill.2d 138, 151-53, 61 Ill.Dec. 766, 772, 435 N.E.2d 463, 469 (1982), as it is under section 1 of the Sherman Act, see, e.g., United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 224 and n. 59, 60 S.Ct. 811, 845 and n. 59, 84 L.Ed. 1129 (1940). Although section 1 of the Sherman Act does not in words distinguish between boycotts and price-fixing conspiracies, in this circuit at least "boycotts are illegal per se only if used to enforce agreements that are themselves illegal per se — for example price-fixing agreements." Recently this language from the second panel opinion in this case (706 F.2d at 1495) was quoted approvingly by another panel considering a boycott by another medical association. Wilk v. American Medical Ass'n, 719 F.2d 207, 221 (7th Cir.1983): It is a correct statement of the law of the circuit. See United States Trotting Ass'n v. Chicago Downs Ass'n, 665 F.2d 781, 787-90 (7th Cir.1981) (en banc).
The complaint in the present case charges either a conspiracy to fix prices or limit output, a per se offense under federal as under Illinois law, or, more likely, a non-price conspiracy to exclude rivals from a professional association, which under our precedents must be tested under the Rule of Reason — and the state law is again the same. Not only does the Illinois Antitrust Act make federal antitrust cases precedents in interpreting the Act, see Ill.Rev.Stat. 1981, ch. 38, 160-11, but the Illinois Supreme Court has indicated that the Rule of Reason has the same meaning under Illinois antitrust law as under federal antitrust law. See People ex rel. Scott v. College Hills Corp., supra, 91 Ill.2d at 154, 61 Ill. Dec. at 774, 435 N.E.2d at 471-72, citing federal cases as authoritative on the meaning of the Rule of Reason in section 3(2) cases.
. Thus, there is no more difference in liability standards between state and federal law in this case than there was in Nash. The only possible difference is in the remedy. If the plaintiffs prove a price-fixing or output-limiting conspiracy, they are entitled under Illinois law as under federal antitrust law to an automatic trebling of their damages. See Ill.Rev.Stat.1981, ch. 38, § 60-7(2), Clayton Act, § 4, 15 U.S.C. § 15. But if they prove a violation just of the Rule of Reason, under federal law they would still be entitled to an automatic trebling of their damages but under the Illinois law applica ble to such violations, "if it is shown that [the] violation was willful, the court may, in its discretion, increase the amount recovered as damages up to a total of 3 times the amount of actual damages." Ill.Rev.Stat. 1981, ch. 38, § 60-7(2).
This might be an important difference in another case, but it has no practical significance in this one. Although the plaintiffs are now asking for damages as well as an injunction against their exclusion from membership in the Academy, it is doubtful that they had any objective in bringing this suit other than to get themselves admitted to membership. We cannot understand otherwise why their state-court suits, insofar as they challenged the denial of the plaintiffs' membership applications, were purely for injunctive relief, and why the plaintiffs did not at that time — seven years ago — either add a state antitrust count to their complaints or bring a federal antitrust suit. The state suits did seek damages, but only on the theory that the application forms which the plaintiffs had filled out were contracts that the Academy had broken by distributing a list of applicants with the plaintiffs' names on it. See 78 Ill. App.3d at 751, 758-59, 33 Ill.Dec. at 505, 509-10, 396 N.E.2d at 1229, 1233-34. The plaintiffs did not seek any damages for being excluded from membership; their federal antitrust suit contains no reference to the facts underlying the breach of contract claim; and because they filed their antitrust suit more than four years after the alleged breach of contract, any attempt to tease an antitrust violation out of the alleged breach would be barred by the four-year federal antitrust statute of limitations. 15 U.S.C. § 15b.
The timing more than suggests that the plaintiffs do not care about treble damages. As busy and successful surgeons with staff privileges at several hospitals (four for Marrese, seven for Treister) they may not think they can prove any actual damages— the prerequisite for getting treble damages — from having been denied membership in the Academy. Although the exact nature of the Academy is unclear from the limited record before us, we know that it has no licensing function, that its meetings are open to nonmembers, and that Dr. Treister once gave an invited paper at a meeting of the Academy. And certainly when the plaintiffs first sued the Academy in 1976, damages resulting from their exclusion were not in their thinking; no such damages were alleged. A suit under the Illinois Antitrust Act would therefore have been a perfect substitute for a federal antitrust suit — even if the Illinois Act had contained no damages provision at all.
