Opinion ID: 2999625
Heading Depth: 2
Heading Rank: 2

Heading: Antitrust Standing and Injury

Text: The Supreme Court has observed that “[a]ntitrust laws in general, and the Sherman Act in particular, are the Magna Carta of free enterprise . . . . as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms.” United States v. Topco Associates, Inc., 405 U.S. 596, 610 (1972). Section 1 of the Sherman Act provides that “[e]very 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.” 15 U.S.C. § 1. The purpose of the Act is “to assure customers the benefits of price competition.” See Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, et al., 459 U.S. 519, 538 (1983) (discussing the legislative history). The Supreme Court has stated that the “central interest” of the Act is “protecting the economic freedom of participants in the relevant market.” Id. We have similarly observed that “[t]he principal purpose of the antitrust laws is to prevent overcharges to consumers.” Premier Elec. Constr. Co. v. Nat’l Elec. Contractors Ass’n, Inc., 814 F.2d 358, 368 (7th Cir. 1987). Given the intent of our antitrust laws, courts have developed the doctrine of “antitrust standing” and the subsidiary doctrine of “antitrust injury” in order to assure efficient use of the resources of the courts towards achieving these goals. See generally William H. Page, The Scope of Liability for Antitrust Violations, 37 STAN. L. REV. 1445, 1446-63 (1985); see also U.S. Gypsum Co. v. Indiana Gas Co., Inc., 350 F.3d 623, 627 (7th Cir. 2003) (questioning the wisdom of the “antitrust standing” nomenclature in light of No. 05-1196 9 the potential for confusion with Article III standing). Under Section 4 of the Clayton Act, “any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent.” 15 U.S.C. § 15(a). The Supreme Court has cautioned that this seemingly broad language must be interpreted more narrowly in light of Congressional intent as revealed by the legislative history. See Associated Gen. Contractors, 459 U.S. at 529-35. Thus, “not all persons who have suffered an injury flowing from [an] antitrust violation have standing to sue under § 4.” In re Industrial Gas Antitrust Litigation, 681 F.2d 514, 516 (7th Cir. 1982). Under our precedent, “only those parties who can most efficiently vindicate the purposes of the antitrust laws have antitrust standing to maintain a private action under § 4.” Serfecz v. Jewel Food Stores, 67 F.3d 591, 597-98 (7th Cir. 1995) (quoting In re Industrial Gas, 681 F.2d at 516). Kochert must demonstrate that she meets the requirements of both antitrust injury and antitrust standing to succeed on the merits of her tying, boycott, and conspiracy claims under the Sherman Act. See Greater Rockford Energy and Technology Corp. v. Shell Oil Co., 998 F.2d 391, 404 (7th Cir. 1993) (“a showing of both antitrust injury and antitrust standing are necessary to proceed under § 4”). 10 No. 05-1196
The threshold question for our inquiry is whether Kochert has suffered an antitrust injury. Kochert must demonstrate that her “claimed injuries are ‘of the type the antitrust laws were intended to prevent’ and ‘reflect the anticompetitive effect of either the violation or of anticompetitive acts made possible by the violation.’ ” Tri-Gen Inc. v. Int’l Union of Operating Eng’rs, Local 150, 433 F.3d 1024, 1031 (7th Cir. 2006) (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977)). Kochert’s cognizable injuries are variations on the theme of lost income in her anesthesia practice. We must determine whether these alleged injuries are the result of defendants’ allegedly anticompetitive acts. But first, we must assess what anticompetitive behavior is at stake here. The parties dispute the starting point of defendants’ anticompetitive acts. The most obvious point in time is 2001, when GLHS formulated its exclusive contract with Anesthesia Associates. Before this point, Lafayette Anesthesiologists had an exclusive contract with SEMC while Anesthesia Associates had an exclusive contract at Home Hospital, and, therefore, the Lafayette market was serviced by two competing anesthesia services groups. Only after GLHS contracted exclusively with Anesthesia Associates in 2001 were the doctors of Lafayette Anesthesiologists (and hence Kochert) completely foreclosed from practicing anesthesia services at either of the two Lafayette Hospitals. This time line creates an obvious problem for Kochert because the record makes clear that she was no longer a practicing anesthesiologist at this point.5 Recognizing this problem, Kochert argues that the real starting point of defendants’ anticompetitive acts is 1998, 5 Kochert has maintained anesthesia privileges at SEMC, but the record is clear that she was practicing pain management full-time by mid-2000. No. 05-1196 11 when Anesthesia Associates declined to renew its subcontract with her. Kochert’s theory is that this event set off an anticompetitive chain reaction which culminated in her complete exclusion from the Lafayette anesthesia services market in 2001. Kochert does not contend that the pre-2001 activity, viewed independently, constituted anticompetitive activity under the Sherman Act. Indeed, her expert, Seaman, testified at his deposition that the events in Kochert’s chain prior to 2001 did not independently raise “any major anticompetitive concern.” The only independent event Seaman identified as having anticompetitive effects was GLHS’s 2001 discontinuation of the exclusive contract between SEMC and Lafayette Anesthesiologists. Seaman, however, also