and the effect on plaintiffs' pension investments.
9. Curtailment of Plaintiffs' Practice in Connection With a New Jersey Clinic
Plaintiffs allege in paragraph 46(i) of their amended complaint that their "practice in connection with a New Jersey Clinic and patients therefrom referred to plaintiff Cardio-Medical has been and is threatened with curtailment and foreclosure as a result of the defendants' unlawful activities." Further, plaintiffs allege in paragraphs 59(d) and 64(d) of their complaint, that in this respect, they "have been prevented from fully expanding and developing their practice." These allegations are also insufficient to satisfy the interstate commerce jurisdictional requirement of the Sherman Act.
The New Jersey practice allegations in plaintiffs' amended complaint fail to identify a relevant channel of interstate commerce. As with the medical personnel allegations discussed earlier, see part III.C.6. supra, this set of allegations refers to a supposed effect on the activities of the individual plaintiffs in their practice of medicine. As discussed above, the labor of a human being does not constitute a commodity or article of commerce for purposes of the Sherman Act. See Daley v. St. Agnes Hospital, supra. Further, at best, plaintiffs' New Jersey practice allegations refer only to effects on plaintiffs, not effects on interstate commerce. See text following note 26 supra.
Even under the most liberal of interpretations, plaintiffs' New Jersey practice allegations are insufficient to vest a federal court with jurisdiction. If plaintiffs intend to refer to the interstate travel of New Jersey patients as the appropriate channel of commerce, I have already ruled that such travel does not constitute a relevant channel of interstate commerce for federal jurisdictional purposes. See part III.C.1. supra; Cardio-Medical, 536 F. Supp. at 1081. In any event, because those New Jersey patients, by plaintiffs' own assertions, would travel to a clinic in New Jersey, and not Pennsylvania, it is difficult to understand how interstate travel of patients is involved. If plaintiffs are referring to their own travel across state lines to conduct a practice in New Jersey, the New Jersey practice allegations would still be insufficient. This travel is completely incidental to plaintiffs' practice of medicine, which is performed only locally, whether in Pennsylvania or New Jersey.
Finally, plaintiffs have again failed to allege the critical nexus between defendants' challenged activities and this identified channel of interstate commerce. The explanation for this failure must be the impossibility in explaining how the denial to plaintiffs of the opportunity to perform limited specialized cardiology procedures at CCMC could have any impact whatsoever on plaintiffs' practice at a New Jersey clinic. Plaintiffs have not alleged that defendants have prevented them from going to New Jersey to practice, nor do they allege that defendants have sought to prevent New Jersey patients from seeking their services. Absent such allegations, it is unclear as a matter of logic how defendants have contributed to any difficulties plaintiffs might be able to prove that they have had in developing their New Jersey practice.
10. Lessening of Use of Out-of-State Continuing Education
In paragraph 46(e) of plaintiffs' amended complaint it is alleged that "the use and application of plaintiffs' continuing education through out-of-state professional seminars, out-of-state publications and manuals, and other out-of-state sources, have been foreclosed and lessened as a result of defendants' allegedly anticompetitive activities." This allegation is also insufficient to establish jurisdiction under the Sherman Act.
All of the analysis supporting my holding that this identified channel of interstate commerce is insufficient to meet plaintiffs' jurisdictional burden has been thoroughly explored in earlier sections. First, this alleged effect is, taken at its best, an effect only on plaintiffs, and not an effect on interstate commerce. See text following note 26 supra. Second, the out-of-state continuing education allegation refers to a supposed effect on the activities of the individual plaintiffs in their practice of medicine. Because the labor of a human being does not constitute a commodity or article of commerce for purposes of the Sherman Act, see part III.C.6. supra; Daley v. St. Agnes Hospital, supra, such an allegation is insufficient to satisfy the affecting commerce theory. Finally, plaintiffs' allegations with respect to this channel of commerce contain no reference to the required nexus between the actions of defendants and the effects allegedly felt on interstate commerce. It is inconceivable that plaintiffs' inability to perform a limited number of specialized cardiology procedures has any logical relationship to the interstate market in continuing education.
This opinion has discussed, in concededly painstaking detail, each of plaintiffs' interstate commerce allegations. As a result of the foregoing analysis, I hold that the allegations contained in plaintiffs' amended complaint are legally insufficient to meet the interstate commerce requirement of the Sherman Act. Notwithstanding the extensive guidance provided to plaintiffs by the initial opinion in this case, and notwithstanding the added assistance of new counsel, the amended complaint does not provide the allegations necessary for this court to find (i) a relevant channel of interstate commerce; (ii) a substantial and adverse effect upon interstate commerce; and (iii) a logical nexus between the challenged activities of defendants and the effect on the relevant channel of commerce identified.
