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Cardio-Medical Associates v. Crozer-Chester Medical Center and James H. Loucks

decided: November 18, 1983.

CARDIO-MEDICAL ASSOCIATES, LTD. AND THOMAS J. MCBRIDE, M.D., AND PAUL T. CASS, M.D., AND C. RICHARD SCHOTT, M.D., AND MICHAEL B. GOODKIN, M.D., APPELLANTS
v.
CROZER-CHESTER MEDICAL CENTER AND JAMES H. LOUCKS, M.D., AND MICHAEL C. BOYD, WILLIAM J. BREECE, JOHN F. CRAMPT, ESQ., DANIEL R. CURRAN, MARY E. DALE, CONRAD A. ETZEL, M.D., JEREMIAH A. HARTLEY, JOSEPH R. LAYTON, REV. DAVID A. MACQUEEN, PETER L. MILLER, WILLIAM B. MITCHELL, JR., CLARENCE R. MOLL, PH.D., J. HAROLD PERRINE, MALCOLM B. PETRIKIN, ESQ., AND BERTRAM M. SPEARE INDIVIDUALLY AND AS MEMBERS OF THE CROZER-CHESTER MEDICAL CENTER BOARD OF DIRECTORS AND JAMES CLARK, M.D., CHIEF OF DEPARTMENT OF MEDICINE OF CROZER-CHESTER MEDICAL CENTER AND DANIEL J. MARINO, M.D., DAVID R. MISHALOVE, M.D., JOEL A. KRACKOW, M.D., ADRIAN S. WEYN, M.D., PETER LAVINE, M.D., MICHAEL YOW, M.D., AND ANCIL JONES, M.D., T/A CARDIOLOGY ASSOCIATES OF DELAWARE COUNTY APPELLEES



Seitz, Chief Judge; Sloviter and Van Dusen, Circuit Judges.

Author: Seitz

Opinion OF THE COURT

SEITZ, Chief Judge:

This is an appeal from two orders of the district court striking appellants' demand for a jury trial and dismissing appellants' amended complaint for lack of subject matter jurisdiction.

The issues on appeal are two: whether appellants, plaintiffs in an action charging violations of sections 1 and 2 of the Sherman Act, have alleged sufficient effects on interstate commerce to withstand a motion to dismiss for lack of subject matter jurisdiction, and whether appellants are entitled to a jury trial.

I. Background

Appellants in this case are four physicians and their employer, Cardio-Medical Associates, Ltd. (hereafter referred to as "plaintiffs"). All four physicians practice in Pennsylvania and specialize in cardiology and internal medicine. Cardio-Medical Associates is a Pennsylvania corporation created for the purpose of facilitating the physicians' practice of cardiology and internal medicine.

Appellees are the Crozer-Chester Medical Center and various of its employees (hereafter referred to as "defendants"). The Medical Center is a health care facility located in Upland, Pennsylvania. It provides various medical services, including cardiological services. Plaintiffs maintain their offices in one of the buildings in defendants' complex.

Plaintiffs filed a complaint against defendants in the district court in 1981, charging violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. ยงยง 1, 2, and the equal protection and due process clauses of the fourteenth amendment. Plaintiffs alleged that defendants had entered into contracts and other agreements to prevent the plaintiff doctors from using certain of defendants' specialized cardiological equipment, located in defendants' complex. These agreements, according to plaintiffs, were part of a conspiracy to restrain trade and monopolize the local market for cardiological services. As a result, plaintiffs were allegedly foreclosed from this market and were injured both in their ability to offer full cardiological services to existing patients and in their ability to attract new patients.

Defendants answered the complaint and then filed a motion for judgment on the pleadings under Fed.R.Civ.P. 12(c), alleging a failure to state a claim and lack of subject matter jurisdiction. The district court granted this motion. The constitutional claim was dismissed with prejudice, and plaintiffs have not renewed that claim in subsequent proceedings. The Sherman Act claims were dismissed for lack of subject matter jurisdiction. This dismissal was without prejudice, and plaintiffs were given sixty days in which to file an amended complaint. 536 F. Supp. 1065.

Plaintiffs filed a timely amended complaint in which they renewed their claims under sections 1 and 2 of the Sherman Act and demanded, for the first time, a jury trial. Without answering this complaint, defendants moved to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1). Defendants also moved to strike plaintiffs' demand for a jury trial and to stay all discovery pending disposition of the Rule 12(b)(1) motion.

In separate opinions, the district court granted both the motion to strike the demand for a jury trial, 95 F.R.D. 194, and the motion to dismiss, 552 F. Supp. 1170. Plaintiffs appeal from orders implementing those two decisions.

II. Jurisdiction Under the Sherman Act

Sections 1 and 2 of the Sherman Act both require that the acts prohibited by those sections relate to trade or commerce "among the several States". This requirement of interstate commerce has been construed as an element of both the jurisdictional standard and the substantive offense under the Sherman Act. See Mortensen v. First Federal Savings & Loan Association, 549 F.2d 884, 890-91 (3d Cir. 1977). In the present appeal we are concerned only with jurisdiction.

There are two ways to satisfy the jurisdictional requirement. The proscribed conduct may itself be "in interstate commerce", or the conduct may be a purely intrastate activity that has a "substantial and adverse effect" (or, what is apparently the same thing, a "not insubstantial effect") on interstate commerce. See, e.g., McLain v. Real Estate Board of New Orleans, 444 U.S. 232, 246, 62 L. Ed. 2d 441, 100 S. Ct. 502 (1980) ("not insubstantial effect"); Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738, 743, 48 L. Ed. 2d 338, 96 S. Ct. 1848 (1976) ("substantially and adversely affects ...


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