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BALAKLAW v. LOVELL

April 30, 1993

LEE A. BALAKLAW, Plaintiff,
v.
ROBERT M. LOVELL, WESSLEY D. STISSER, DONALD AMES, JOSEPH COMPAGNI, JR., RONALD DENNISTON, DEBORAH GEIBEL, JAMES GIBBS, WILLIAM GREER, DAVID HEMPSON, DAVID HUNSINGER, BONNIE INNERST, DAVID LUNDEEN, DEAN MITCHELL, GENE NACCI, JOAN POSKANZER, CHARLES SPAULDING, CONNIE SWARR, CORTLAND MEMORIAL HOSPITAL INC. and CORTLAND MEMORIAL GROUP, INC., Defendants.



The opinion of the court was delivered by: SCULLING

 MEMORANDUM-DECISION AND ORDER

 I. Background

 Plaintiff Lee A. Balaklaw ("Balaklaw") commenced this action on June 26, 1992. On July 16, 1992, defendant Cortland Memorial Hospital (the "Hospital") moved to dismiss this complaint, and on August 4, 1992, plaintiff moved for a preliminary injunction. Following oral argument on August 28, 1992 in Albany, New York, the Hospital's motion to dismiss was denied and plaintiff's motion for a preliminary injunction was held in abeyance pending a hearing regarding same. This hearing was conducted on October 5 and 6, 1992. Thereafter, in its Memorandum-Decision and Order filed October 16, 1992, this court denied plaintiff's application for a preliminary injunction based upon the court's determination that the plaintiff failed to demonstrate irreparable harm.

 Magistrate Judge Gustave J. DiBianco granted plaintiff's motion to amend his complaint, and on December 11, 1992 Balaklaw filed an amended complaint in this action.

 On January 20, 1992, the defendants filed the instant motion for summary judgment on plaintiff's amended complaint. In their motions, the defendants allege that the plaintiff lacks standing to bring this lawsuit and that there is insufficient evidence to support a claimed violation of the Sherman Act. The following day, the plaintiff filed a motion for partial summary judgment on the issue of liability. Oral argument on these motions was heard on February 11, 1992. *fn1"

 II. The Pleadings

 The plaintiff's amended complaint asserts two causes of action under section 1 of the Sherman Act. *fn2" Balaklaw's first cause of action alleges that the defendants engaged in a group boycott of the plaintiff. His second cause of action alleges that the defendants violated the Sherman antitrust act by entering into an exclusive dealing arrangement whereby the defendants, Dr. Delf O. King ("Dr. King"), and a group of anesthesiologists affiliated with Dr. King (the "King Group") agreed to provide anesthetic and related services to the Hospital. Plaintiff's complaint seeks treble damages, and declaratory and injunctive relief for the "threatened and continued injuries to his business, property, trade and profession caused by the defendants' group boycott and conspiracy to deprive [him] of reasonable, fair, equal and full access to the exercise of professional and clinical staff privileges at CORTLAND MEMORIAL HOSPITAL, INC. and elsewhere . . . ." Amended complaint at P 2.

 Defendants deny the principle allegations contained in this complaint, and have interposed six affirmative defenses in their answer. Defendants contend that (i) plaintiff has failed to state a claim upon which relief can be granted under Section 1 of the Sherman Act; (ii) the actions of which the plaintiff complains are not violative of the Sherman Act; (iii) plaintiff has not suffered any antitrust injury within the meaning of Section 1 of the Sherman Act and thereby lacks standing to bring this lawsuit; (iv) the amended complaint alleges insufficient facts to establish a horizontal group boycott and therefore does not state a claim of per se violation under Section 1 of the Sherman Act; (v) the decisions and actions of the defendants were in furtherance of legitimate institutional objectives; and (vi) plaintiff is estopped from bringing this lawsuit due to his endorsement of the concept of an exclusive contract for the provision of anesthesia services at the Hospital and his participation in the Request for Proposal process. See answer at PP 38-43.

 III. Discussion

 A. Standard for resolving motions for summary judgment.

 Before discussing the merits of the motions before the court, it is instructive to review the standard this court must apply in resolving same.

 A court should grant a motion for summary judgment where there exists no genuine issues of material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). The mere existence of some alleged factual dispute is not sufficient to defeat a motion for summary judgment. Id. Rather, such a motion may only be defeated if there exists a genuine issue of material fact. Id. at 248, 106 S. Ct. at 2510, 91 L. Ed. 2d 202. A material fact is one which might affect the outcome of the case under the governing law. Id.

