Court Opinion

ID: 195386
Source: CourtListenerOpinion
Date Created: 2011-02-07 02:38:53+00
Date Added: 2024-06-11T15:11:23.847439
License: Public Domain

May 25, 1994      UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT

No. 93-1988

                        TONY LEE, ET AL.,

                     Plaintiffs, Appellants,

                                v.

           THE LIFE INSURANCE COMPANY OF NORTH AMERICA,

                      Defendants, Appellees.

                                           

                           ERRATA SHEET

     The opinion of this Court issued on May 4, 1994, is  amended
as follows:

Cover sheet:
           

     Jay S. Goodman for The University of Rhode Island, et al.
                   

     William P.  Devereaux and  McGovern, Noel  & Benik,  Inc. on
                                                              
     brief for The Life Insurance Company of North America.

     Phillip A. Proger, with whom Gregory A. Castanias and Jones,
                                                                 
     Day, Reavis &  Pogue were  on brief for  The Life  Insurance
                         
     Company of North America, and for all appellees on antitrust
     issues.

                  UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT

                                           

No. 93-1988

                        TONY LEE, ET AL.,

                     Plaintiffs, Appellants,

                                v.

       THE LIFE INSURANCE COMPANY OF NORTH AMERICA, ET AL.,

                      Defendants, Appellees.

                                           

           APPEAL FROM THE UNITED STATES DISTRICT COURT

                 FOR THE DISTRICT OF RHODE ISLAND

      [Hon. Raymond J. Pettine, Senior U.S. District Judge]
                                                          

                                           

                              Before

                    Torruella, Circuit Judge,
                                            

                  Aldrich, Senior Circuit Judge,
                                               

                     and Cyr, Circuit Judge.
                                           

                                           

     Jay S. Goodman for The University of Rhode Island, et al.
                   

     William P.  Devereaux and  McGovern, Noel  & Benik, Inc.  on
                                                             
     brief for The Life Insurance Company of North America.

     Phillip A. Proger, with whom Gregory A. Castanias and Jones,
                                                                 
     Day, Reavis &  Pogue were  on brief for  The Life  Insurance
                         
     Company of North America, and for all appellees on antitrust
     issues.

                                           
                           May 4, 1994

                                           

          CYR, Circuit  Judge.  Three University  of Rhode Island
          CYR, Circuit  Judge.
                             

("URI") students  appeal from  a district court  order dismissing

their federal antitrust, equal protection, and due process claims

against  URI, its Board  of Governors,  three URI  officials, and

URI's student-health  insurer, Life  Insurance  Company of  North

America ("LINA").  Finding no error, we affirm the district court

judgment.

                                I

                            BACKGROUND
                                      

          As a  precondition to reregistering each  semester, URI

requires  all full-time undergraduate students to pay a fixed fee

for the  right to  use URI's  on-campus, walk-in  medical clinic,

University Health Services  ("UHS").1  All  students who pay  the

UHS  clinic fee  must  also carry  supplemental health  insurance

coverage for certain medical services, such as x-rays,  lab tests

and gynecological  tests, that  are available  through UHS.   Two

supplemental insurance options are available.  First, the student

may obtain supplemental insurance  through LINA, a private health

care  underwriter which  URI sponsors  as its  "default" insurer.

LINA  purportedly "dovetails" its  supplemental coverage  so that

the insured student pays an  annual premium that minimizes dupli-

cative  coverage;  that is,  it lessens  the  risk that  the LINA
                                       

premium and  the UHS clinic  fee will reflect  redundant coverage

                    

     1Graduate students are  not required to  pay the UHS  clinic
fee,  provided they  have  health insurance  coverage that  meets
URI's requirements.

for the same medical  procedures.2  As a second  option, students
            

may  secure "comparable  [supplemental]  coverage"  from an  off-

campus  health care insurer of their choice, except that URI does

not consider either Rhode Island Blue Cross or Rhode Island-based

HMOs "comparable coverage."   Students who do not opt  out of the

LINA "default" coverage by a specified deadline are automatically

billed for the annual LINA premium, and cannot reregister for the

following semester until  the LINA  premium has been  paid.   The

automatic "default" scheme notwithstanding, only about 40% of the

students who pay the UHS clinic fee insure through LINA.

