Court Opinion

ID: 4651309
Source: CourtListenerOpinion
Date Created: 2021-01-14 01:00:24.202373+00
Date Added: 2024-06-11T08:01:37.853033
License: Public Domain

Case: 20-50394      Document: 00515705908         Page: 1    Date Filed: 01/13/2021

           United States Court of Appeals
                for the Fifth Circuit                             United States Court of Appeals
                                                                           Fifth Circuit

                                                                         FILED
                                                                  January 13, 2021
                                   No. 20-50394
                                                                    Lyle W. Cayce
                                                                         Clerk

   Jaydeep Shah, M.D. M.A.,

                                                            Plaintiff—Appellant,

                                       versus

   VHS San Antonio Partners, L.L.C., doing business as
   Baptist Health System, doing business as North
   Central Baptist Hospital; Graham Reeve; Dana Kellis,
   M.D.; William Waechter; Tenet Healthcare
   Corporation; Tenet Healthcare, Limited,

                                                          Defendants—Appellees.

                  Appeal from the United States District Court
                       for the Western District of Texas
                            USDC No. 5:18-CV-751

   Before Owen, Chief Judge, and King and Engelhardt, Circuit Judges.
   Priscilla R. Owen, Chief Judge:
          Pediatric anesthesiologist Dr. Jaydeep Shah alleges that Baptist
   Health System (BHS), its officers, and its parent company (collectively, the
   BHS parties) (1) committed violations of §§ 1 and 2 of the Sherman Antitrust
   Act and (2) tortiously interfered with a business relationship by entering into
   an agreement with STAR Anesthesia, P.A. (STAR) through which STAR
   became the exclusive provider of anesthesia services to several of BHS’s
Case: 20-50394      Document: 00515705908          Page: 2   Date Filed: 01/13/2021

                                    No. 20-50394

   hospitals in the San Antonio area. Because Shah’s definition of the relevant
   market is insufficient as a matter of law, we affirm the district court’s grant
   of summary judgment in favor of the BHS parties.
                                          I
          Jaydeep Shah, M.D. M.A. is a board-certified anesthesiologist who
   specializes in pediatric anesthesiology in San Antonio, Texas. In 2006, Shah
   joined STAR Anesthesia, P.A., an independent group of anesthesiologists, as
   the Director of Pediatric Anesthesiology. Soon after, Shah became a full
   partner and shareholder of STAR. During Shah’s tenure with STAR, STAR
   entered into a series of agreements (collectively, the BHS-STAR Agreement)
   to become the exclusive provider of anesthesia services at several acute-care
   hospitals in the San Antonio area operated by VHS San Antonio Partners,
   L.L.C., doing business as Baptist Health System, including North Central
   Baptist Hospital (NCB Hospital). For pediatric anesthesia specifically, BHS
   agreed to provide STAR a pediatric income guarantee, promising STAR at
   least $500,000 in collections for pediatric anesthesia services provided by
   STAR at NCB Hospital.
          In 2012, BHS and STAR incorporated their earlier agreements into an
   overall agreement for anesthesiology coverage between them. With that
   incorporation, STAR became the exclusive provider of anesthesia services at
   four of BHS’s hospitals. Shah was not a party to the 2012 incorporation, nor
   was he named in the pediatric income guarantee income provision. But he
   continued to practice as a full-time pediatric anesthesiologist with STAR,
   becoming the primary beneficiary of STAR’s guaranteed collections.
          In 2016, STAR and BHS negotiated to amend the 2012 agreement and
   eliminate the $500,000 pediatric income guarantee.           The exclusivity
   provision remained unchanged. The next month, as a result of the fallout
   between Shah and STAR from the elimination of the income guarantee,

