With respect to the geographic market, this court is not prepared to make a finding based on the record. Castelli's expert advocates using a portion of Crawford county that excludes Titusville, the location of the only competing hospital in the county. His geography results in a 100 percent market share for MMC. The defendants maintain that the area should be the nationwide market for radiologists, and certainly an area larger than that selected by Castelli. Although it seems to this court that the portion of Crawford county advocated by Castelli is arbitrarily drawn and may not reflect the consumers ability to travel to other facilities, we do not make such a finding. Instead, we will assume for purposes of this motion that the defendants have monopoly power over inpatient professional radiology services in the relevant geographical market.
In order to establish liability for monopolization under § 2, the plaintiff must prove: (1) the defendant has monopoly power in the relevant market; and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as the result of product quality, business acumen, or historic accident. United States v. Grinnell Corp., 384 U.S. 563, 570-71, 16 L. Ed. 2d 778, 86 S. Ct. 1698 (1966). In order to establish an attempt to monopolize under § 2, Castelli must prove: (1) a specific intent to monopolize the relevant market; and (2) sufficient existing market power that there is a dangerous possibility of success. Pontius v. Children's Hosp., 552 F. Supp. 1352, 1376 (W.D. Pa. 1982). In order to establish a conspiracy to monopolize, Castelli must prove: "(1) an agreement or understanding between two or more economic entities, (2) a specific intent to monopolize, and (3) the commission of an overt act in furtherance of the alleged conspiracy." Id. at 1377.
Each of these § 2 claims requires a showing that the defendants had an unlawful intent to monopolize. Id. The act that Castelli claims violated the Sherman Act was the awarding of an exclusive contract. Thus, the issue under § 2 is whether MMC had an unlawful intent to monopolize when it awarded the exclusive radiology contract.
The mere fact that Driscoll's contract was exclusive is not sufficient to prove intent to monopolize. A company with monopoly power can deal exclusively with a single business entity provided that it has a substantial business justification for its refusal to transact with others, and that its purpose was not solely to preserve or increase its monopoly power. Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979), cert. denied, 444 U.S. 1093, 62 L. Ed. 2d 783, 100 S. Ct. 1061 (1980).
The defendants argue that Castelli has no evidence tending to show that they exercised their market power in an improper manner. MMC decided to award a unilateral contract based on the recommendation of their management consultants and the industry wide practice of awarding unilateral contracts in many departments including radiology. See Houser v. Fox Theatres Management Corp., 845 F.2d 1225, 1988-1 Trade Cases p 67,996 (3d Cir. 1988) (finding evidence of industry standards and business reasons sufficient for summary judgment under § 2).
Castelli asserts that conduct aimed at destroying a competitor satisfies the intent requirement of the various § 2 tests. He claims that the awarding of the exclusive contract to Driscoll prevented him from practicing radiology and removed him from competition.
In support of his arguments, Castelli cites Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 86 L. Ed. 2d 467, 105 S. Ct. 2847 (1985). In Aspen, the parties were two competing skiing resorts who had a history of sharing marketing programs. The defendant, the larger of the resorts, terminated the sharing, and the plaintiff sued. The Court held that, while monopolies had no general duty to deal with others, once they have established a long-term pattern, they cannot break the pattern without a legitimate business reason. We find that Aspen does not support Castelli's action. First, we note that both hospitals had exclusive contracts before the merger, and that preservation of the status quo was impossible following the merger. Second, we note that MMC has proffered valid business reasons for an exclusive contract.
In sum, Castelli has asserted that he was injured when Driscoll got the exclusive contract. This contention is insufficient to sustain his burden of production. The primary deficiency in his argument is that he fails to produce any evidence of an intent to injure him or a motive to injure him. Castelli merely alleges that the effect of not obtaining the exclusive contract was an injury to him, not that the decision to use an exclusive contract was designed to drive him out of business. Some evidence, either direct of circumstantial, of an intent to monopolize is an essential element of Counts III, IV, and V of Castelli's Complaint. Pontius, 552 F. Supp. at 1377. Having found no such evidence on the record, we consequently find no genuine issues of material fact, and will grant the defendants' motion.
D. Count VI
In Count VI, Castelli asserts a claim for per se liability based upon an invalid tying arrangement in violation of § 1. Tying occurs when two separate products are sold as a package so that one cannot be purchased without the other. To be actionable under § 1, the manufacturer of the tying product must have monopoly power in its market sufficient to coerce purchase of the tied product, and the tying arrangement must have anticompetitive effects in the tied market. Griffing v. Lucious O. Crosby Memorial Hospital, 1984-1 Trade Cases p 65,854 (S.D. Miss. 1984). Furthermore, the manufacturer of the tying product must garner some economic benefit from the tying arrangement. Venzie Corp. v. United States Mineral Products Co., Inc., 521 F.2d 1309, 1317 (3d Cir. 1975).
