Weiss v. York Hospital

Case information

• Court: United States Court of Appeals for the Third Circuit
• Citation: 745 F.2d 786
• Judges: (Judge Adams recused after oral argument and did not participate in the resolution of this appeal)

Majority opinion

Finally, we deal with the plaintiff's assertion that the district court erred in charging the jury that the hospital could not conspire with its medical staff. The district court found that the medical staff was an unincorporated division of the hospital, and as such the court determined that the two could not conspire. Although we do not necessarily agree with the district court's characterization of the medical staff as an unincorporated division of the hospital, we agree with its basic conclusion that, with respect to the issues in this case, the hospital could not, as a matter of law, conspire with the medical staff. The medical staff was empowered to make staff privilege decisions on behalf of the hospital. As such, with regard to these decisions, the medical staff operated as an officer of a corporation would in relation to the corporation. Although the members of the medical staff had independent economic interests in competition with each other, the staff as an entity had no interest in competition with the hospital. Accordingly, we conclude that the district court correctly charged the jury that there could not be a conspiracy between the hospital and the medical staff. But see Antitrust and Hospital Privileges, supra note 4, at 639-40.⁵¹

1. Proof of Restraint of Trade

a. Introduction

Read literally, Section 1 prohibits every agreement "in restraint of trade." In United States v. Joint Traffic Ass'n, 171 U.S. 505, 19 S.Ct. 25, 43 L.Ed. 259 (1898), the Supreme Court recognized that Congress could not have intended a literal interpretation of the word "every," and since Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1911), courts have analyzed most restraints under the so-called "rule of reason." As its name suggests, the rule of reason requires the factfinder to decide whether, under all the circumstances of the case, the restrictive practice imposes an unreasonable restraint on competition.⁵²

The courts have also, however, applied a rule of per se illegality to certain types of business practices. The development of per se rules has resulted from a recognition that the case-by-case approach inherent in the rule of reason has significant costs,⁵³ and that certain types of business practices almost always have anticompetitive effects without offsetting pro-competitive effects. In applying the per se rules, a court eschews the ordinary evaluation of the effect of the challenged practice, and concentrates instead on the question whether the practice falls within one of the categories of practices condemned by the per se rule. In this case, the plaintiffs argued that the actions of the defendants were the equivalent of a boycott, or as it is sometimes called, a concerted refusal to deal, and thus illegal per se.⁵⁴ We now turn to that inquiry.

b. Is Defendants' Exclusionary Conduct the Equivalent of a Concerted Refusal to Deal ("Boycott")?

The jury found that the defendants had engaged in a policy of discrimination against Dr. Weiss and the other D.O.s in the York MSA by applying unfair, unequal, and unreasonable procedures in reviewing their applications. Weiss, 548 F.Supp. at 1051 (findings of fact Nos. 5-8). In addition, the district court concluded that this unfair, unreasonable, and unequal treatment "could reasonably be anticipated [by the defendants] to cause osteopathic physicians to refrain from applying for staff privileges at the York Hospital." Weiss, 548 F.Supp. at 1053 (finding of fact No. 31).⁵⁵ The question before us is whether these actions should properly be characterized as a "group boycott" or "concerted refusal to deal,"⁵⁶ in which case they are illegal per se under section 1. See United States v. General Motors Corp., 384 U.S. 127, 86 S.Ct. 1321, 16 L.Ed.2d 415 (1966); Silver v. New York Stock Exchange, 373 U.S. 341, 83 S.Ct. 1246, 10 L.Ed.2d 389 (1963); Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 U.S. 656, 81 S.Ct. 365, 5 L.Ed.2d 358 (1961); Klor's, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d 741 (1959); Fashion Originators' Guild of America v. FTC, 312 U.S. 457, 61 S.Ct. 703, 85 L.Ed. 949 (1941); Eastern States Retail Lumber Dealers' Ass'n v. United States, 234 U.S. 600, 34 S.Ct. 951, 58 L.Ed. 1490 (1914). If the defendants' actions cannot be so characterized, the rule of reason analysis would apply and the outcome of the case could be different. But see infra note 61. We conclude that the defendants' actions, as found in the district court, are the equivalent of a concerted refusal to deal.