 Rule 56 limits the information that the court may consider in making its determination on a summary judgment motion. The court is limited to reviewing the pleadings, affidavits, depositions, answers to interrogatories and admissions on file. Fed. R. Civ. P. 56(c). Additionally, the movant's uncontested assertions in its Local Rule 10j statement are deemed admitted for purposes the court's determination on the summary judgment motion. See Rule 10j of the Local Rules for the Northern District of New York; Glazer v. Formica Corp., 964 F.2d 149 (2d Cir. 1992).

 The initial burden of informing the court of the basis for the motion rests with the moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2558, 91 L. Ed. 2d 265 (1986). In satisfying this burden, the movant must demonstrate that there is no evidence to support the non-movant's case on which that party bears the burden of proof at trial. Id. Should the movant satisfy this burden, the burden then shifts to the non-movant to demonstrate the existence of a genuine issue of material fact. The non-movant must make a preliminary showing establishing all elements of its case on which it would bear the burden of proof at trial. Id. at 322, 106 S. Ct. at 2552, 91 L. Ed. 2d 265. The non-movant must do more than "simply show that there is some metaphysical doubt as to the material facts. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986). Speculation, conclusory allegations and mere denials are insufficient to raise genuine issues of fact. To avoid summary judgment, the nonmovant must present sufficient evidence such that a jury could return a verdict in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. at 248, 106 S. Ct. at 2510, 91 L. Ed. 2d 202.

 In the context of a claim brought under the Sherman Act, the Supreme Court has held that, to survive a summary judgment motion, a plaintiff "must establish that there is a genuine issue of material fact as to whether the [defendants] entered into an illegal conspiracy that caused [plaintiff] to suffer cognizable injury," Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. at 585-86, 106 S. Ct. at 1355, 89 L. Ed. 2d 538, and that such conspiracy resulted in actual "antitrust injury." Id. at 586, 106 S. Ct. at 1355, 89 L. Ed. 2d 538. Such a conspiracy is not generally susceptible of direct proof, but is generally proven through circumstantial evidence in the form of inferences drawn from the words and conduct of the parties to the alleged agreement and from their course of dealing. See Norfolk Monument Co. v. Woodlawn Memorial Gardens, Inc., 394 U.S. 700, 704, 89 S. Ct. 1391, 1393, 22 L. Ed. 2d 658 (1969); American Tobacco Co. v. United States, 328 U.S. 781, 809-10, 66 S. Ct. 1125, 1138-39, 90 L. Ed. 1575 (1946). Conduct that may be viewed as either permissible competition or an illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy. Matsushita Elec. Indus Co. v. Zenith Radio Corp., 475 U.S. at 588, 106 S. Ct. at 1356, 89 L. Ed. 2d 538 (citing Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764, 104 S. Ct. 1464, 1470, 79 L. Ed. 2d 775 (1984)); see also Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. , , 112 S. Ct. 2072, 2083, 119 L. Ed. 2d 265 (1992). To survive a motion for summary judgment, a plaintiff must present evidence "that tends to exclude the possibility that the alleged conspirators acted independently." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. at 588, 106 S. Ct. at 1356, 89 L. Ed. 2d 538 (quoting Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. at 764, 104 S. Ct. at 1471, 79 L. Ed. 2d 775); H.L. Hayden Co. of N.Y., Inc. v. Siemens Medical Sys., Inc., 879 F.2d 1005, 1013 (2d Cir. 1989). The plaintiff must proffer direct or circumstantial evidence that reasonably tends to prove a conscious commitment to a common scheme designed to achieve an unlawful objective. Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. at 768, 104 S. Ct. at 1473, 79 L. Ed. 2d 775; H.L. Hayden Co. of N.Y., Inc. v. Siemens Medical Sys., Inc., 879 F.2d at 1013.

 Before reaching the issue of whether there is a genuine issue of material fact on any of the elements of plaintiff's Sherman Act claim, the court must ascertain whether this plaintiff has standing to bring his antitrust claims.