This is not a case like Lektro-Vend Corp. v. Vendo Co., 660 F.2d 255, 274 (7th Cir. 1981), where the plaintiff alleged in his federal antitrust suit that the state court suit that the defendants had pleaded as res judicata was itself part of the unlawful conspiracy. Marrese and Treister had a full and fair opportunity to litigate their claims in their earlier suits. Cf. Lee v. City of Peoria, supra, 685 F.2d at 201. And although the application of res judicata often produces a harsh result, the result here is less harsh than in many other cases, such as Harrington v. Vandalia-Butler Board of Educ., 649 F.2d 434, 437-40 (6th Cir.1981). Harrington brought a Title VII discrimination suit against a municipal corporation, and won. She could have gotten damages in that suit if she had joined with her Title VII claim a claim under 42 U.S.C. § 1983, but she did not do so, because the law was clear that municipal corporations were immune from liability under section 1983. After the final judgment in the Title VII suit the Supreme.Court abrogated municipal immunity, and Harrington then brought her section 1983 suit. It was held barred by res judicata. As a practical matter Harrington had less opportunity to pursue her 1983 claim at the time of her first suit than Marrese and Treister had to pursue their antitrust claims at the time of their initial suits, which they could have done either by adding a count under the Illinois Antitrust Act or by bringing a separate federal antitrust suit.
We turn to No. 81-2671, the Academy's appeal from the $10,000 fine for contempt of Judge Shadur's discovery order. The first question is whether the appeal brings up to us the validity of the discovery order. The panel that originally decided this appeal was unanimous that it did, see 692 F.2d at 1087-88 (majority opinion), 1096 (dissenting opinion); 706 F.2d at 1492-93, and we agree. If a party is willing to pay the price of being punished for contempt (or suffering an equivalent sanction such as dismissal of the complaint) if the validity of the order he has disobeyed is ultimately upheld, he can get immediate review of that order by appealing from the contempt judgment. United States v. Ryan, 402 U.S, 530, 532-33, 91 S.Ct. 1580, 1581-82, 29 L.Ed.2d 85 (1971); Ryan v. Commissioner, 517 F.2d 13, 19-20 (7th Cir. 1975); Hanley v. James McHugh Construction Co., 419 F.2d 955, 957 (7th Cir.1969). Cf. National Utility Service, Inc. v. Northwestern Steel & Wire Serv., Inc., 426 F.2d 222 (7th Cir.1970); Hastings v. North East Independent School Dist., 615 F.2d 628, 631 (5th Cir.1980). If the underlying order is invalidated, the contempt judgment falls with it. See Hanley v. James McHugh Construction Co., supra, 419 F.2d at 956, 958; cf. United States v. Ryan, supra, 402 U.S. at 533, 91 S.Ct. at 1582.
Yet in apparent contradiction to the above, many decisions state that the validity of a contempt judgment is independent of the validity of the underlying order. See, e.g., Howat v. Kansas, 258 U.S. 181, 189-90, 42 S.Ct. 277, 280-81, 66 L.Ed. 550 (1922); United States v. United Mine Workers, 330 U.S. 258, 291-94, 67 S.Ct. 677, 694-96, 91 L.Ed. 884 (1947); Blocksom & Co. v. Marshall, 582 F.2d 1122,1124 (7th Cir.1978); ITT Community Development Corp. v. Barton, 569 F.2d 1351, 1356 (5th Cir.1978). "Persons who make private determinations of the law and refuse to obey an order generally risk criminal contempt even if the order is ultimately ruled incorrect." Maness v. Meyers, 419 U.S. 449, 458, 95 S.Ct. 584, 591, 42 L.Ed.2d 574 (1975). Equally broad language appears in Howat and United Mine Workers.
The difference between the two lines of cases cannot be the difference between civil and criminal contempt, because both are lines of criminal contempt cases. An order adjudging a party in civil contempt is not even an appealable final order. Fox v. Capital Co., 299 U.S. 105, 57 S.Ct. 57, 81 L.Ed. 67 (1936); Wright, The Law of Federal Courts 703 and n. 37 (4th ed. 1983). However, the two lines of cases can be reconciled by noting that in the cases where the validity of the underlying order was held not to be reviewable on appeal from the judgment of contempt, the order could have been appealed as of right directly, or otherwise reviewed other than by appeal from the contempt judgment. See Hanley v. McHugh Construction Co., supra, 419 F.2d at 957; United States v. Ryan, supra, 402 U.S. at 532 n. 4, 91 S.Ct. at 1582 n. 4; Maness v. Meyers, supra, 419 U.S. at 460, 95 S.Ct. at 592; Blocksom & Co. v. Marshall, supra, 582 F.2d at 1124; 13 Wright, Miller & Cooper, Federal Practice and Procedure § 3537, at pp. 340-41 (1975).