Although plaintiffs' counsel have made a valiant attempt to plead properly a valid cause of action, they, like the court, are constrained by the facts in the instant case. Plaintiffs' amended complaint contains little more than a greater number of the same type of allegations characterized as "vague, broad, and conclusory" by the initial opinion in this case. See Cardio-Medical, 536 F. Supp. at 1080. Thus, although plaintiffs have attempted to make up in quantity what they lack in substance, the whole complaint cannot be greater than the sum of its parts -- and the sum of ten zeroes still equals zero.
D. Consistency With Prior Precedent
My holding that plaintiffs' amended complaint fails to contain sufficient allegations to satisfy the interstate commerce requirement of Sherman Act jurisdiction is supported amply by earlier precedent. No fewer than fifteen courts deciding antitrust cases involving the health-care industry have concluded that allegations quite similar to those found in plaintiffs' amended complaint are insufficient to vest a federal court with jurisdiction. In particular, the Wolf, Riggall, Barr, Grigg, Daley, Moles, and Capili cases directly support the result reached in this opinion. These cases discuss and analyze such channels of interstate commerce as the interstate flow of revenues, travel for the purpose of medical care, the use and purchase of medical equipment and supplies, the prescription of drugs and medications, and the market for medical personnel services, and find none of these channels, in any combination, sufficient to satisfy the jurisdictional requirements of the Sherman Act.
Further, within the terms of the framework explained in part II.C. supra, my holding is fully consistent with the previously decided Supreme Court, Third Circuit, and other denial of hospital staff privileges precedents. For example, plaintiffs' assertion that the interstate commerce allegations in Hospital Building Co. v. Trustees of the Rex Hospital, 425 U.S. 738, 48 L. Ed. 2d 338, 96 S. Ct. 1848 (1976), "are almost on all fours with the interstate commerce allegations here,'" Plaintiffs' Memorandum in Opposition to Defendants' Joint Motion to Dismiss at 15, is simply incorrect. Although Hospital Building Co. did involve a hospital defendant, and therefore channels of commerce similar to those suggested by plaintiffs in the instant case were discussed by the Supreme Court, the similarity between the two cases ends at that point.
In Hospital Building Co., plaintiff alleged that defendants had conspired to halt the planned expansion of plaintiff's hospital. Thus, plaintiff alleged that, if defendants' conspiracy succeeded, (i) the plaintiff's purchases of out-of-state medicine and supplies, as well as its revenues from out-of-state insurance companies, would be substantially lessened; (ii) management fees that plaintiff paid to its out-of-state parent corporation would be diminished; and (iii) the multi-million dollar financing for the expansion, a large portion of which would come from out-of-state lenders, would not take place.
Given this explanation of the Hospital Building Co. facts, that case is totally distinguishable from plaintiffs' claims here. First, with respect to the sheer magnitude of the amount of interstate commerce involved, it is apparent that, if any interstate commerce is implicated by defendants' action in this case, it is miniscule in comparison to that involved in Hospital Building Co. The interstate commerce activities of the four local plaintiff-physicians suing in this action, do not even come close to approaching those of the plaintiff in Hospital Building Co., a large hospital building company, whose parent company, headquartered in Georgia, operated in a number of states.
Second, the conspiracy challenged in Hospital Building Co., if successful, would have blocked totally the planned expansion of plaintiff's new hospital. Certain events, such as the purchase of out-of-state supplies and interstate financing, would not have taken place if defendants' conspiracy succeeded. In contrast, the alleged restraint in the instant case relates only to the ability of plaintiffs to perform a limited number of cardiology procedures at defendant CCMC. There is no allegation that defendants have sought to foreclose plaintiffs from attending their patients at CCMC, performing cardiology procedures in their office, or pursuing their practice of medicine anywhere else.
The Third Circuit cases relied on by plaintiffs are also distinguishable from this action and are, therefore, not dispositive of the jurisdictional issue. In each of the two primary Third Circuit cases cited by Cardio-Medical, the plaintiffs were able to establish a readily apparent nexus between the defendants' challenged activities and the alleged effect on interstate commerce. Further, the plaintiffs in the Third Circuit cases also demonstrated that a significant amount of interstate commerce was affected by defendants' actions.
For example, in Doctors, Inc. v. Blue Cross of Greater Philadelphia, plaintiff alleged that the necessary effect of defendants' alleged conspiracy to terminate plaintiff's Blue Cross membership would be complete closure of plaintiff's operations and total elimination of its $2 million annual purchases of supplies in interstate commerce. Similarly, in Harold Friedman, Inc. v. Thorofare Markets, Inc., plaintiff, operator of a supermarket, was eliminated from a shopping center as a result of an "exclusivity clause" obtained by one of its competitors, also operating in the shopping center. In concluding that plaintiff had satisfied the interstate commerce requirement of the Sherman Act, the Court of Appeals in Harold Friedman, Inc., relied on the facts that the case involved a nationwide supermarket chain and that the value of products travelling in interstate commerce greatly exceeded the amount involved in the Hospital Building Co. case.