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   STAR terminated its relationship with Shah for cause after notice and a
   hearing. As a result, Shah could no longer provide pediatric anesthesia
   services at NCB Hospital or any other BHS facility included in the BHS-
   STAR Agreement’s exclusivity provision.
           A few months later, Shah sent a letter to the president of NCB
   Hospital requesting authorization to provide pediatric anesthesia care at
   NCB Hospital. In response, the president and CEO of BHS wrote back that
   Shah’s reappointment to the Medical Staff of BHS and his privileges were
   approved, and that BHS “welcome[d] [Shah’s] continued participation in
   providing this care.” In actuality, the exclusivity provision of the BHS-
   STAR Agreement precluded Shah—no longer affiliated with STAR—from
   providing pediatric anesthesia services at six BHS facilities (including NCB
   Hospital). Shah was required to receive an exception to the Agreement from
   STAR and BHS, as they sometimes granted. An exception was not granted.
           After suing STAR in Texas state court to no avail, 1 Shah filed the
   present suit against BHS, three of its officers, and its parent company for
   (1) violations of §§ 1 and 2 of the Sherman Act and (2) tortious interference
   with a business relationship. Shah claimed that the BHS parties excluded
   him and non-STAR anesthesiologists from practicing in Bexar County and
   the surrounding areas, causing harm to surgeons and patients. The parties
   conducted tiered discovery, with Tier One involving the issues of the
   “relevant market” and “damages/antitrust injury.” The BHS parties then
   moved for summary judgment. The district court granted the motion on the

           1
            See Shah v. Star Anesthesia, P.A., 580 S.W.3d 260, 268 (Tex. App.—San Antonio
   2019, no pet.) (affirming trial court); Star Anesthesia, P.A. v. Shah, No. 2018CI04393, 2018
   WL 3520044, at *1 (244th Dist. Ct., Bexar County, Tex. June 12, 2018).

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   merits—choosing not to decide the issue of antitrust standing.                           Shah
   appealed to this court.
                                                 II
           “We review the district court’s grant of summary judgment de
   novo.” 2 Summary judgment is proper “if the movant shows that there is no
   genuine dispute as to any material fact and the movant is entitled to judgment
   as a matter of law.” 3 To defeat summary judgment, Shah must “identify
   specific evidence in the record” and “articulate the ‘precise manner’ in
   which that evidence support[s] [his] claim.” 4 In ruling, we must view all
   facts and inferences in the light most favorable to Shah and resolve all factual
   disputes in his favor. 5
           Assuming without deciding that Shah provided enough evidence to
   present a genuine dispute of material fact as to antitrust standing, he must do
   the same for the individual Sherman Act claims. As a prerequisite to both
   Sherman Act claims, Shah must define the relevant market. 6 “Without a

           2
             S&M Brands, Inc. v. Caldwell, 614 F.3d 172, 175 (5th Cir. 2010) (emphasis
   omitted) (citing Breaux v. Halliburton Energy Servs., 562 F.3d 358, 364 (5th Cir. 2009)).
           3
               Fed. R. Civ. P. 56(a).
           4
            Willis v. Cleco Corp., 749 F.3d 314, 317 (5th Cir. 2014) (first alteration in original)
   (quoting Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994)).
           5
            Boudreaux v. Swift Transp. Co., Inc., 402 F.3d 536, 540 (5th Cir. 2005) (first
   quoting Armstrong v. Am. Home Shield Corp., 333 F.3d 566, 568 (5th Cir. 2003); and then
   quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)).
           6
             See Golden Bridge Tech., Inc. v. Motorola, Inc., 547 F.3d 266, 271 (5th Cir. 2008)
   (“To establish a § 1 violation, a plaintiff must prove that: (1) the defendants engaged in a
   conspiracy; (2) that restrained trade; (3) in the relevant market.” (citing Apani Sw., Inc. v.
   Coca-Cola Enters., Inc., 300 F.3d 620, 627 (5th Cir. 2002))); Surgical Care Ctr. of Hammond,
   L.C. v. Hosp. Serv. Dist. No. 1 of Tangipahoa Par., 309 F.3d 836, 839-40 (5th Cir. 2002) (“To
   establish Section 2 violations . . . a plaintiff must define the relevant market.” (quoting
   Dr.’s Hosp. of Jefferson, Inc. v. Se. Med. All., Inc., 123 F.3d 301, 311 (5th Cir. 1997))).