In United Mine Workers, for example, the union that was punished for contempt had failed to move to dissolve the temporary restraining order that it disobeyed. See 330 U.S. at 290, 67 S.Ct. at 694. Moreover, as soon as the temporary restraining order ripened into a preliminary injunction (as it did, see id. at 296, 67 S.Ct. at 697), the union could have appealed as of right under 28 U.S.C. § 1292(a)(1). Discovery orders, however, are not appealable. See Wright, supra, at 550-51. The right to appellate review of a judgment for contempt of a discovery order is thus a safety valve in the final-judgment rule of 28 U.S.C. § 1291. In United States v. Ryan, supra, in holding that an order to comply with a subpoena was not appealable, the Supreme Court noted that "If, as [the person subpoenaed] claims, the subpoena is unduly burdensome or otherwise unlawful, he may refuse to comply and litigate those questions in the event that contempt or similar proceedings are brought against him." 402 U.S. at 532, 91 S.Ct. at 1582. That is just what the Academy did in this case. The Court in Ryan explained in a footnote that its holding in earlier cases "that the claims there sought to be asserted were not open on review of petitioners' contempt convictions was based upon the availability of review of those claims at an earlier stage." Id. at 532 n. 4, 91 S.Ct. at 1582 n. 4. The Academy could not have gotten review of the discovery order at any stage earlier than the judgment of contempt for disobeying it.
Although, as this case illustrates, discovery orders may impose heavy and irrecoverable costs on a party, to make every such order appealable as of right would lead to unacceptable delays in litigation. Confining the right to get appellate review of discovery orders to cases where the party against whom the order was directed cared enough to incur a sanction for contempt is a crude but serviceable method, well established in the case law, of identifying the most burdensome discovery orders and in effect waiving the finality requirement for them.
The validity of the discovery order that the Academy disobeyed is therefore properly before us. The next question is whether the order is invalid merely because, as we have just held, Judge Shadur should have dismissed the suit on res judicata grounds before the order was entered. Although we cannot find any authority on the precise question, probably because criminal contempt is a rarely imposed sanction for violation of a discovery order, we believe that the discovery order . does fall with the underlying suit. You cannot (with exceptions not pertinent here) get discovery in the federal courts unless you have a pending lawsuit, and if it turns out that the lawsuit should not have been pending because it was barred at the outset by res judicata we think it follows logically and practically that the discovery order exceeded the judge's authority.
And, as we have noted, if the order is invalid the contempt judgment must be set aside. For this is not a case where the appellant bypassed the established procedure for getting appellate review of the order; there was no other procedure but to disobey the order and be held in contempt. The Academy was not held in contempt for "obstructive and disruptive courtroom conduct," as in United States v. Seale, 461 F.2d 345, 361 (7th Cir.1972), or for having destroyed its files rather than produce them, or for otherwise having shown disrespect for the orderly processes of the law; then the punishment would not be for violating an order but for the manner of the violation. Nothing of that sort is involved. The Academy, not in a provocative manner, disobeyed the discovery order because of a reasonable, and as it has turned out a correct, belief that the order was invalid — invalid on the very ground (res judicata) designed to protect a defendant from being harassed by repetitious litigation — and because disobeying the order and being punished for the disobedience was the only way, and a proper way, that the Academy could get appellate review.
This is not to say that anyone who wants to get the' merits of his suit reviewed by this court without waiting for a final judgment to be entered or an interlocutory appeal to be certified under 28 U.S.C. § 1292(b) need only refuse to obey the first discovery order that the district judge issues in the case and then appeal from whatever (appealable) sanction the district judge imposes for the disobedience. We have not reviewed the district court's res judicata determination as part of our review of the appeal from the contempt judgment, but on review of an independent appeal (No. 83-2683) taken under section 1292(b).