Exclusive contracts between hospitals and doctors have been the target of numerous tying actions. Griffing v. Lucious O. Crosby Memorial Hospital, 1984-1 Trade Cases p 65,854 (S.D. Miss. 1984), contains facts almost identical to this case. In Griffing, the plaintiff formerly had the radiology contract at a hospital. When the hospital awarded an exclusive contract to a different doctor, the plaintiff sued both the hospital and the doctor. In granting summary judgment, the court wrote:
There is no unlawful tying unless the seller of the tying product also competes in the market for the tied product, either by selling the tied product itself or by receiving profits, commissions or rebates from the sale of the tied product . . . . The defendant Hospital is not profiting from the sale of the claimed tied services . . . . The payment which [the doctor] receives is for professional services rendered by him. . . . Finally, and significantly, the Hospital itself is not competing in the market for professional radiology services and receives no profit or other payment from any participation in that market.
Id. at 67,564-65. See also White v. Rockingham Radiologists, Ltd., 820 F.2d 98 (4th Cir. 1987) (hospital not a competitor in the market for professional interpretation of CT scans, so no tying); Drs. Steuer & Latham v. Nat. Med. Enterprises, 672 F. Supp. 1489, 1508-09 (D.S.C. 1987) (hospital not a competitor in the market for professional pathological services, so no tying).
The Supreme Court considered allegations of tying by a disgruntled anesthesiologist in Jefferson Parish Hospital Dist. No. 2 v. Hyde, 466 U.S. 2, 80 L. Ed. 2d 2, 104 S. Ct. 1551 (1984). The Court granted summary judgment in favor of the hospital because it did not have monopoly power, but held that the arrangement otherwise might have been illegal. Hyde can be distinguished from this case, however, in two critical areas. First, in Hyde, the hospital billed patients for the anesthesiology services, then split the proceeds with the anesthesiologist. Thus, the hospital profited from the anesthesiology services and, to a certain degree, competed in that market. In this case, Driscoll bills patients directly for his services, so MMC does not profit from the radiology services. Second, several cases including Hyde itself have held that anesthesiology differs significantly for purposes of the Sherman Act from radiology and pathology. Id. at 22 n.36; Collins v. Associated Pathologists, 676 F. Supp. 1388, 1403 (C.D. Ill. 1987), aff'd, 844 F.2d 473 (7th Cir. 1988) (distinguishing Hyde).
After reviewing the evidence, we find that Castelli has not satisfied one of the essential elements of a tying action, the requirement that the holder of the monopoly power benefit economically from the arrangement. Therefore, we will grant the defendants' motion.
E. Count VII
In Count VII, Castelli asserts a claim for per se liability under the essential facility doctrine. This doctrine provides for liability under § 1 when one who controls an essential facility refuses to allow access to the facility on fair terms. Hecht v. Pro-Football, Inc., 187 U.S. App. D.C. 73, 570 F.2d 982, 992-93 (D.C. Cir. 1977), cert. denied, 436 U.S. 956, 57 L. Ed. 2d 1121, 98 S. Ct. 3069 (1978). An essential facility is defined as one which cannot practicably be duplicated be willing competitors. The facility need not be indispensable, merely economically infeasible to duplicate. Id. The doctrine should be applied selectively, because "the antitrust laws do not require that an essential facility be shared if such sharing would be impractical or would inhibit the defendant's ability to serve its customers adequately." Id.
Courts have frequently refused to apply the essential facility doctrine to hospitals and their staff. In Pontius v. Children's Hosp., 552 F. Supp. 1352, 1370 (W.D. Pa. 1982), Judge Cohill wrote, "The essential facilities doctrine is inapplicable to hospital staff privileges decisions." See also Drs. Steuer and Latham v. Nat. Med. Enterprises, 672 F. Supp. 1489, 1507 (D.S.C. 1987); McMorris v. Williamsport Hosp., 597 F. Supp. 899, 915 n.15 (M.D. Pa. 1984); Robinson v. Magovern, 521 F. Supp. 842, 913 (W.D. Pa. 1981).
This court is in full agreement with the consistent decisions of other courts not to apply the essential facilities doctrine to exclusive service contracts by hospitals. Furthermore, if there were a case in which a hospital would be an essential facility, MMC would not be that hospital. Within a forty mile radius of MMC, there are eight other hospitals at which Castelli potentially could practice. See MMC Exh. 36. Additionally, MMC offered Castelli the opportunity to practice, albeit as Driscoll's employee. Because we are persuaded that the essential facilities doctrine is not appropriate for a hospital's decisions about professional services, we will grant the defendants' motion with respect to Count VII.
F. Counts VIII, IX, and X
Counts VIII, IX, and X contain state law claims. Because we have dismissed all of the federal claims, we can only retain the state law claims via a discretionary exercise of pendant jurisdiction. We choose not to exercise such discretion, and will dismiss Counts VIII, IX, and X without prejudice.
AND NOW, this 18th day of October, 1988, for the reasons set forth in the accompanying Memorandum Opinion,
IT IS HEREBY ORDERED that:
(1) The Defendants' Motion for Summary Judgment is GRANTED in part and DENIED in part;
(2) Judgment is entered in favor of Meadville Medical Center and Robert A. Driscoll and against Peter J. Castelli on Counts I, II, III, IV, V, VI, and VII of the Complaint; and
(3) Counts VIII, IX, and X of the Complaint are DISMISSED without prejudice.
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