          Appellants  initiated  this  class  action  in  federal

district court against URI and LINA in January 1992.  The amended

complaint alleges  that the  practice  of conditioning  continued

matriculation at URI on payment of the UHS  clinic fee and/or the

LINA supplemental  insurance premium  violates the  Sherman Anti-

trust Act, 15 U.S.C.   1 (1993),  as well as the equal protection

and due process guarantees  under the United States Constitution.

Following  minimal  discovery,  URI  and LINA  moved  to  dismiss

pursuant to Fed.  R. Civ.  P. 12(b)(6),3 and  the district  court

dismissed all claims.  Lee v. Life Ins. Co. of N.A., 829 F. Supp.
                                                   

                    

     2LINA coverage requires the student to present for treatment
at UHS in  the first  instance, pending possible  referral to  an
                    
outside health care provider.

     3Appellants'  motion  for  class  certification  was  stayed
pending disposition of appellees' motions to dismiss.

                                4

529 (D.R.I. 1993).4

                                II

                            DISCUSSION
                                      

A.  The Antitrust "Tying" Claim
                               

          Appellants  challenge the dismissal of their claim that

the URI health care-insurance  scheme is an impermissible "tying"

arrangement in violation of the Sherman Act, 15 U.S.C.   1 (1993)

("Every contract . . . in restraint of trade or commerce . . . is

hereby declared to be illegal.").  See Eastman Kodak Co. v. Image
                                                                 

Technical  Servs., Inc.,  112 S.Ct.  2072 (1992)  ("Kodak").   "A
                                                         

tying arrangement is 'an agreement by a party to sell one product

but only on the condition that the buyer also purchases a differ-

ent (or  tied)  product, or  at  least agrees  that he  will  not

purchase that product  from any  other supplier.'"   Id. at  2079
                                                        

(quoting Northern Pac. Ry. Co. v.  United States, 356 U.S. 1, 5-6
                                                

(1958)).  Generally speaking, an impermissible "tie-in" occurs if

a seller  (viz., URI)  enjoys either  a monopoly  or "appreciable
               

economic  power"  ("AEP") in  the  "tying"  product (or  service)

market, and uses  its considerable market leverage  to "coerce" a

buyer     already intent on purchasing the tying product from the

seller    into  buying a  second, "tied" product  that the  buyer

would not have bought based solely on the quality or price of the

tied  product itself.  See Fortner Enters., Inc. v. United States
                                                                 

                    

     4At  the same time, the district  court declined to exercise
jurisdiction over several pendent state-law claims, see 28 U.S.C.
                                                       
  1367(c)(3) (1993).  Cf. infra note 11.
                               

                                5

Steel Corp., 394  U.S. 495, 503  (1969); see generally  Grappone,
                                                                 

Inc. v. Subaru of  New England, Inc., 858  F.2d 792, 794-96  (1st
                                    

Cir. 1988) (describing  procompetitive policy interests animating

per  se  tying analysis).5   Since  many  product "ties"  may not
       

prove anti-competitive, notwithstanding their somewhat misleading

epithet, "per  se" tie-ins may require a "fairly subtle antitrust
                 

analysis" of  "market power,"  a fact-intensive inquiry  aimed at

winnowing out  only  those ties  most  likely to  threaten  anti-

competitive harm.  Id. at 795.  
                      

          Appellants claim three "product" tie-ins:   (1) between

a  university  education  (URI)  and  health  insurance  coverage

(LINA); (2) between health care services (UHS) and  health insur-

ance  coverage (LINA);  and  (3) between  a university  education

(URI) and health care services (UHS).6       We  agree  with  the

                    

     5The tie-in  must also affect  a substantial volume  of com-
merce in the tied market, see Kodak, 112 S. Ct. at 2079, a factor
                                   
not at issue in this case.  Further, we assume, without deciding,
                                                                
that  URI is a participant  in the insurance  "market," for anti-
trust  purposes,  simply  because  it  receives  a  one-time  $10
processing fee for each LINA policy sold to a URI student.