We need not rest our decision in No. 81-2671 (contempt) entirely on our decision in No. 83-2683 (res judicata). The argument made in No. 81-2671 that whether or not the entire case should have been dismissed on res judicata grounds the contempt judgment should be reversed because the discovery order violated Rule 26 of the Federal Rules of Civil Procedure has been fully briefed and argued to us, was discussed at length in both panel decisions, and is ripe for decision.
Rule 37(a)(2), authorizing discovery orders, must be read in light of Rule 26(c), which empowers the district court to "make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including . that discovery not be had .and Rule 26(d), which empowers the court, "upon motion, for the convenience of parties and witnesses and in the interests of justice," to control the sequence and timing of discovery. Of course the effective management of complex litigation requires that the district judge be allowed a broad discretion in guiding the discovery process, Chrysler Corp. v. Fedders Corp., 643 F.2d 1229, 1240 (6th Cir.1981), and hence in deciding whether to limit discovery in accordance with Rules 26(c) or (d). But his discretion is not unlimited; if we have a firm conviction that he has made a mistake, we must reverse. Silkwood v. Kerr-McGee Corp., 563 F.2d 433, 436 (10th Cir.1977). This was the test suggested by Justice Stewart, in his opinion dissenting from the second panel decision, for reviewing the discovery order in this case. See 706 F.2d at 1498.
A motion under Rule 26(c) to limit discovery requires the district judge to compare the hardship to the party against whom discovery is sought, if discovery is allowed, with the hardship to the party seeking discovery if discovery is denied. He must consider the nature of the hardship as well as its magnitude and thus give more weight to interests that have a distinctively social value than to purely private interests; and he must consider the possibility of reconciling the competing interests through a carefully crafted protective order. He must go through the same analysis under Rule 26(d) except that an order merely postponing a particular discovery request obviously should be granted more freely than one denying the request altogether.
In an effort to show that more than purely private interests are at stake the Academy argues that its membership files are protected by the First Amendment. If meant to establish a complete immunity from pretrial discovery of these materials the argument is untenable in light of Memorial Hospital for McHenry Cty. v. Shadir, 664 F.2d 1058, 1063 (7th Cir.1981) (per curiam), which rejected a claim of privilege for a hospital's records of disciplinary proceedings against staff physicians. Even if the Academy were engaged in advocating controversial views and the publication of its internal files would expose members to retaliation for those views, it would not have an absolute privilege against discovery, though the plaintiffs would then have the burden of showing that the information sought was essential to their case and unobtainable by other means that would be less likely to discourage such advocacy. See Hastings v. North East Independent School Dist., supra, 615 F.2d at 632; In re Petroleum Prods. Antitrust Litigation, 680 F.2d 5, 7 (2d Cir.1982); Gray v. Board of Educ., 692 F.2d 901, 903-05 (2d Cir.1982).
Yet there is in this case, if not a First Amendment right, at least a First Amendment interest, which the discovery sought by the plaintiffs would impair and which differentiates this case from the usual antitrust case, where discovery is sought of invoices or salesmen's reports or the minutes of a board of directors' meeting. In NAACP v. Alabama, 357 U.S. 449, 78 S.Ct. 1163, 2 L.Ed.2d 1488 (1958), a case involving resistance to pretrial discovery of membership lists, the Supreme Court recognized a First Amendment right of association for the purpose of expressing ideas. The American Academy of Orthopaedic Surgeons is not the NAACP, but neither is it a country club or a trade association; it is a professional association and a forum for exchanges of information about surgical techniques and related matters of substantial public interest. We do not understand the plaintiffs to be contesting the Academy's self-description in one of its pleadings in this case: "a professional society of board certified surgeons which exists for the purposes of encouraging research in the medical specialty of orthopaedics, and of sponsoring educational programs relating to the field of orthopaedic surgery which may be of interest to physicians." If the Academy has to reveal its membership files, members may be reluctant to offer candid evaluations of applicants, and the atmosphere of mutual confidence that encour ages a free exchange of ideas will be eroded.
