Opinion ID: 217510
Heading Depth: 1
Heading Rank: 5

Heading: The Hospital's Derogatory and Territorial Communications

Text: Mercatus also argues that a number of statements the Hospital made outside of its public relations campaign violated the antitrust laws because they impaired Mercatus' ability to compete with the Hospital.
In addition to its public relations campaign against Mercatus, the Hospital also allegedly communicated with other businesses to make it more difficult for Mercatus to enter the Lake Bluff market. For example, the Hospital contacted Mercatus' business partner ENH to question why it would support a physician center that was ideally designed to lure [away] physicians that were aligned with the hospital, and to warn ENH to stay out of Lake Bluff. A Hospital employee also contacted other health care providers to discuss Mercatus' CEO's rude treatment of her during her visit to Mercatus' Vernon Hills facility and to warn them of the competitive threat Mercatus posed to their business. Mercatus also alleges that the Hospital made false statements asserting that Mercatus was not in compliance with federal antikickback regulations.
Unlike the Hospital's public relations campaign, we see no discernible connection between any of these communications and the proceedings before the Board; as a result, they are simply outside Noerr-Pennington 's reach. See MCI Communications Corp. v. Am. Tel. & Telegraph Co., 708 F.2d 1081, 1159 (7th Cir. 1983) (The Noerr-Pennington doctrine is concerned solely with the right to attempt to influence government action.). That is not to say, of course, that these statements are necessarily actionable in antitrust. To resolve that particular question, we must consider the precise speech at issue here.
We first turn to the Hospital's warning that ENH stay out of the Hospital's territory. Under circuit precedent, such a territorial admonition to a competitor like other speech made in the commercial contextdoes not violate the antitrust laws unless it leads to an agreement to restrain trade or is accompanied by some sort of enforcement mechanism designed somehow to coerce or compel that competitor to heed the admonition. See Sanderson v. Culligan Int'l Co., 415 F.3d 620, 623 (7th Cir.2005) (affirming summary judgment against antitrust claim based on allegedly defamatory statements, due to lack of an enforcement mechanism); Schachar v. American Academy of Ophthalmology, Inc., 870 F.2d 397, 400 (7th Cir.1989) (Without [an enforcement mechanism] there is only uncoordinated individual action, the essence of competition.). We find nothing in the record to indicate that the Hospital's warnings to ENH were backed by any sort of coercive conduct that might give rise to antitrust liability. The Hospital did not threaten to spearhead a boycott of ENH's services or to have ENH's suppliers withhold medical supplies if it entered Hospital territory. See Schachar, 870 F.2d at 399 (noting that boycotts and agreements not to distribute certain products are the types of enforcement mechanisms that may render speech actionable under the antitrust laws). Nor did the Hospital possess any inherent authority that it could leverage to compel ENH to stay out of Lake Bluff. See id. at 398 (finding significant that defendant had no authority over hospitals, insurers, state medical societies or licensing boards, and other persons who might be able to govern the performance of surgery). Regardless of what the Hospital said, ENH was free to choose for itself whether to compete close to the Hospital. Put simply, all the Hospital did was say aloud what every business already thinks about its competitors: stay out of my territory. See Olympia Equip. Leasing Co. v. W. Union Telegraph Co., 797 F.2d 370, 379 (7th Cir.1986) (Most businessmen don't like their competitors, or for that matter competition.). Such a statement, absent an agreement or any coercive enforcement mechanisms to back it up, is simply not actionable under the Sherman Act.