     6Notwithstanding  certain  misgivings,  we  further  assume,
without deciding,  that the  amended complaint  adequately pleads
                
two other  essential "tying"  claim elements.   These assumptions
merely facilitate clearer focus on the  core deficiency in appel-
lants' antitrust claim.   First, we presume that the  products at
issue are distinct, i.e., that each is distinguishable by consum-
                        
ers  in the relevant market,  and that there  would be sufficient
consumer demand  for each individual  product, and not  merely as
                                    
part  of an integrated  product "package."   See Jefferson Parish
                                                                 
Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 21-22 (1984).  But see id.
                                                                 
at 39 (O'Connor, J., concurring) (noting obvious policy limits of
"two product"  rule, since almost  every product could  be broken
down into smaller constituent parts that  might be sold separate-
ly); Lee, 829 F. Supp. at  537 ("I do not believe plaintiffs have
        
adequately alleged  that this arrangement  involved two  separate
products.").    Second,  we accept,  arguendo,  the  questionable
                                             

                                6

district  court however,  that  appellants failed  to allege  any
                                                                 

"tie-in" claim upon which  relief could be granted.   In particu-

lar,  appellants failed  to advance  a colorable  claim as  to an

indispensable  element:  that URI  had AEP in  the relevant tying
             

markets (university education and health care services).   AEP or

"market  power" is the demonstrated ability of a seller "to force

a purchaser to do something that he would not do in a competitive

market."  Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2,
                                                    

14  (1984); see  also Grappone,  858  F.2d at  794.   AEP may  be
                              

demonstrated,  for example, if the seller holds a monopoly in the

tying product (e.g.,  a patented product), controls  a very large
                   

share of sales  in the tying product market, see  id. at 796 (AEP
                                                     

"means significant market power" over an "'appreciable' number of
                  

buyers") (emphasis in original) (citation omitted), or produces a

"unique"  tying  product,  and  therefore  faces  no  significant

competition from  functionally similar products or  services, see
                                                                 

Jefferson  Parish, 466 U.S.  at 37-38 n.7  (O'Connor, J., concur-
                 

ring) (market must be defined  to include "all reasonable substi-

tutes  for the  product");  Grappone,  858  F.2d at  796  (market
                                    

encompasses all "readily available substitutes").

          Appellants can assert no colorable claim that URI holds

AEP either in the "tying" market for a university education or in
                                                              

the  "tying" market for health  care services.   URI competes for

new undergraduate and graduate students on a regional and nation-

                    

contention  that  URI  students are  "coerced"  financially  into
buying LINA coverage because only LINA insurance "dovetails" with
UHS clinic fee services.

                                7

al  level with  dozens of universities  and colleges.7   Although

URI obviously  is a "unique"  institution in a  colloquial sense,

appellants cannot claim that  other institutions of higher educa-

tion do not or  cannot provide "functionally similar" educational

offerings to potential  URI applicants.   Cf. id.  at 798  (brand
                                                 

name alone does not  establish product "uniqueness" necessary for

AEP).  And,  of course,  absent AEP  in the  university-education

market  it is a  virtual given that  URI cannot enjoy  AEP in the

student health care business.

          Appellants attempt to circumvent URI's  evident lack of

AEP in the two  relevant tying markets by contriving  a so-called

Kodak  "lock-in."    Kodak  involved distinct  products:    Kodak
                          

copiers (the "lock-in"  product), Kodak copier  replacement parts

(the tying product), and Kodak  copier servicing and repair  (the

tied  product).  In 1985,  Kodak began to  confine sales of Kodak

copier  parts to Kodak copier owners who contracted to have their

copiers  serviced  by Kodak,  rather  than  by Kodak's  servicing
                 

competitors ("ISOs").  Kodak, 112 S.Ct. at 2077-78.  Significant-
                            

ly, only  Kodak parts would fit Kodak copiers.  Id. at 2077.  The
                                                   

ISOs initiated an antitrust action  against Kodak under section 1

of  the Sherman  Act.   After  truncated discovery,  the district

court granted summary  judgment for  Kodak.   Id. at  2078.   The
                                                 

Ninth Circuit reversed, Kodak, 903 F.2d 612, 617 (9th Cir. 1990),
                             

and the Supreme Court affirmed, Kodak, 112 S. Ct. at 2092.
                                     

                    

     7As of  1991, for example, Rhode  Island residents comprised
only 56% of the URI student body.