The Constitution to one side, one does not have to be a student of Aristotle and de Tocqueville to know that voluntary associations are important to many people, Americans in particular, and that voluntary professional associations are important to American professionals (the premise of the plaintiffs' antitrust suit, as it was of their Illinois suits). Since an association would not be genuinely voluntary if the members were not allowed to consider applications for new members in confidence, the involuntary disclosure of deliberations on membership applications cannot but undermine the voluntary character of an association and therefore harm worthy interests, whether or not those interests derive any additional dignity from the First Amendment. The threat to such interests is more than speculative in this case. Dr. Marrese's counsel said at the rehearing en banc that he wants to use the membership files as a source of names of Academy members to depose in an effort to find out the motives behind their opposition to his client's application. It is hard to believe that after members of the Academy find themselves deposed for this purpose they will still be willing to offer candid evaluations of prospective members.
The other side of the coin is that barring the plaintiffs or their counsel from all access to the membership files would probably make it impossible for them to prove their antitrust case. But there were various devices that the district judge could have used to reconcile the parties' competing needs. For example, he could have examined the membership files himself in camera, a procedure described by the Supreme Court in a related context as "a relatively costless and eminently worthwhile method to insure that the balance between petitioners' claims of irrelevance and privilege and plaintiffs' asserted need for the documents is correctly struck." Kerr v. United States District Court, 426 U.S. 394, 405, 96 S.Ct. 2119, 2125, 48 L.Ed.2d 725 (1976). We are told the membership files may be voluminous. No doubt the files in all cases between 1970 and 1980, where applications for mémbership in the Academy were refused are voluminous, but the place to start an in camera examination would be with the files on Drs. Marrese and Treister. If the judge found no evidence in those files of any anticom-petitive purpose attributable to the Academy, he would not have to look at any other files. This is not a class action; the plaintiffs are not suing as the representatives of other orthopaedic surgeons who have been denied membership in the Academy.
Better yet, the judge might have followed the procedure discussed in this court's recent decision in EEOC v. University of Notre Dame Du Lac, 715 F.2d 331, 338-39 (7th Cir.1983). There we ordered the files of faculty tenure deliberations edited ("redacted") to remove the names of the deliberating faculty members and any other information that might enable them to be identified, and we directed that on remand the redaction be reviewed in camera by the district judge, who would have the originals before him to compare with (and thereby assure the accuracy of) the redactions. Had the same procedure been followed here, the plaintiffs' counsel would have been able to read the files personally. If the files had turned out to contain evidence or leads to evidence of anticompetitive conduct, the plaintiffs' counsel could then have requested the judge to order names revealed to counsel so that the relevant individuals could be deposed. We do not think that only universities should be entitled to such consideration.
The protective order that the judge did enter ("which draws on each party's submission but parallels neither," in his words) was not well designed to protect the privacy of the Academy's members. It not only allowed the plaintiffs themselves — two disappointed applicants for membership — to read the files on their own applications; it allowed the plaintiffs' counsel "to discuss with plaintiffs the general contents" of all of the other files and to depose anyone whose name they found in the files. The order was not calculated to allay the Academy's justifiable anxiety for the confidentiality of its membership deliberations.
Rule 26(d) (control of the sequence and timing of discovery) provided another method of accommodating the competing interests here with minimal damage to either. If there is other discovery that a plaintiff must complete in order to be able to resist a motion by the defendant for summary judgment, and thus a significant probability that his case will fail regardless of what the internal files he is seeking may show, the district judge has the power under Rule 26(d) to require the plaintiff to complete the other, nonsensitive discovery first. See Wright & Miller, Federal Practice and Procedure § 2040, 2047. And in an appropriate case he has the duty. "As a threshold matter, the court should be satisfied that a claim is not frivolous, a pretense for using discovery powers in a fishing expedition. In this case, plaintiff should show that it can establish jury issues on the essential elements of its case not the subject of the contested discovery." Bruno & Stillman, Inc. v. Globe Newspaper Co., 633 F.2d 583, 597 (1st Cir.1980). Cf. McBride v. Merrell Dow & Pharmaceuticals Inc., 717 F.2d 1460, 1467 (D.C.Cir.1983).
Of course, if the plaintiffs do not need anything beyond the contents of the Academy's membership files to prove their case, they cannot be asked to do any other discovery before getting access to the files. At oral argument we asked Dr. Marrese's counsel whether his discovery would be complete after he saw the membership files and followed up any leads the files contained. He answered that at that point he would file a motion for summary judgment arguing that the Academy had committed a per se violation of the Sherman Act, but that if the motion was denied he would conduct additional discovery, which he admitted would be necessary to prove a Rule of Reason violation. It is unlikely that the district judge would allow him to proceed in so piecemeal a fashion. The judge probably would tell him to complete discovery before moving for summary judgment. See 10 Wright, Miller & Kane, Federal Practice and Procedure § 2717 at p. 666 (1983). Assuming discovery would not be at an end when the files were turned over and any leads contained in them were tracked down, Rule 26(d) could have been used to schedule the sensitive discovery last.