We next turn to the remainder of the Hospital's communications, all of which served to disparage either Mercatus itself or the services it offered. Like the Hospital's territorial admonitions to ENH, these statements were not backed by threats designed to coerce acceptance of the Hospital's views about Mercatus. See Sanderson, 415 F.3d at 623; Schachar, 870 F.2d at 400. As a result, this speech can be compared to a kind of commercial speech familiar to all: advertisements. Like an advertisement (think of Apple's long-running Mac vs. PC commercials, for example), the Hospital's statements implicitly touted the Hospital's strengths while calling into question the wisdom of doing business with Mercatus. As a general matter, such statements are outside the reach of the antitrust laws, however critical they may be of a competitor's product or business model. Antitrust law does not compel your competitor to praise your product or sponsor your work. To require cooperation or friendliness among rivals is to undercut the intellectual foundations of antitrust law. Id. at 399. This analysis holds true even if the Hospital's statements about Mercatus were false. As we recognized in Sanderson, even false statements about a competitor serve to set the stage for competition. 415 F.3d at 623. If the Hospital falsely claimed that Mercatus would drive local community-based hospitals out of business, for example, Mercatus could respond with information to refute that claim. If the Hospital falsely claimed that Mercatus violated anti-kickback regulations, Mercatus could respond with facts indicating the falsity of that claim. [10] By engaging in this process, Mercatus could have derived a distinct competitive advantage: a falsehood, when exposed, will likely generate bad will toward the firm by which [the public] was misled. Covad Communications Co. v. Bell Atlantic Corp., 398 F.3d 666, 674 (D.C.Cir.2005). The genuine anticompetitive effects of false and misleading statements about a competitor are minimal, at best. Although false statements about a rival can [theoretically] obstruct competition on the merits, it is difficult to identify those false statements on which buyers do, or ought reasonably to, rely. 3 P. Areeda & D. Turner, Antitrust Law, ¶ 737b at 280-81 (1978), quoted in American Prof'l Testing Service, Inc. v. Harcourt Brace Jovanovich Legal & Prof'l Publications, Inc., 108 F.3d 1147, 1152 (9th Cir.1997). Many consumers will recognize disparagement as non-objective and highly biased. Id. As a result, courts must exercise caution ... against attaching much weight to isolated examples of disparagement, and claims based on one competitor's disparagement of another should presumptively be ignored. Id. Recognizing these concerns, other circuits have concluded that the anticompetitive effects of false speech are presumptively minimal. See, e.g., American Council of Certified Podiatric Physicians & Surgeons v. American Bd. of Podiatric Surgery, Inc., 323 F.3d 366, 370 (6th Cir. 2003); American Prof'l Testing Service, 108 F.3d at 1152; National Ass'n of Pharmaceutical Mfrs. v. Ayerst Labs., 850 F.2d 904, 916 (2d Cir. 1988). As we said in Sanderson, absent an accompanying coercive enforcement mechanism of some kind, even demonstrably false [c]ommercial speech is not actionable under the antitrust laws. 415 F.3d at 624; see Schachar, 870 F.2d at 400 (noting that, whenever one competitor's statements about another are false or misleading or incomplete or just plain mistaken, the remedy is not antitrust litigation but more speechthe marketplace of ideas); cf. Associated Gen. Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 526-27, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983) (observing that even conduct that might constitute common-law fraud or deceit is plainly not subject to review under the federal antitrust laws). To the extent that a falsehood results in some harm to a competitor, that is a matter better suited for the laws against unfair competition or false advertising, not the antitrust laws, which are concerned with the protection of competition, not competitors. Mullis v. Arco Petroleum Corp., 502 F.2d 290, 298 (7th Cir.1974) (quotation omitted); see Northwest Power Products, Inc. v. Omark Indus., Inc., 576 F.2d 83, 88 (5th Cir.1978) (The thrust of antitrust law is to prevent restraints on competition. Unfair competition is still competition and the purpose of the law of unfair competition is to impose restraints on that competition.). Some other law may require judicial intervention in order to increase the portion of truth in advertising; the Sherman Act does not. Sanderson, 415 F.3d at 624. Neither the Hospital's territorial comments nor its alleged derogatory statements about Mercatus are a valid basis, whether considered alone or in conjunction with the Hospital's other complained-of conduct, for an antitrust claim. The district court correctly granted summary judgment for the Hospital regarding these matters.