                                8

          By reason of Kodak's very small market share in  copier

sales, the parties had  stipulated that Kodak had  no AEP in  the

copier  market (assuming copier sales to  be the relevant "tying"
                        

market),  and hence, no unlawful  "tie" could exist between Kodak

copiers  and Kodak  parts-servicing.   Id.  at  2081 n.10.    The
                                          

Supreme Court  accordingly focused on whether  an unlawful tie-in

nonetheless existed between Kodak parts and Kodak servicing.  Id.
                                                                 

Kodak  argued for  the view  that, either  presumptively or  as a

matter of  law, vigorous competition  in the copier  market would

prevent  Kodak  from raising  its  parts  and servicing  contract

prices above competitive levels, because any such price increases

in these "derivative aftermarkets"  would become known to copier-

equipment consumers, and eventually cause Kodak to lose ground to
                                                       

its competitors in copier sales.  Id. at 2081-82, 2083.
                                     

          The Court rejected Kodak's  per se "cross-elasticity of
                                            

demand" theory, identifying two different fact patterns which, if
                               

borne out by  the evidence, might support a  reasonable inference

that  parts  and servicing  contract  price  increases would  not

necessarily  cause Kodak to lose  copier sales.   Under the first

scenario, the  evidence  might  demonstrate  that  a  substantial

number  of consumers, at the  time of their  original copier pur-

chases, would not enjoy  cost-efficient8 access to the difficult-

to-acquire  pricing  information  needed to  evaluate  the  total

                    

     8The Court noted that  even assuming readily available price
information, consumers rationally might decide not to investigate
life-cycle costs  if investigation  would prove more  costly than
the potential savings.  Id. at 2086.
                           

                                9

"life-cycle" cost of  the entire Kodak  "package"    namely,  the

price  of  the copier,  likely  replacement  parts, and  product-

lifetime  servicing.  Id. at 2085-87.  Under the second scenario,
                         

the  Court postulated that, in a market for complex durable goods

like  copiers, current  Kodak-copier  owners might  tolerate even
                      

uncompetitive  price increases  in Kodak  parts and  servicing as

long  as the  increases did  not exceed  the costs  of abandoning

their  original investment in the Kodak copier and switching, for

example, to  a Canon  or Xerox  copier.  Id.  at 2087-88.   Since
                                            

Kodak's servicing competitors had produced some evidence of "very

high" switching costs  for Kodak copier owners,  the Court opined

that such "lock-ins"     attendant  as they are  to the  original

copier purchase    could conceivably enable the plaintiff ISOs to

establish Kodak's  AEP in the derivative  "tying" aftermarket for

Kodak parts.  The  Court accordingly concluded that the  undeter-

mined  "information  costs"  and  "switching  costs"  represented

material  issues of fact, and  if in genuine  dispute, would pre-
                                                     

clude  summary judgment,  even  though Kodak  lacked  AEP in  the

"lock-in" product market for copiers.  Id. at 2086-87.
                                          

          Appellants  attempt to shoehorn  their allegations into

this  Kodak  "derivative  aftermarket"  mold,  by  proposing  the
           

following comparative model:  first-semester matriculation at URI
                                            

serves  as the "lock-in" product, as did the Kodak copier; subse-

quent  semesters at URI serve as the  tying product, as did Kodak

replacement parts;  and health clinic services  and health insur-

ance  coverage represent the tied products.  Of course, URI, like

                                10

Kodak, might contend, on  summary judgment or at trial,  that its

lack  of AEP in the  locked-in product market  ("sales" of first-

semester  university education)  creates  a "cross-elasticity  of

demand," which would  prevent health clinic fees and LINA supple-

mental insurance  premiums from being  increased to uncompetitive

levels.  Nevertheless, because Kodak was a summary judgment case,
                                                           

rather  than a Rule 12(b)(6) case, appellants argue that they did

enough  to withstand URI's  motion to dismiss  simply by alleging

the existence of unspecified "information" and "switching" costs,
                            

which must be credited  for Rule 12(b)(6) purposes.   See Rumford
                                                                 

Pharmacy, Inc. v. City of East Providence, 970 F.2d 996, 997 (1st
                                         

Cir. 1992) (review of Rule 12(b)(6) dismissal is de novo, credit-
                                                        

ing  all allegations in the  complaint and drawing all reasonable

inferences favorable to plaintiff).

          Appellants  challenge the  district  court ruling  that

their "information cost" allegations  were insufficient to defeat

the motion to dismiss.   First, appellants argue that  URI cannot

posit  a  "cross-elasticity of  demand"  in  the present  context

because the prices charged for health clinic services and  insur-

ance premiums  are too insignificant  in relation to  tuition and

other university-education  costs to  be considered a  meaningful

factor in determining whether  potential applicants for admission

will attend URI or some other university.   Alternatively, appel-

lants argue that URI would bear the burden of proof on this issue

at  trial, and that  on appeal it  has not  pointed to supportive

evidence of consumer "sophistication."