We do not hold that all files of all voluntary associations are sacrosanct; we do not even hold that the membership files of an association of medical professionals are sacrosanct. They are discoverable in appropriate circumstances, subject to appropriate safeguards. But we may not ignore as judges what we know as lawyers — that discovery of sensitive documents is sometimes sought not to gather evidence that will help the party seeking discovery to prevail on the merits of his case but to coerce his opponent to settle regardless of the merits rather than have to produce the documents. In a survey of Chicago lawyers, "Several lawyers reported using discovery to try to 'move' cases toward settlement. For some attorneys this meant little more than trying to pick a propitious moment to serve a major discovery request, hoping that an opponent would rather settle than respond. For others it meant asking for information about which they knew opposing parties were particularly sensitive or using a deposition to 'educate' an opponent about the weaknesses of his case or the cost of litigation." Brazil, Civil Discovery: Lawyers' Views of Its Effectiveness, Its Principal Problems and Abuses, 1980 A.B.F.Res.J. 789, 858 (emphasis added). (Of course the problem is not limited to Chicago!) "Unnecessary intrusions into the privacy of the individual, high costs to the litigants, and correspondingly unfair use of the discovery process as a lever toward settlement have come to be part of some lawyers' trial strategy." Erickson, The Pound Conference Recommendations: A Blueprint for the Justice System in the Twenty-First Century, 76 F.R.D. 277, 288 (1980).
Many other judges and commentators have voiced concern over the use of discovery to force settlement in groundless cases. See, e.g., Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 741, 95 S.Ct. 1917, 1928, 44 L.Ed.2d 539 (1975); Herbert v. Lando, 441 U.S. 153, 176, 99 S.Ct. 1635, 1648, 60 L.Ed.2d 115 (1979); ACF Industries, Inc. v. EEOC, 439 U.S. 1081, 99 S.Ct. 865, 59 L.Ed.2d 52 (1979) (Powell, Stewart, and Rehnquist, JJ., dissenting from denial of certiorari); Cohn, Federal Discovery: A Survey of Local Rules and Practices in View of Proposed Changes to the Federal Rules, 63 Minn.L.Rev. 253, 255-56 (1979); Kaminsky, Proposed Federal Discovery Rules for Complex Litigation, 48 Fordham L.Rev. 907, 922 (1980); Renfrew, Discovery Sanctions: A Judicial Perspective, 67 Cal.L. Rev. 264 (1979); Setear, The Sources and Reform of Discovery Abuse 5-6 (Wkg. Paper No. 11, Center for Studies in Law, Economics & Pub. Policy, Yale Law School, June 1983); Comment, Discovery Abuse Under the Federal Rules: Causes and Cures, 92 Yale L.J. 352 (1982). There is at least a hint of predatory discovery in this case in the fact that the plaintiffs did not seek access to the federal court system with its liberal discovery rules till after they had lost their state-court suit, and in the determination expressed by Dr. Marrese's counsel to use the Academy's membership files as the basis for deposing the individuals who voted against his client's membership application.
There are so many ways in which Judge Shadur could have prevented the plaintiffs from abusing the discovery process, without denying them any information essential to developing their case, that we are left with the firm conviction that the discovery order he issued, when he issued it, was erroneous. Our conclusion is consistent with the evolving concept of the district judge's managerial responsibility in complex litigation. Although amended Fed.R.Civ.P. 26(b)(1), which expands that responsibility, did not take effect until August 1, 1983, after the discovery order in issue here was issued, the Advisory Committee's Note indicates that the purpose of the amended rule is in part to remind federal district judges of their broad powers — and, we believe, correlative responsibilities — under Rule 26.
This case illustrates the pathological delays that are all too frequent in modern litigation. After nearly eight years of state and federal litigation, the case remains stalled in the earliest stages of discovery. It has gone on long enough. In No. 81-2671, the contempt judgment is reversed with directions to dismiss the contempt proceeding. In No. 83-2683, the order denying the defendant's motion to dismiss the underlying suit is reversed with directions to grant the motion and dismiss the complaint with prejudice.