 B. Defendants' motion for summary judgment based upon lack of standing.

 Generally, whether a plaintiff has standing to bring a lawsuit is determined by whether there exists a "case or controversy." See Flast v. Cohen, 392 U.S. 83, 94-101, 88 S. Ct. 1942, 1949-53, 20 L. Ed. 2d 947 (1968). In the context of an antitrust action, courts must engage in "an analysis of prudential considerations aimed at preserving the effective enforcement of antitrust laws" in determining whether standing exists. Todorov v. DCH Healthcare Auth., 921 F.2d 1438, 1448 (11th Cir. 1991); see also Associated Gen. Contractors of Cal., Inc. v. California State Council of Carpenters, 459 U.S. 519, 535, n.31, 103 S. Ct. 897, 907 74 L. Ed. 2d 723 (1983).

 Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 & 26, set forth the remedies available for a claimed violation of the Sherman Act. The relief available through § 16 of the Clayton Act differs from that afforded through § 4.

 A two-pronged test has evolved for the determination of whether a particular plaintiff is the proper party to enforce a claim under Section 4 of the Clayton Act. First, the court must determine whether the plaintiff has suffered actual "antitrust injury" at the hands of the defendant. Second, the court must determine whether the plaintiff is an efficient enforcer of the antitrust laws. *fn3" See Todorov v. DCH Healthcare Auth., 921 F.2d at 1449 (citing Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. at 110 n.5, 107 S. Ct. at 489 n.5, 93 L. Ed. 2d 427); see also Trepel v. Pontiac Osteopathic Hosp., 599 F. Supp. 1484, 1493 (E.D. Mich. 1984), aff'd, 780 F.2d 1023 (6th Cir. 1985). Section 4 of the Clayton Act provides that "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust law" is entitled to treble damages.

 Under section 16 of this Act, a plaintiff need only establish "threatened" loss or damage, rather than actual loss or damage, in establishing a violation under this section. See Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. at 111, 107 S. Ct. at 489-90, 93 L. Ed. 2d 427. As a result of these differences, the standing requirement for a section 16 claim is somewhat less demanding: courts are less concerned about whether a plaintiff is an efficient enforcer of the antitrust laws. Todorov v. DCH Healthcare Auth., 921 F.2d at 1452. However, as under section 4, for section 16 injunctive relief, a plaintiff still must allege "antitrust injury" (in the form of threatened loss or damage) as well as the defendant's causal responsibility for that injury. Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. at 111-13, 107 S. Ct. at 490-91, 93 L. Ed. 2d 427. Under section 16 of the Clayton Act, 15 U.S.C. § 26, private parties "threatened [with] loss or damage by a violation of the antitrust laws" may seek injunctive relief.

 In Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., the Supreme Court described antitrust injury as:

 
Injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful. [It] should reflect the anti-competitive effect either of the violation or of anti-competitive acts made possible by the violation. It should, in short, be the type of loss that the claimed violations . . . would likely cause.

 Id., 429 U.S. 477 at 489, 97 S. Ct. at 697, 50 L. Ed. 2d 701; see also Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 334, 110 S. Ct. 1884, 1889, 109 L. Ed. 2d 333 (1990). Proof of an unlawful purpose or an anti-competitive effect will satisfy this requirement of antitrust injury due to the fact that competitors may be unable to prove antitrust injury before they are actually driven from the market, thereby lessening competition. United States v. United States Gypsum Co., 438 U.S. 422, 436 n.13, 98 S. Ct. 2864, 2873 n.13, 57 L. Ed. 2d 854 (1978).

 Prior to this lawsuit, Balaklaw claims that he had an arrangement with the defendant Hospital whereby he and a group of fellow anesthesiologists would provide anesthesia services to the patients at the Hospital. After a period of time, the Hospital determined that it wished to enter into an exclusive contract with a group of doctors to provide the Hospital with anesthesia services. The Hospital solicited proposals from various physician groups, including a group headed by Balaklaw. A committee consisting of two members of the Board of Trustees, three members of the Medical Staff and two members of the administration of the Hospital interviewed four of these groups, including the group headed by the plaintiff. Since the defendants chose to enter into an exclusive contract for anesthesia services with a group other than one which included the plaintiff, Balaklaw claims he was effectively ousted from his practice at the Hospital.

 Defendants contend that Balaklaw does not have standing to assert his claims alleging violations of the antitrust laws because his purported injuries are not "antitrust injuries" as this term has been interpreted by the courts in the context of Sherman Act claims. They claim that Balaklaw was merely a "disappointed competitor" for the subject contract who may not seek redress for his alleged ...


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