                                11

          Appellants  exaggerate  the role  that summary-judgment

burden  shifting played  in  the Kodak  analysis.   Kodak  simply
                                                         

pointed out that summary judgment was not yet in order on Kodak's
                                             

"cross-elasticity of demand" theory (1) in light of the plaintiff

ISOs' proffer  on "information costs"     i.e., readily inferable
                                                                 

expenses  associated  with  accumulating   technical  information

relating to the costs of equipment, parts, and servicing over the

lifetime  of a  "complex  durable goods"  item,  and (2)  in  the
                                                    

absence of any conclusive evidence  from Kodak that a substantial

number of purchasers  actually make accurate prepurchase  assess-
                              

ments of the  life-cycle "package" price of  their Kodak copiers.

Thus, the Court neither discussed any reallocation of  burdens of

proof  at trial, nor in any way  intimated a shift in the eviden-
                                                  

tiary burden  of  proof on  the  factual issues  of  "information

costs" and "lock-in."   See, e.g., Jefferson Parish, 466  U.S. at
                                                   

13-14  (assuming burden of proof rests with plaintiff to show AEP

in tying-product  market); Town  Sound and Custom  Tops, Inc.  v.
                                                             

Chrysler Motors Corp., 959  F.2d 468, 479 n.12 (3d  Cir.) (plain-
                     

tiff bears burden  of proof on  "tying market" definition),  cert
                                                                 

denied, 113  S. Ct.  196  (1992).   In order  to withstand  URI's
      

motion to dismiss for failure to state a claim, therefore, it was

appellants'  burden (absent any colorable  claim that URI had AEP

in  the locked-in  product markets  for university  education and

student  health  services) to  allege  "information  costs" which
                                     

would prevent a substantial number of URI students from accurate-

ly assessing the total costs of a URI education, including health

                                12

clinic  fees and  insurance premiums,  in determining  whether to

matriculate at URI.

          Second,  appellants  argue  that  it is  impossible  to

allege  "information  costs"  because  potential  URI  applicants

cannot  know or predict their  future URI health  clinic fees and

LINA insurance  premiums with any  precision, since URI  and LINA

reserve  the  right to  increase these  charges  each year.   But

appellants  mistake the focus  of the Court's  concerns about the

"information costs" in Kodak.
                            

          In  Kodak,  the information  required  by  the customer
                   

pertained to the life-cycle pricing  of a Kodak copier "package,"

information so patently "difficult and costly" to come by that it

spontaneously gave  rise to  a reasonable inference  that unsoph-

isticated  consumers would  not  have the  information needed  to

evaluate  their options at the  time they made  their decision to

purchase a  Kodak copier.  Kodak, 112  S. Ct. at 2085.9   By con-
                                

                    

     9The Kodak Court elaborated on the complexity of the "infor-
               
mation" needed to make an informed investment:

     In  order to  arrive at an  accurate price,  a consumer
     must  acquire  a substantial  amount  of  raw data  and
     undertake sophisticated analysis.  The necessary infor-
     mation would include data on price, quality, and avail-
     ability  of  products  needed to  operate,  upgrade, or
     enhance the  initial equipment, as well  as service and
     repair costs, including estimates of breakdown frequen-
     cy,  nature of  repairs,  price of  service and  parts,
     length of  "down-time" and  losses incurred  from down-
     time.  
          Much of  this information is difficult     some of
     it is  impossible      to acquire  at the time  of pur-
     chase.  During  the life  of a  product, companies  may
     change the service and  parts prices, and develop prod-
     ucts with more advanced  features, a decreased need for
     repair, or  new warranties.  In  addition, the informa-

                                13

trast,  before signing up for  their first semester  at URI, stu-

dents are informed  that their continued matriculation  at URI is

conditioned,  inter alia,  on their  "purchase" of  health clinic
                        

services at a stated annual fee, subject to historically predict-

able  annual increases,  and  on their  purchase of  supplemental

insurance coverage.10   See  Philip E.  Areeda  & Herbert  Hoven-
                           

kamp,  Antitrust Law   1709.2,  at 1174 (Supp.  1993) (Kodak does
                                                            

not focus on  potential exploitation of the "irrational  or fool-

ish" purchaser, but the purchaser who makes the rational decision

that comparative-shopping costs would outweigh any savings from a

fully  informed purchase;  "the [Kodak]  context was  confined to
                                      

hard-to-obtain information")  (emphasis added); cf.  id. at  1174
                                                        

("[R]elevant  information  need  not  be so  comprehensive  as  a

binding future price schedule . . . .");  see also supra note  8.
                                                        

                    

     tion is likely to be customer specific; lifecycle costs
     will vary  from customer to  customer with the  type of
     equipment, degrees of equipment use, and costs of down-
     time.

