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SWARTHMORE RADIATION ONCOLOGY, INC. v. LAPES

December 9, 1992

SWARTHMORE RADIATION ONCOLOGY, INC., ONCOLOGY SERVICES, INC., and ONCOLOGY ASSOCIATES, P.C., Plaintiff
v.
MELVYN J. LAPES, M.D., ALAN E. MORRISON, ANDREW J. SOLAN, M.D., RIDDLE MEMORIAL HOSPITAL, and TAYLOR HOSPITAL, Defendants


Gawthrop, III


The opinion of the court was delivered by: ROBERT S. GAWTHROP, III

MEMORANDUM

Gawthrop, J.

 December 9, 1992

 Before the court are motions to dismiss filed by all five defendants, as well as the motion of defendants, Drs. Lapes and Solan, to strike plaintiff's claim for injunctive relief. Based on the following reasoning, I shall deny all the motions.

 In this antitrust action, plaintiffs allege that defendants conspired to arrange and execute a group boycott of plaintiffs' new cancer treatment center in Swarthmore, Pennsylvania, with the purpose, and eventual result, of driving the center out of business. They seek compensatory, declaratory, and injunctive relief.

 Motions to Dismiss

 Defendants move to dismiss on the ground that plaintiffs have failed to allege sufficient facts upon which the trier of fact could find that defendants organized a group boycott of plaintiffs' cancer treatment center, which boycott caused the failure of plaintiffs' center.

 When considering a motion to dismiss, the court must "accept as true all facts alleged in the complaint and all reasonable inferences that can be drawn from them." Fuentes v. South Hills Cardiology, 946 F.2d 196, 197 (3d Cir. 1991). The court may grant a motion to dismiss only if it finds that the plaintiff cannot prove any set of facts, consistent with the complaint, which would entitle it to relief. Hishon v. King & Spalding, 467 U.S. 69, 73, 81 L. Ed. 2d 59, 104 S. Ct. 2229 (1984). I find that plaintiffs' complaint does make allegations upon which the trier of fact could find that defendants violated the Sherman Antitrust Act. Therefore, I shall deny defendants' motions to dismiss.

 At oral argument, defendants argued that plaintiffs' complaint was defective in at least four ways, and that if the court agreed with defendants on any one of the four defects, the case should be dismissed. I shall address each suggested defect in turn.

 First, defendants argue that plaintiffs' complaint fails to allege specifically the parties with whom defendants supposedly conspired to organize the boycott of plaintiffs' center. It is true that antitrust claims must be pleaded with reasonable specificity. Commonwealth v. Pepsico, 836 F.2d 173 (3d Cir. 1988) However, the Supreme Court has held that, "in antitrust cases, where 'the proof is largely in the hands of the alleged conspirators,' dismissals prior to giving the plaintiff ample opportunity for discovery should be granted very sparingly." Hospital Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738, 746, 48 L. Ed. 2d 338, 96 S. Ct. 1848 (1976) (citation omitted). In paragraphs 12 through 30 of their complaint, plaintiffs allege various conspiratorial activities on the part of the five named defendants. In addition, plaintiffs allege in paragraph 31 of the complaint that "various persons not made defendants in this Complaint are believed to have participated as co-conspirators with the defendants . . ." Accepting as true the allegations of paragraphs 12 through 30, I draw a reasonable inference that plaintiffs can, upon further investigation, determine who the other alleged co-conspirators are. Plaintiffs have alleged enough conspiratorial activities between and among the five named defendants to support the allegations that those defendants participated in a conspiracy with each other and with other, as yet unnamed, co-conspirators.

 Defendants' second argument is that plaintiffs do not allege that they sought patient referrals from Swarthmore-area physicians; rather, the argument goes, plaintiffs simply allege that they built a state-of-the-art facility and that not many patients were referred to that facility. Defendants rely on Out Front Productions v. Magid, 748 F.2d 166, 170 (3d Cir. 1984), for the proposition that an antitrust claimant must show not only that it "had the background, experience, and financial ability to make a viable entrance [into the market], but even more important, that it took affirmative actions to pursue the new line of business." But plaintiffs do allege that they took "affirmative actions," particularly in their contacts with the named defendants prior to opening the facility. In addition, plaintiffs threw a "Grand Opening" unveiling their brand new facility and thereby advertising to the relevant medical-referral community their availability and willingness to perform radiation therapy. In Out Front Productions, the plaintiff lost on summary judgment when it failed to show that it had made sufficient marketing efforts. If, on a summary judgment motion or at trial, plaintiffs fail to show what "affirmative actions" they took to solicit business, they may very well lose their case. However, at this stage of the proceedings I find that plaintiffs have alleged sufficient attempts to drum up business.

 Third, defendants argue that plaintiffs have not alleged that defendants had control over plaintiffs' potential referral sources. Defendants rely on Northwest Wholesale Stationers v. Pacific Stationery & Printing Co., 472 U.S. 284, 86 L. Ed. 2d 202, 105 S. Ct. 2613 (1985), and FTC v. Indiana Fed'n of Dentists, 476 U.S. 447, 90 L. Ed. 2d 445, 106 S. Ct. 2009 (1986), for the proposition that, in order to be liable per se for a group boycott, defendants must either be dominant in the relevant market or be in a position to prevent plaintiffs from receiving a vital source of supplies. Plaintiffs rely on Weiss v. York Hosp., 745 F.2d 786 (3d Cir. 1984), cert. denied, 470 U.S. 1060 (1985), for the proposition that courts may use a per se standard when examining group boycotts in the health care industry. Defendants counter that Footnote 6 in Miller v. Indiana Hosp., 843 F.2d 139 (3d Cir. 1988), questions the continuing validity of the Weiss holding in light of Northwest Wholesale Stationers and Indiana Fed'n of Dentists. However, I need not reach the question of whether to apply a per se standard or a "rule of reason."

 In Fuentes v. South Hills Cardiology, 946 F.2d 196, 202 (3d Cir. 1991), a group boycott case decided after Miller, the Third Circuit held that "allegations identifying the conspiracy's participants, purpose and motive are sufficient to survive a motion to dismiss." Dr. Fuentes sued a cardiology center, a hospital, and five doctors, alleging that the defendants acted in concert to deny him access to the Pittsburgh cardiological market, thereby reducing competition against the defendants' cardiological services. The court held that Dr. Fuentes's broad allegations were sufficient to survive a motion to dismiss. The Fuentes court did not reach the question of whether a per se rule or a "rule of reason" applied, nor did it discuss market share or market control.

 Following the lead of the Fuentes court, I need not decide, at this stage of the proceedings, whether a per se rule or a "rule of reason" applies. Nor must I consider whether plaintiffs have alleged sufficient market dominance by defendants. Plaintiffs' allegations of conspiratorial activity here are more specific than the Fuentes allegations. The complaint identifies, albeit a bit vaguely, the ...


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