advanced Kochert’s chain reaction theory of anticompetitive effects. We agree with the district court that Kochert’s chain reaction theory must be rejected. Kochert has offered no precedential support for the proposition that a court should look backward from the point of the actual anticompetitive activity in search of the genesis of the acts that eventually allowed the anticompetitive behavior to occur. Such an examination would have no logical starting point in this case. Kochert argues for 1998, which coincides with the point at which her injuries accrued, but one could just as easily argue that the starting point of the chain reaction was 1994, when Home Hospital first awarded an exclusive contract to Anesthesia Associates. But the 1994 contracting is not logically the first domino because it clearly was not part of an anticompetitive scheme. The same logic applies to the 1998 denial of renewal of Kochert’s subcontract—either this act constituted a part of an anticompetitive scheme or it did not. If it did not, it is not the starting point for our examination of defendants’ allegedly anticompetitive behavior. Kochert asserts that events in an antitrust case must be viewed “not in a vacuum or in isolation, but as a con12 No. 05-1196 tinuum,” and cites several cases in support of this contention, including our decision in In re High Fructose Corn Syrup Antitrust Litigation, 295 F.3d 651, 655-56 (7th Cir. 2002). We do not quibble with the proposition that courts should not be myopic in their assessment of potential violations of the antitrust laws, but Kochert’s reliance on this concept is misplaced in the context of the current inquiry. If she could demonstrate that the events of 1998 actually were elements of a broader anticompetitive scheme, we would be remiss if we failed to consider them in the antitrust injury assessment. But she cannot. There is no evidence that any of the events of 1998, including Anesthesia Associates’s decision to deny Kochert a subcontract, were part of an anticompetitive scheme that culminated with GLHS’s decision to contract exclusively with Anesthesia Associates. They were simply staffing decisions made solely by parties without market control. We have stated explicitly that “the staffing decision at a single hospital [is] not a violation of section 1 of the Sherman Act.” See BCB Anesthesia Care Ltd. v. Passavant Memorial Area Hospital Ass’n, 36 F.3d 664, 668 (7th Cir. 1994) (collecting cases). Furthermore, the cases Kochert cites in support of her argument do not address the issue of antitrust injury as we examine it here. In re High Fructose discusses the need for holistic examination of a defendant’s acts in the context of a court’s assessment of price-fixing arrangements. See In re High Fructose, 295 F.3d at 655 (“The second trap to be avoided in evaluating evidence of an antitrust conspiracy for purposes of ruling on the defendants’ motion for summary judgment is to suppose that if no single item of evidence presented by the plaintiff points unequivocally to conspiracy, the evidence as a whole cannot defeat summary judgment”). The case does not address either antitrust standing or antitrust injury. The other cases cited by Kochert are similarly inapposite. See Continental Ore Co. No. 05-1196 13 v. Union Carbide & Carbon Corp., 370 U.S. 690, 699 (1962) (“(T)he character and effect of a conspiracy are not to be judged by dismembering it and viewing its separate parts, but only by looking at it as a whole.”) (quoting American Tobacco v. United States, 147 F.2d 93, 106 (6th Cir. 1945)); Aspen Highlands v. Aspen Skiing Co., 738 F.2d 1509, 1522 n.18 (10th Cir. 1984) (concluding that the six parts of the plaintiff’s evidence of monopolization “should be viewed as a whole.”); City of Mishawaka, et al. v. American Elec. Power Co., 616 F.2d 976, 986 (7th Cir. 1980) (concluding that the various acts of a monopoly in a “price squeezing” scheme can not be looked at in a vacuum for the purposes of determining whether there is evidence of a Sherman Act violation). Moreover, none of the plaintiffs in the cases Kochert cites attempted to introduce evidence of activity postdating their participation in the market as proof of antitrust injury. Kochert has not introduced evidence supporting the conclusion that anything other than GLHS’s 2001 elimination of the exclusive contract between SEMC and Lafayette Anesthesiologists should be considered as the starting point for our antitrust injury analysis. This conclusion brings into focus the central question in assessing Kochert’s alleged antitrust injury: did GLHS’s 2001 elimination of the exclusive contract between SEMC and Lafayette Anesthesiologists cause Kochert’s injuries? Put another way, was this act “the cause-in-fact of the injury,” or can it be said that “ ‘but for’ the violation, the injury would not have occurred”? See Greater Rockford Energy and Technology Corp. v. Shell Oil Co., 998 F.2d 391, 395 (7th Cir. 1993). Since Kochert was practicing pain management full-time as of August 2000, the answer to all of these questions is “no.” GLHS’s anticompetitive behavior in 2001 did not injure Kochert’s anesthesiology practice because it was nonexistent by this point. Kochert therefore fails to establish one necessary prong of the twopronged test that the Supreme Court described in Bruns14 No. 05-1196 wick Corp.; she cannot demonstrate that her injuries “flow[ ] from that which makes defendants’ acts unlawful.” Brunswick Corp., 429 U.S. at 489. She has not demonstrated antitrust injury.