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   definition of the market there is no way to measure the defendant’s ability to
   lessen or destroy competition.” 7 The relevant market is “the area of
   effective competition” 8 “in which the seller operates, and to which the
   purchaser can practicably turn for supplies.” 9 The relevant market has two
   components: a product market and a geographic market. 10
           “Whether a relevant market has been identified is usually a question
   of fact; however, in some circumstances, the issue may be determined as a
   matter of law.” 11 If Shah fails to define his “proposed relevant market with
   reference to the rule of reasonable interchangeability and cross-elasticity of
   demand, or alleges a proposed relevant market that clearly does not
   encompass all interchangeable substitute products even when all factual
   inferences are granted in [his] favor, the relevant market is legally
   insufficient.” 12 That is, in order for Shah’s definition to be legally sufficient,
   it “must include all ‘commodities reasonably interchangeable by consumers
   for the same purposes.’” 13
           Shah defines the product market as “pediatric anesthesiologists” and
   the geographic market as “Bexar County and the seven contiguous
   counties.” He emphasizes that his “product market” definition is not

           7
            Ohio v. Am. Express Co., 138 S. Ct. 2274, 2285 (2018) (alterations omitted)
   (quoting Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 177 (1965)).
           8
                Id.
           9
                Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 327 (1961).
           10
                Wampler v. Sw. Bell Tel. Co., 597 F.3d 741, 744 (5th Cir. 2010).
           11
             Apani, 300 F.3d at 628 (citing Seidenstein v. Nat’l Med. Enters., Inc., 769 F.2d
   1100, 1106 (5th Cir. 1985)).
           12
                Id.
           13
            PSKS, Inc. v. Leegin Creative Leather Prods., Inc., 615 F.3d 412, 417 (5th Cir. 2010)
   (quoting United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 395 (1956)).

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                                            No. 20-50394

   hospitals, as the district court may have understood, but the pediatric
   anesthesiologists themselves. The BHS parties contend that “in reality,”
   Shah’s product market definition is “far narrower” because it “includes only
   facilities that provide pediatric anesthesia services where [Shah] cannot
   practice, and excludes other hospitals and non-hospital environments where
   pediatric anesthesia services are rendered—including some where [Shah] has
   himself practiced.” The BHS parties argue that the product market as
   defined by Shah does not encompass all interchangeable substitute products
   and is insufficient as a matter of law.
           The district court, relying on our decision in Surgical Care Center of
   Hammond, 14 held that “‘[a]bsent a showing of where people could practically
   go’ for pediatric anesthesia services,” Shah’s definition of the relevant
   market “failed to meet his burden of presenting sufficient evidence.” 15 In
   Hammond, a hospital sued another hospital under §§ 1 and 2 of the Sherman
   Act, alleging that the defendant-hospital was attempting to monopolize the
   outpatient surgery product market by abusing its market power over the
   inpatient care product market, thus “tying” the two products. 16 This court
   rejected the plaintiff’s definition of the relevant market because its expert
           did not attempt to identify the hospitals or clinics that may be
           deemed competitors of [the defendant]. [The expert] relied
           solely on what he defined as [the defendant’s] service area to

           14
             Surgical Care Ctr. of Hammond, L.C. v. Hosp. Serv. Dist. No. 1 of Tangipahoa Par.,
   309 F.3d 836 (5th Cir. 2002).
           15
             Shah v. VHS San Antonio Partners LLC, No. SA-18-CV-00751-XR, 2020 WL
   1854969, at *6 (W.D. Tex. Apr. 9, 2020) (quoting id. at 840); see also Shah, 2020 WL
   1854969, at *5 n.8 (noting that Shah’s varying use of the terms “‘pediatric anesthesia
   services’ (such as ‘pediatric anesthesiology,’ ‘pediatric anesthesia,’ and ‘pediatric
   anesthesiology services’)” are “differences without distinction” for purposes of the
   relevant market definition).
           16
                Hammond, 309 F.3d at 838.

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           compose the geographic market. Absent a showing of where
           people could practicably go for inpatient services, [the plaintiff]
           failed to meet its burden of presenting sufficient evidence to
           define the relevant geographic market. 17
           Shah, a pediatric anesthesiologist, sued BHS, a hospital system,
   alleging Sherman Act violations related to the pediatric anesthesiologist
   product market. Shah did not attempt to identify, either at summary
   judgment or in his opening brief, hospitals or clinics “where people could
   practicably go” for pediatric anesthesia services within Bexar County and the
   seven contiguous counties. He did not even specify individual pediatric
   anesthesiologists from whom patients could practicably obtain health care
   services. Rather, he provided tallies, by county, of pediatric anesthesiologists
   in Texas that fit the anesthesiology requirements of the BHS-STAR
   Agreement.
           Moreover, as the BHS parties argue, Shah’s proposed relevant market
   does not encompass all interchangeable substitute products because it does
   not include the two non-BHS facilities that the BHS parties contend serve as
   viable alternatives to BHS facilities. Shah has not provided evidence or any
   persuasive argument to raise a genuine dispute as to either of those facilities.
   In fact, in his reply brief, Shah appears to identify those two hospitals as
   “included in the relevant geographic market.” But claims raised for the first
   time in a reply brief are forfeited. 18
           Drawing all factual inferences in Shah’s favor, his relevant market
   definition is insufficient as a matter of law.