Thus, the applicable Supreme Court and Third Circuit precedents are distinguishable from the present case with respect to both (i) the nature of the alleged restraint and the obvious nexus between that restraint and the alleged effect (i.e. total elimination of plaintiff as a competitor), and (ii) the magnitude of interstate commerce involved.
Aside from Hospital Building Co., Doctors, Inc., and Harold Friedman, Inc., twelve other courts considering denial of hospital staff privileges claims or other health-care industry issues have concluded that federal jurisdiction exists on allegations similar to those in the instant case. Putting aside the Third Circuit's warning that precedent is not going to be particularly helpful in deciding antitrust jurisdictional cases, see Doctors, Inc., 490 F.2d at 51, eleven of those cases are easily distinguishable from the facts of the instant case. First, all twelve of the adversely decided cases except Stone v. William Beaumont Hospital, supra, involve total restraints infringing on the very ability of the plaintiffs to remain in the market as a meaningful competitor. In contrast, the limited, partial restraint alleged in this case cannot logically be deemed to have anywhere near this substantial an effect. Second, three of the adversely decided cases (Feminist Women's Healthy Center, Inc., Ballard, and Feldman) were brought either on behalf of a class of physicians or on behalf of a hospital. As a matter of logic, the four local physicians suing in this case cannot hope to establish the substantiality and causal nexus that the plaintiffs in those three cases alleged. Finally, in eight of the remaining adversely decided cases, the individual physicians suing had hospital-based practices. The threat to these plaintiffs as competitors cannot even be compared, either as a matter of substantiality or nexus, to the remote threat to the four local physicians with a concededly non-hospital based practice involved in the instant case. Thus, only the Eastern District of Michigan decision in Stone cannot be harmonized with the result reached in the instant case. And to that extent, I am forced to disagree with Judge Guy's conclusion.
Plaintiffs have suggested several times throughout these proceedings that both defendants and this court have attempted to apply a "special" analysis to plaintiffs' interstate commerce allegations so as to insulate hospital defendants from the full and customary reach of the Sherman Act. As this opinion adheres strictly to traditional antitrust analysis, plaintiffs' suggestion is incorrect. Ironically, because plaintiffs refuse to accept the reality that the Sherman Act does not extend to every type of restraint, no matter how local in nature, it is plaintiffs who seek to have this court apply a "special" rule to the instant case. As stated in Rasmussen v. American Dairy Ass'n, 472 F.2d 517, 526 (9th Cir. 1972), cert. denied, 412 U.S. 950, 37 L. Ed. 2d 1003, 93 S. Ct. 3014 (1973), "there must be some limit on the intrusiveness of Sherman Act regulation." Plaintiffs' amended complaint challenging the limited denial to them of the opportunity to perform certain specialized cardiology procedures at CCMC, represents precisely the type of claim that warrants application of that rule. If antitrust jurisdiction can be invoked on the basis of these plaintiffs' allegations, virtually all activities, even if purely local, and including our hypothetical house painter, would be subject to federal antitrust scrutiny. As a matter of policy and legal precedent, such a result would be absurd.
Plaintiffs have cited ten categories of allegations that they contend satisfy the interstate commerce requirement of the antitrust laws. As discussed in detail throughout this opinion, each of these identified channels of interstate commerce is legally deficient under the tripartite jurisdictional analysis adopted by this court. Plaintiffs have been equally unsuccessful in their invocation of the "in commerce" jurisdictional standard. Thus, plaintiffs have fulfilled the prediction made in the initial Cardio-Medical opinion that the facts of this case would not support an amended complaint vesting a federal court with jurisdiction. See Cardio-Medical Associates, Ltd. v. Crozer-Chester Medical Center, 536 F. Supp. 1065, 1085 (E.D. Pa. 1982).
Notwithstanding its affirmance of federal court jurisdiction, the Tenth Circuit in Crane v. Intermountain Health Care, Inc., 637 F.2d 715 (10th Cir. 1981) (en banc), stated that "interstate commerce is not implicated for Sherman Act purposes every time someone is excluded from a staff, organization, association or other membership." Id. at 726. This case provides a clear illustration of that principle. Plaintiffs have now had two opportunities to plead sufficient factual allegations to vest this court with jurisdiction. In light of this repeated failure to allege a legally cognizable antitrust claim, and in light of my holding that plaintiffs can prove no set of facts that would satisfy the interstate commerce requirement of the Sherman Act, I dismiss plaintiffs' amended complaint with prejudice and direct that judgment be entered in favor of all defendants.