Even if Kochert could establish antitrust injury, she would still fail to establish antitrust standing because she is not the party “who can most efficiently vindicate the purposes of the antitrust laws” in this case. See Serfecz, 67 F.3d at 598. The Supreme Court has identified six factors that courts should weigh in making this assessment:
anti-trust violation and the harm to the plaintiff; (2) [i]mproper motive; (3) [w]hether the injury was of a type that Congress sought to redress with the antitrust laws; (4) [t]he directness between the injury and the market restraint; (5) [t]he speculative nature of the damages; (6) [t]he risk of duplicate recoveries or complex damages apportionment. Sanner, 62 F.3d at 927 (describing factors articulated in Associated General Contractors, 459 U.S. at 537-46). The fourth factor weighs particularly heavily in this case. In discussing the directness inquiry, the Supreme Court stated that “[t]he existence of an identifiable class of persons whose self-interest would normally motivate them to vindicate the public interest in antitrust enforcement diminishes the justification for allowing a more remote party . . . to perform the office of a private attorney general.” Associated Gen. Contractors, 459 U.S. at 542. As was the case in Serfecz, Lafayette’s anesthesia “consumers could maintain an action if defendants’ actions stifled competition allowing defendants to engage in monopoly pricing in the retail [ ] market.” See Serfecz, 67 No. 05-1196 15 F.3d at 598. These consumers, or perhaps one of the entities that is also directly affected by rises in anesthesia services prices, such as an insurer, would be a more efficient claimant. The Court’s concern with opening the antitrust litigation floodgates also suggests that groups of doctors, such as the excluded Lafayette Anesthesiologists group, might serve as better plaintiffs than individual doctors like Kochert. Denying Kochert “a remedy on the basis of its allegations in this case is not likely to leave a significant antitrust violation undetected or unremedied.” See Associated Gen. Contractors, 459 U.S. at 542. If Anesthesia Associates and GLHS are truly manipulating the anesthesia services market in order to raise prices and drive down quality of care, these effects will not be missed by patient-consumers or insurers. Two other factors outlined in Associated General Contractors that weigh against a finding of antitrust standing are addressed in the context of our antitrust injury analysis. Though Kochert is arguably a direct competitor, the causal connection between her injury and the antitrust violation is tenuous at best. Kochert has also failed to produce evidence of improper motive. She has not offered any arguments with regard to the other factors sufficient to tip the scales away from our ultimate conclusion. Kochert does not have antitrust standing. Finally, though it is ultimately unnecessary, we note that the record is bereft of any credible evidence of the type of anticompetitive effects alleged by Kochert. Kochert’s economics expert testified at his deposition that “there is no particular evidence on nominal rates that would suggest an exercise in market power.” With no evidence that prices, in the normal sense, have been affected by anticompetitive activity, Kochert (and her expert) relied exclusively on her evidence of diminished quality of care as proof of anticompetitive effect, in and of itself, and as proof of higher “quality adjusted” costs. But no reasonable jury, 16 No. 05-1196 examining Kochert’s evidence of diminished quality, could find it credible as proof of such diminution. Kochert has not introduced any evidence that would allow a jury to compare the quality of care prior to defendants’ anticompetitive acts with the quality of care after these acts. She has not introduced any statistical analysis focusing on measurable indices of quality, such as the number of patient complaints or mortality rates. Instead, Kochert offers expert testimony and physician affidavits which rely almost exclusively on anecdotes, such as one story about an anesthesiologist leaving an operating room momentarily to eat a sandwich, to prove diminished quality. We have serious doubts about the usefulness of Kochert’s evidence. But we will not resolve this issue because it is clear that Kochert does not have antitrust standing.