The opinion of the court was delivered by: FOSCHIO
This matter was referred to the undersigned on April 24, 1991 by the Honorable Richard J. Arcara for report and recommendation. The matter is presently before the court on the American Board of Emergency Medicine, the Council of Emergency Medicine Residency Directors, and the "hospital Defendants,'"
motions to dismiss the Second Amended Complaint on statute of limitations grounds and for failure to state a claim.
Plaintiff, an emergency medicine physician, filed this action on September 25, 1990, following the American Board of Emergency Medicine's ("ABEM") refusal to permit Plaintiff to take its examination as a prerequisite to certification as an ABEM Diplomate. Following removal of this action to federal court on October 23, 1990, Defendants moved for dismissal of the original complaint which asserted causes of action for violations of the due process and equal protection clauses of the Fourteenth Amendment to the Constitution, and for a violation of the New York State Human Rights Law. In response, Plaintiff filed an amended complaint ("the First Amended Complaint") on February 7, 1991, withdrawing the claims for constitutional violations and asserting causes of action under Sections 1 and 2 of the Sherman Act, 15 U.S.C. § 1 et seq., and seeking relief pursuant to Sections 4 and 16 of the Clayton Act, 15 U.S.C. § 12 et seq. The First Amended Complaint also added the individual board members of ABEM as defendants.
Defendants filed a motion to dismiss the First Amended Complaint on April 5, 1991. This motion was granted as against all of the individual ABEM board members, except Henry A. Thiede, M.D., for lack of personal jurisdiction. Daniel v. American Board of Emergency Medicine, 802 F. Supp. 912 (W.D.N.Y. 1992). Thereafter, on July 16, 1993, Plaintiff filed a motion to amend the complaint to add parties. This request was granted, and, as to the additional Plaintiffs, the Second Amended Complaint was deemed to relate back to the date of the filing of the First Amended Complaint on February 7, 1991. However, Defendants' rights to move against the Second Amended Complaint were fully preserved. Decision and Order, dated January 12, 1994, at p. 13 n. 1.
On January 13, 1994, the Second Amended Complaint was filed, adding one hundred and seventy-five additional Plaintiffs, all individual physicians who allege to have similar claims, and thirty Defendants, including the Council of Emergency Medicine Residency Directors ("CORD") and twenty-eight teaching hospitals whom Plaintiffs allege are co-conspirators with Defendant ABEM. Specifically, in the Second Amended Complaint, Plaintiffs allege that ABEM conspired with CORD and the hospital Defendants to unreasonably restrict competition between ABEM certified and non-certified emergency physicians, including Plaintiffs, by eliminating ABEM's prior alternative qualification for eligibility to sit for ABEM's certification examination on the basis of years of practice in the field of emergency medicine (referred to as the "practice-track"), under which Plaintiffs may have been eligible to sit for and successfully pass the examination thereby requiring ABEM's certification. Plaintiffs allege that ABEM and the hospital Defendants perpetuated this restraint through a conspiracy involving various professional organizations in the field of emergency medicine, including CORD, as a result of the activities of various physicians whom had achieved ABEM certification under the "practice-track" and were either employed or affiliated with the hospital Defendants' residency programs in emergency medicine. Familiarity with the prior proceedings and orders of this court is presumed.
Defendants subsequently, in March, April, and May of 1994, moved to dismiss or for summary judgment on statute of limitations grounds
or for failure to state a claim. Plaintiffs' response to the Defendants' motions to dismiss for failure to state a claim and on statute of limitations grounds were filed on April 8, 1996. Defendants' replies were filed on April 25 through April 29, 1996. A sur-reply was filed by the Plaintiffs, with the court's permission, on May 13, 1996. No oral argument was held on this matter.
Based upon the discussion which follows, the Defendants' motions to dismiss on statute of limitations grounds should be DENIED; Defendants motions to dismiss for failure to state a claim upon which relief can be granted should also be DENIED.
On a motion to dismiss, the court looks to the four corners of the complaint and is required to accept a plaintiff's allegations as true and to construe those allegations in the light most favorable to plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974); Dacey v. New York County Lawyers' Association, 423 F.2d 188, 191 (2d Cir. 1969), cert. denied, 398 U.S. 929, 26 L. Ed. 2d 92, 90 S. Ct. 1819 (1970). The complaint will be dismissed only if "it appears beyond doubt" that the plaintiffs can prove no set of facts which would entitle them to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); Gagliardi v. Village of Pawling, 18 F.3d 188, 191 (2d Cir. 1994); Goldman v. Belden, 754 F.2d 1059, 1065 (2d Cir. 1985). This rule "applies with no less force to a Sherman Act claim. . . ." McLain v. Real Estate Board of New Orleans, Inc., 444 U.S. 232, 246, 62 L. Ed. 2d 441, 100 S. Ct. 502 (1980). The court is required to read the complaint with great generosity on a motion to dismiss. See Yoder v. Orthomolecular Nutrition Institute, 751 F.2d 555, 558 (2d Cir. 1985). When determining the sufficiency of a plaintiff's claims for Rule 12(b)(6) purposes, the court may only consider the factual allegations in the complaint, documents attached to the complaint, matters to which judicial notice can be taken, or documents in plaintiff's possession or of which plaintiff had knowledge and relied on in bringing suit.
