Opinion ID: 771680
Heading Depth: 3
Heading Rank: 1

Heading: Per Se Illegal Tying

Text: 41 To establish that a tying arrangement is illegal per se, plaintiffs must prove three elements: (1) a tie between two separate products or services sold in relevant markets; (2) sufficient economic power in the tying product market to affect the tied market; and (3) an effect on a not-insubstantial volume of commerce in the tied product market. See Bhan, 929 F.2d at 1411; Robert's Waikiki U-Drive, Inc. v. Budget RentA-Car Sys., Inc., 732 F.2d 1403, 1407 (9th Cir. 1984). 42 The district court also analyzed a fourth element: whether the defendant has an economic interest in the tied product. See id. The economic interest requirement is based on the theory that if the tying entity receives no economic benefit from the tie, then we can safely presume that it is not attempting to spread its power into the tied-product market, and we need not strike the arrangements down as an illegal tie under the antitrust laws. Gonzalez v. St. Margaret's House Hous. Dev. Fund Corp., 880 F.2d 1514, 1517 (2d Cir. 1989). 7 Under this element, we analyze SCH's economic interest in the tied product, C-sections performed by defendant OBs. 43 We conclude that there is no genuine issue of material fact about whether SCH received a direct economic benefit from C-sections performed by defendant OBs. Beard, 912 F.2d at 141. Defendant OBs are not employees of SCH and there is no evidence in the record that they share their fees with the hospital. Although defendant OBs may charge more for deliveries than Dr. Runte charges, plaintiffs have pointed to no evidence in the record that SCH's profits are in any way affected by who performs deliveries at SCH. Even if SCH has a high C-section rate, there is nothing in the record to show that the hospital receives any direct economic benefit from the performance of those C-sections. Id. 44 Plaintiffs argue that SCH received some indirect economic benefits by capturing the pediatric business referred by defendant OBs and by preventing TGH from entering the market. TGH, however, withdrew from and decided against reentering the market even before SCH established its C-section privileging criteria. Plaintiffs' expert testified that the number of births in the County can only support inpatient obstetrical service at one hospital. TGH conducted an independent study and concluded that it was not economically feasible for TGH to re-open its obstetrical unit. Because they are so attenuated, any indirect economic benefits simply do not raise a genuine issue of material fact under the direct economic interest requirement. Id. In sum, no genuine issue of material fact exists on the per se tying claim.