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ACADEMY OF AMBULATORY FOOT SURGERY v. AMERICAN POD

May 15, 1981

ACADEMY OF AMBULATORY FOOT SURGERY, et al., Plaintiffs,
v.
The AMERICAN PODIATRY ASSOCIATION, et al., Defendants



The opinion of the court was delivered by: MOTLEY

MEMORANDUM OPINION AND ORDER

Now pending before the court are three motions to dismiss some, or all, of the complaint in this action. The plaintiffs have responded to these motions and moved in turn for leave to amend the complaint. A brief description of the facts relevant to all pending motions will be followed by discussion of each motion individually.

 Facts

 The underlying dispute in this antitrust suit is between various professional associations whose members are podiatrists. The plaintiffs are the Academy of Ambulatory Foot Surgery (AAFS), the American Board of Ambulatory Foot Surgery (ABAFS), and named individual members of the AAFS and ABAFS who seek class certification. The primary defendants are the American Podiatry Association (APA) and the Podiatric Society of the State of New York (the New York Society). The New York Society is the APA's affiliate in New York state. The Associated Hospital Services of New York (Blue Cross) and United Medical Services, Inc. (Blue Shield) are also defendants.

 Briefly speaking, this lawsuit is one battle in what appears to be an ongoing jurisdictional war between the APA and the AAFS/ABAFS. The complaint alleges a variety of anticompetitive acts on the part of APA and its New York affiliate society designed to injure and retard the growth of the AAFS and the ABAFS. At the center of the suit is the APA's alleged refusal to accept as valid the certification by AAFS/ABAFS of podiatrists to perform certain types of podiatric procedures. Blue Cross and Blue Shield have been sued because of their alleged refusal to utilize podiatrists not certified by the APA to perform certain podiatric services connected to their insurance programs.

 1. The APA's Motion to Dismiss for Improper Venue

 The APA contends that the complaint must be dismissed with respect to it because venue is not proper in this District. The applicable venue provision is 15 U.S.C. § 22, which provides:

 
Any suit, action, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; and all process in such cases may be served in the district of which it is an inhabitant, or wherever it may be found.

 Plaintiffs concede that since the APA is a District of Columbia corporation, it is not an inhabitant of this District. Instead, plaintiffs rely on the portion of 15 U.S.C. § 22 allowing venue in any district where a defendant "transacts business." *fn1" In what has come to be the accepted interpretation of 15 U.S.C. § 22, the Supreme Court has construed the statute to provide for venue whenever a defendant transacts business of "any substantial character" in the district where suit is filed. United States v. Scophony Corp., 333 U.S. 795, 809, 68 S. Ct. 855, 862, 92 L. Ed. 1091 (1948). The term "transacting business" is to be applied as a "practical, everyday business or commercial concept." Banana Distributors Inc. v. United Fruit Co., 269 F.2d 790, 794 (2d Cir. 1959). For the reasons given below, this court concludes that the APA may not be properly sued in this District pursuant to 15 U.S.C. § 22.

 The APA does not maintain an office in this District, is not licensed to do business here and does not have any employees or agents in this District. All the APA's books and records are maintained in Washington, D.C. It neither owns, rents nor leases any property in this District, and it does not maintain any sort of bank account here. The APA has 7738 members, 313 of whom reside in New York. The APA has not appointed an agent for service of process in New York. The last APA annual meeting held in New York took place in 1964.

 Moreover, despite plaintiffs' suggestion, this court refuses to impute the activities of the New York Society to the APA for purposes of determining whether the APA transacts business in this District. The New York Society is separately incorporated and has a separate staff. It is financially self-sufficient, and maintains its own dues structure. Certainly there is a parallel between the APA's constitution and bylaws and the constitution and bylaws of the New York Society. Also, members of the New York Society must be members of the APA. Finally, disciplinary decisions made by the New York Society are reviewable by the APA. Nevertheless, on the record before this court, it appears that the New York Society "is autonomous in the same way that a local association of the American Medical Association was found to be autonomous in Elizabeth Hospital, Inc. v. Richardson, 167 F. Supp. 155 (W.D.Ark.1958), aff'd, 269 F.2d 167 (8th Cir. 1959), cert. denied, 361 U.S. 884 (, 80 S. Ct. 155, 4 L. Ed. 2d 120.)" Friends of Animals, Inc. v. American Veterinary Medical Association, 310 F. Supp. 620, 624 (S.D.N.Y.1970) (Friends of Animals).

 In Friends of Animals this court dismissed a suit by Friends of Animals, Inc. against the American Veterinary Medical Association (AVMA) because the AVMA did not transact sufficient business in this District to make venue proper under 15 U.S.C. § 22. The decision was based, in part, on the conclusion that the AVMA's New York affiliate society was sufficiently distinct from the AVMA to preclude imputing its activities to AVMA for purposes of determining venue. The only potentially significant difference between the relationship of the AVMA and its constituent society and the APA and the New York Society in this case is the collection by the New York Society of dues for the APA. However, after considering the record, this court finds that collection of APA dues by the New York Society is merely clerical assistance rendered to the APA by its New York affiliate. The New York Society simultaneously collects its own dues, and the APA dues collected are simply forwarded to Washington, D.C. Collection of dues for the APA is insufficient grounds for imputing all of the New York Society's activities in this District to the APA.

 Friends of Animals also provides a useful perspective on some of the contacts which the APA does have with this District. In Friends of Animals this court observed that "(a) professional association does not "transact business' in a judicial district merely because some of its members reside in the district and receive the association's publications there." 310 F. Supp. at 624. See also Golf City, Inc. v. Wilson Sporting Goods Co., Inc. 555 F.2d 426, 437-38 (5th Cir. 1975). Thus, the presence of APA members in this District, and the receipt by them of APA literature and publications, will not be sufficient contact with this District to constitute "transacting business" for purposes of 15 U.S.C. § 22.

 Another important reason for granting the APA's instant motion to dismiss is the sporadic nature of its certification and evaluation activities in this District. For instance, during the four year period covered by the statute of limitations applicable to the antitrust violations here alleged, APA has made only one trip into this District for evaluation purposes. The trip occurred in 1978 when representatives of the APA evaluated the Jewish Memorial Hospital's podiatric residency program. This lack of regular evaluation activities serves to distinguish this case from two decisions primarily relied upon by the plaintiffs, Levin v. Joint Commission on Accreditation of Hospitals, 122 U.S. App. D.C. 383, 354 F.2d 515 (D.C.Cir.1965) (Levin) and Bogus v. American Speech and Hearing Association, 389 F. Supp. 327 (E.D.Pa.1975) (Bogus). Levin and Bogus are two cases in which venue was found to exist pursuant to 15 U.S.C. § 22 in suits against association defendants which resided outside the forum district. In each case, the decision was clearly ...


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