Brass v. American Film Technologies, Inc., 987 F.2d 142, 150 (2d Cir. 1993) (citing Cortec Industries, Inc. v. Sum Holding L.P., 949 F.2d 42, 47-48 (2d Cir. 1991), cert. denied, 503 U.S. 960 (1992)).
Defendants argue that Plaintiffs' Second Amended Complaint should be dismissed on statute of limitations grounds and/or for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6).
1. Statute of Limitations
Section 4B of the Clayton Act provides for a four year statute of limitations in private antitrust actions measured from the time the cause of action accrues. 15 U.S.C. § 15b. An antitrust cause of action accrues "when a defendant commits an act that injures a plaintiff's business." Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338, 28 L. Ed. 2d 77, 91 S. Ct. 795, reh'g denied, 401 U.S. 1015, 28 L. Ed. 2d 552, 91 S. Ct. 1247 (1971). Continuing antitrust conduct resulting in a continued invasion of a plaintiff's rights may give rise to continually accruing causes of action, however, a newly accruing claim for damages must be based on some injurious act actually occurring during the limitations period, not merely additional consequences of some pre-limitation action.
Poster Exchange, Inc. v. National Screen Service Corp., 517 F.2d 117, 128 (5th Cir. 1975), cert. denied, 423 U.S. 1054, 46 L. Ed. 2d 643, 96 S. Ct. 784 (1976); Delaware and Hudson Railway Company v. Consolidated Rail Corp., 654 F. Supp. 1195, 1204 (N.D.N.Y. 1987). See, e.g., Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 502 n. 12, 20 L. Ed. 2d 1231, 88 S. Ct. 2224 (1968) (an illegal policy first affected the plaintiff in 1912, but a suit instituted in 1955 was not barred by the statute of limitations because the policy was "conduct which constituted a continuing violation of the Sherman Act . . . [and] inflicted continuing and accumulating harm on [the plaintiff]."); Poster Exchange, 517 U.S. at 126-27 ("Where the violation is final at its impact, for example, where the plaintiff's business is immediately and permanently destroyed, or where an actionable wrong is by its nature permanent at initiation without further acts, then the acts causing damage are unrepeated, and suit must be brought within the limitations period and upon the initial act."). See also Delaware State College v. Ricks, 449 U.S. 250, 257, 66 L. Ed. 2d 431, 101 S. Ct. 498 (1980) (completed act of discrimination); United Air Lines v. Evans, 431 U.S. 553, 558, 52 L. Ed. 2d 571, 97 S. Ct. 1885 (1977) (continuing effects of earlier discrimination). In other words, where all damages complained of necessarily result from a pre-limitations act by the defendants, the cause of action does not "continually accrue" into the limitations period. Imperial Point Colonnades Condominium v. Mangurian, 549 F.2d 1029, 1034-35 (5th Cir.), cert. denied, 434 U.S. 859 (1977).
The question presented in this case is whether the alleged continuing conspiracy interfering with Plaintiffs' ability to obtain jobs, raises and promotions in the field of emergency medicine is to be treated for statute of limitations purposes as a single act and invasion of Plaintiffs' rights, occurring with the closure of the practice track on June 30, 1988, or whether it may be viewed as a continuing series of acts upon which successive causes of action may accrue.
The parties do not dispute the fact that the practice track closed on June 30, 1988. However, Plaintiffs contend that their antitrust claims are not barred by the four year statute of limitations, as there have been actions by the Defendants subsequent to the closure of the practice track which constitute a continuing antitrust violation, not merely the continuing damage Plaintiffs incur from the original closure of the practice track on June 30, 1988. Plaintiffs' Memorandum of Law in Opposition to Defendants' Motions to Dismiss based on Statute of Limitations Grounds, filed April 8, 1996, at pp. 3-26 ("Plaintiffs' Statute of Limitations Memorandum"). Defendants, however, assert that the statute of limitations began to run on June 30, 1988, and Plaintiffs have failed to allege any additional injury after that date. Reply Memorandum of the LeBoeuf Hospital Defendants in Support of the Statute of Limitations Motion, filed April 26, 1996, at p. 3 ("Defendants' Statute of Limitations Reply Memorandum").