Kodak, 112 S.Ct. at 2085-86.
     

     10Considering  the recent  hyperinflationary  trends in  the
health care industry as  a whole, UHS clinic fees  have increased
at  fairly  predictable increments  since  1987:  1987-88 ($179);
1988-89  ($188);  1989-90   ($200.50);  1990-91  ($227);  1991-92
($248); 1992-93 ($312).   LINA premiums have increased comparably
over the same  period, from $158 in  1987-88 to $369 in  1992-93.
The record  contains no evidence that  prospective URI applicants
would have  great difficulty  gaining access to  this information
from  any  number  of  reliable sources  (e.g.,  URI  application
                                              
materials,  URI admissions  officials, past  or current  URI stu-
dents, college entrance source books).  Nor do appellants suggest
that  URI had any  incentive to conceal  the scope  of past price
increases.  On  the billing  invoices it mails  to students,  URI
routinely  individualizes its charges  for registration, tuition,
UHS fees, LINA premiums, and taxes.

                                14

Appellants  have made no allegations sufficient to give rise to a

reasonable  inference  that  the  health-care  and insurance-cost

information needed to make an informed decision whether to accept

the  preconditions to  continued matriculation  at URI  is either
                                                                 

difficult or expensive to obtain or correlate.
                                             

          The district court further ruled that appellants failed

to state an actionable claim that they were "locked in"; that is,

they  failed to plead actual costs associated with switching from

URI after their  first semester.  Although  appellants now assert

that  they can  amend their  complaint to  allege such  costs, we

conclude that  further  amendment to  allege specific  "switching

costs" would be  futile.  See University of  Rhode Island v. A.W.
                                                                 

Chesterton Co., 2 F.3d 1200, 1219 n. 20 (1993).
              

          First, there  is an important distinction between Kodak
                                                                 

and  the present case.  Kodak was a "derivative aftermarket" case
                             

involving "complex durable  goods."  Unlike  the copier parts  in

Kodak, subsequent URI semesters are  not "derivative aftermarket"
     

components  upon which the  buyer's initial investment absolutely

depends.  As the  Supreme Court noted, Kodak copiers  are "expen-

sive when new," incompatible with replacement parts used in other

copiers,  and  retain  "little resale  value"  presumably because

complex durable goods depreciate so rapidly.  Kodak, 112 S.Ct. at
                                                   

2077.  The "lock-in" would occur provided it could be shown  that

Kodak copier  owners must either purchase  replacement parts from

Kodak or  abandon their initial, unamortized  investment in their
                                                        

Kodak copier.  In contrast, a completed first semester at univer-

                                15

sity is discretely priced    students do not pay for their entire

four-year stint in advance      and the "college credit" value of

the first semester is neither nontransferable nor without econom-

ic  or educational value in  the future even  if the student does

not  remain at URI.   Thus, appellants' attempt  to extend Kodak,
                                                                

beyond  the "derivative  aftermarket" context to  the educational

context, is problematic at best.

          Second, the timing  of the "lock-in" at issue  in Kodak
                                                                 

was  central to  the Supreme  Court's decision.   Unsophisticated

Kodak copier  owners were destined for "lock-in"  from the moment
                                                                 

they  purchased their Kodak copiers.   At the  time current Kodak
                                   

copier owners bought their copiers, Kodak had not yet conditioned

its sale of replacement parts on the purchase of Kodak servicing,

and its later-announced policy to that effect was made applicable

both  to  prospective  and existing  Kodak  copier  owners.   Had
                                   

previous customers known,  at the  time they  bought their  Kodak

copiers, that Kodak would implement its restrictive parts-servic-

ing policy,  Kodak's "market power," i.e., its leverage to induce
                                         

customers to purchase  Kodak servicing, could  only have been  as

significant as its AEP in the copier market, which was stipulated
                                           

to  be inconsequential or nonexistent.   See Kodak,  112 S.Ct. at
                                                  

2095-96  (Scalia, J.,  dissenting)  (noting that  even the  Kodak
                                                                 

majority  probably would have  found no  "lock-in" had  Kodak an-

nounced its parts-service "tie" at the time of its market entry);