           17
                Id. at 840.
           18
              United States v. Ponce, 896 F.3d 726, 728 (5th Cir. 2018); Ashford v. Aeroframe
   Servs., L.L.C., 907 F.3d 385, 398 (5th Cir. 2018) (Jones, J., dissenting).

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                                               III
           To bolster his § 1 Sherman Act claim, Shah argues that the exclusive
   BHS-STAR Agreement is a per se illegal tying arrangement. A tying
   arrangement is “an agreement by a party to sell one product but only on the
   condition that the buyer also purchases a different (or tied) product, or at
   least agrees that he will not purchase that product from any other supplier.” 19
   The BHS parties, citing Keelan v. Majesco Software, Inc., 20 argue that Shah
   waived his tying arguments because he did not raise those arguments in his
   pleadings or summary judgment response. Assuming without deciding that
   Shah did not forfeit the argument, it nevertheless fails.
           In Jefferson Parish, 21 the Supreme Court held that an exclusive
   agreement between a hospital and a group of anesthesiologists “does not
   provide a basis for applying the per se rule against tying.” 22                    “Tying
   arrangements need only be condemned if they restrain competition on the
   merits by forcing purchases that would not otherwise be made.” 23 The Court
   explained that “every patient undergoing a surgical operation needs the
   services of an anesthesiologist”; the record contained “no evidence that the

           19
             Schlotzsky’s, Ltd. v. Sterling Purchasing & Nat’l Distrib. Co., Inc., 520 F.3d 393,
   405 (5th Cir. 2008) (quoting Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451,
   461 (1992)).
           20
              407 F.3d 332, 339-40 (5th Cir. 2005) (“If a party wishes to preserve an argument
   for appeal, the party must press and not merely intimate the argument during the
   proceedings before the district court. An argument must be raised to such a degree that the
   district court has an opportunity to rule on it.” (citation and internal quotation marks
   omitted) (quoting N.Y. Life Ins. Co. v. Brown, 84 F.3d 137, 141 n.4 (5th Cir. 1996))).
           21
              Jefferson Par. Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2 (1984), abrogated on other
   grounds by Ill. Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28 (2006).
           22
                Id. at 4-5, 29.
           23
                Id. at 27.

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   hospital ‘forced’ any such services on unwilling patients.” 24 The same is
   true here. Shah’s tying arrangement fails.
                                               IV
           In addition to the Sherman Act claims, Shah asserted a claim for
   tortious interference, alleging that the BHS parties tortiously interfered with
   his business relationships with STAR, pediatric surgeons, and patients, and
   ultimately caused his termination from STAR. A required element of a
   tortious interference claim under Texas law is an independently unlawful
   action. 25 There is no dispute that the only alleged unlawful actions upon
   which Shah’s tortious interference claim is premised are those underlying his
   Sherman Act claims. Accordingly, as Shah acknowledges, because the
   Sherman Act claims fail, “so too does the tortious interference claim.”
                                       *        *         *
           For the foregoing reasons, the judgment of the district court is
   AFFIRMED.

           24
              Id. at 28 (emphasis added); see also id. at 43 (O’Connor, J., concurring)
   (“[T]here is no sound economic reason for treating surgery and anesthesia as separate
   services. Patients are interested in purchasing anesthesia only in conjunction with hospital
   services, so the Hospital can acquire no additional market power by selling the two services
   together.”).
           25
             D’Onofrio v. Vacation Publ’ns, Inc., 888 F.3d 197, 214 (5th Cir. 2018) (quoting
   Am. Med. Int’l, Inc. v. Giurintano, 821 S.W.2d 331, 335 (Tex. App.—Houston [14th Dist.]
   1991, no writ)).

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