In the Second Amended Complaint, Plaintiffs allege several anticompetitive acts of the Defendants, occurring after June 30, 1988, in support of their continuing antitrust conspiracy theory, including (1) ABEM's continuing refusal to reopen the practice track as late as March of 1992, PP 83-86, (2) ABEM's reopening of the practice track for Diplomates of the American Board of Internal Medicine from January of 1990 through June of 1992, PP 11, 71-77, (3) ABEM's denials of Plaintiffs' applications to take the certification examination and Defendants' continuing refusal to reconsider such denials, P 105, (4) the hospital Defendants' denials of positions, promotions, and salary increases to plaintiffs as the result of lack of ABEM eligibility or certification, PP 34, 104-110, (5) ABEM's promulgation of arbitrary and unreasonable guidelines for use in evaluation under the special application track and rejection of Plaintiffs' applications despite their qualifications, PP 34, 63-70, and (6) all of the Defendants' promotion of ABEM certified emergency physicians as having the highest training standards, thereby misleading the public into believing that the ABEM certified physicians are better qualified than the Plaintiffs. PP 78-82.
In determining whether the acts which occurred subsequent to the closure of the practice track constituted injuries to Plaintiffs, the court must determine whether each overt act alleged in the Second Amended Complaint is a "new and independent act that is not merely a reaffirmation of a previous act" and "inflicts new and accumulating injury on the plaintiff." Pace Industries, Inc. v. Three Phoenix Co., 813 F.2d 234, 238 (9th Cir. 1987). ABEM's continuing refusal to reopen the practice-track to the Plaintiffs and the denials of applications of emergency physicians meeting the practice track criteria could be considered extensions or reaffirmations of the original injury, rather than new and independent acts causing accumulating injury to the Plaintiffs. See, e.g., Pace, supra, at 237-39 (finding a permanent and final decision "made outside the limitations period does not constitute a continuing violation even if the injury continues within the statutory period"); Midwestern Waffles, Inc. v. Waffle House, Inc., 734 F.2d 705, 714-15 (11th Cir. 1984) (if plaintiff's requests for a franchise territory in another state, made subsequent to the statute of limitations period, were futile and plaintiffs had reason to know they were futile, no new cause of action accrues); Vitale v. Marlborough Gallery, 1994 U.S. Dist. LEXIS 9006, 1994 WL 654494 (S.D.N.Y. 1994) (initial refusal to deal was final, therefore, defendants' continued failure to advise and continued requirement of authentication of paintings did not give rise to a new cause of action).
When ABEM closed the practice track, this decision was by its nature permanent at initiation without further action, thus, subsequent applications and appeals of application denials do not constitute new acts which inflict continuing and accumulating harm on the Plaintiffs. Poster Exchange, 517 F.2d at 126-27. Therefore, as Plaintiffs' practice-track option was immediately and permanently eliminated on June 30, 1988, Plaintiffs' allegations of ABEM's continuing refusal to reopen the practice track, and ABEM's denials of Plaintiffs' applications in the Second Amended Complaint are insufficient to support a finding of continuing antitrust conspiracy.
However, Plaintiffs are entitled to maintain suit if they can demonstrate that "there had been a specific act or word of refusal [by defendants to deal with plaintiff] during the limitations period." Poster Exchange, 517 F.2d at 129. See also Imperial Point, 549 F.2d at 1035-38 (plaintiffs purchased their condominium unit and became parties to a recreational lease more than four years before commencing suit, however, the court held that defendant's quarterly collection of rent and increases in rent constituted acts which injured plaintiffs and that were committed within four years of filing suit). Plaintiffs in this case have asserted several additional acts by the hospital Defendants which they allege occurred during the limitations period,
including demotions or losses of responsibility, the denial of jobs, raises and promotions, receipt of less remuneration than ABEM certified physicians, and ABEM's act of temporarily reopening of the practice-track for members of the American Board of Internal Medicine.
Second Amended Complaint at PP 11, 34, 63-70, 71-77, 78-82, 104-110. Accepting all of Plaintiffs' allegations as true and drawing all reasonable inferences in favor of the Plaintiffs, each of these acts caused new and accumulating injury to the Plaintiffs subsequent to the limitations period and separate from the injuries caused by the original closure of the practice-track. As this continuing antitrust conduct results in a continued invasion of a plaintiff's rights, these acts give rise to continually accruing rights of action. Thus, as Plaintiffs have suffered injurious acts which occurred during the limitations period, the Plaintiffs have made sufficient allegations in their Second Amended Complaint to demonstrate that acts of Defendants during the limitations period have foreclosed or interfered with their access to the employment market for emergency medicine physicians.
Accordingly, the court finds that Plaintiffs have made sufficient allegations in their Second Amended Complaint to overcome Defendants' statute of limitations defense, and the Defendants' motions to dismiss ...