see  generally  Philip E.  Areeda,  supra,    1709.2,  at 1164-68
                                         

(same).  In the instant case, however, students know before their

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matriculation that they are buying a URI "package" that  includes

at least two  "tied" products     a URI  education and  on-campus

health  care services  and  insurance.   As appellants  failed to

assert a colorable claim that URI had AEP in the primary (univer-

sity  education)  market,  no  Kodak-type  "lock-in"  could  have
                                    

occurred  in subsequent  semesters,  and even  the most  detailed

allegations of "switching costs" would be wholly unavailing.

                                17

B.   The "Due Process" and "Equal Protection" Claims
                                                    

          Appellants attempt  to  raise two  vaguely  articulated

constitutional  challenges to  the URI  health services-insurance

scheme.   First, they argue  that URI's conditioning of continued

matriculation on  the  payment of  a health  clinic fee  violates

their constitutional right to  procedural due process, by depriv-

ing  them of  a  property interest  (fees  and premiums),  and  a

liberty-privacy interest (the alleged right to retain a physician

of  one's  choice).    Unsurprisingly, appellants  cite  no  case

authority  for  either  contention,  nor  have  we  found  any.11

Appellants purchased  a  "product"-"service" from  URI with  full

knowledge from the outset that health care fees  and supplemental

                    

     11The  district court  interpreted appellants'  complaint as
alleging claims based on substantive due process and the right to
contract.   Appellants concede  that their  "cumbersome briefing"
contributed to  this understanding, yet  did not move  for recon-
sideration.  See Vanhaaren v. State Farm Mut. Auto. Ins. Co., 989
                                                            
F.2d 1, 4-5 (1st Cir. 1993)  (issues raised for the first time on
appeal  are deemed  waived).   Unfortunately, the  procedural due
process claim asserted on appeal is no less unwieldy.
     Inexplicably, appellants continue to urge that  Rhode Island
law disempowered URI from entering the "business"  of health care
and insurance, and that the LINA  policies were merely a fraud or
sham  affording  students no  actual  coverage.   Although  these
allegations might  be material  to appellants' ultra  vires claim
                                                           
under  state  law, which  the  district  court dismissed  without
prejudice, cf. Boston Envtl.  Sanitation Inspectors Ass'n v. City
                                                                 
of Boston,  794 F.2d 12,  13 (1st  Cir. 1986) (noting  that state
         
actor's "[m]ere  violation of  state statutory  requirements does
not offend  federal constitutional due  process"), or conceivably
may have served  as a basis for some  sort of consumer protection
claim,  appellants do  not  explain  how  URI's mere  refusal  to
continue  selling  them   a  service   (i.e.,  education)   would
                                            
constitute an actionable "deprivation" of their "property rights"
for  federal  due process  purposes.   Cf.  id. (noting  that "an
                                               
alleged breach of contract [by a state actor] does not  amount to
a  deprivation  of property  without  due  process"); Jimenez  v.
                                                             
Almodovar, 650 F.2d 363, 370 (1st Cir. 1981) (same).
         

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insurance premiums were  a required  component of the  cost.   We

perceive no procedural infirmity.

          Second,  appellants  argue that  the URI  "package" in-

fringes  their constitutional  right to  equal protection  of the

laws because male and female  students matriculating at URI  must

pay the same health care fees, even though male students will not

utilize the UHS gynecological services.  The district court aptly

found  that appellants  failed to  allege  that URI  imposed this

unitary  scheme  with any  discriminatory  animus  aimed at  male

students.  See Nieves v. University  of Puerto Rico, 7 F.3d  270,
                                                   

276 (1993) (plaintiff contesting  classification-neutral statutes

on equal  protection grounds must  proffer not  only evidence  of

disparate effect, but  evidence that enactment  resulted "because

of," rather than "in spite of," classification) (citing Personnel
                                                                 

Adm'r of Massachusetts v.  Feeney, 442 U.S. 256, 278-80  (1979));
                                 

Lipsett v. University of Puerto Rico, 864 F.2d 881, 896 (1st Cir.
                                    

1988).  Appellants advance  no curative allegations for relieving

this infirmity.

          Affirmed.
                  

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