The classic example of a concerted refusal to deal is the situation in which businesses at one level of production or distribution, e.g., retailers, use the threat of a boycott to induce businesses at another level, e.g., manufacturers, not to deal with competitors of the retailers. As Professor Sullivan has observed, "The boycotting group members, in effect, say to their suppliers or to their customers, `If you don't stop dealing with non-group members, we will stop dealing with you.' If continued trade with group members is more important to a supplier or customer than is trading with non-group members, this threat will be effective." L. Sullivan, Handbook of the Law of Antitrust § 83, at 230 (1977).⁵⁷

In this case York is a provider of hospital services; for the purpose of our analysis, the equivalent of the manufacturer in the example of a classical boycott. Similarly, the M.D.s are the equivalent of the retailers in the example, in the sense that physicians require access to a hospital in order to effectively treat patients. The difficulty with this analogy, at first blush, is that there is no evidence that the M.D.s have used coercion for the purpose of inducing York to exclude their competitors, the D.O.s. Upon closer analysis, however, the absence of coercion is irrelevant. A boycott is not illegal under the antitrust laws because of opposition to the use of coercion, but because it involves the use by businesses of an existing relationship with a supplier to exclude competition. In the paradigm case, coercion is necessary to induce the supplier not to deal with the competitors. In this case, because of the M.D.s' control over York's admission decisions, no coercion is necessary. The underlying antitrust violation is the same: a group of firms at one level of distribution, i.e., the doctors' level, have used their existing relationship with a supplier to exclude their competitors from dealing with the supplier.⁵⁸

We recognize that the facts of this case do not precisely fit into the mold of the classical refusal to deal. The refusal to deal is less than total insofar as York admitted Dr. Zittle and a number of other osteopaths. See supra note 13 and infra note 76. Arguably then, what is at issue is not a boycott but mere discrimination, which sounds less like a per se antitrust violation. However, given the evidence of the different standards applied to osteopaths and M.D.s and the second class citizenship afforded D.O.s upon admission to staff privileges at York, and in view of the adverse impact of these factors upon D.O. applications for York staff privileges, we are satisfied that the restrictive policy is, in purpose and effect, sufficiently close to the traditional boycott, that the characterization is appropriate.

The Medical Staff is, however, entitled to exclude individual doctors, including osteopaths, on the basis of their lack of professional competence or unprofessional conduct. See infra note 60. If York's policy toward D.O.'s could be viewed as a form of industry self-regulation of this type, the rule of reason, rather than a per se rule, would be applicable. See generally L. Sullivan, Handbook of the Law of Antitrust §§ 86-88 (1977).⁵⁹ We recognize, therefore, that in many cases involving exclusion from staff privilege, courts will, more or less openly, have to utilize a rule of reason balancing approach. This case is different, however, because York has not contended that osteopaths as a group are less qualified than M.D.s. See supra note 4. In the absence of such a contention, or another legitimate explanation for the discrimination, we conclude that a per se rule should be applied, since the effect of the practice is identical to that of the traditional boycott, and plainly anticompetitive.

Congruent with the foregoing discussion, the Supreme Court has adopted an exception to application of the per se rule of illegality where the case involves a learned profession and where the restriction is justified on "public service or ethical norm" grounds. Thus unlike most cases where characterization of some activity as a classical boycott ends the inquiry, here, because the medical profession is involved, the rule of reason analysis may still control, as a "built-in" exception. We now turn to a discussion of this potential "escape hatch" to see if it can extricate the defendants from the "cut" of the per se rule.

c. The "Learned Profession" Exception

In Goldfarb v. Virginia State Bar, 421 U.S. 773, 788 n. 17, 95 S.Ct. 2004, 2013 n. 17, 44 L.Ed.2d 572 (1975), in which the Supreme Court made clear that the medical profession is not exempt from the antitrust laws, the Court stated that the "public service aspect, and other features of the professions, may require that a particular practice, which could properly be viewed as a violation of the Sherman Act in another context, be treated differently." See also National Society of Professional Engineers v. United States, 435 U.S. 679, 696, 98 S.Ct. 1355, 1367, 55 L.Ed.2d 637 (1978). In Arizona v. Maricopa County Medical Society, 457 U.S. 332, 348-49, 102 S.Ct. 2466, 2475-2476, 73 L.Ed.2d 48 (1982), the Court partially explained this exception by stating that conduct which is normally subject to per se condemnation under section 1 will instead be subject to rule of reason analysis where the challenged conduct is "premised on public service or ethical norms." Id.⁶⁰ In Maricopa, because the defendants did not attempt to justify their price fixing arrangements on either of these grounds, but instead attempted to argue that the maximum price levels were pro-competitive, the Court held that the per se rule controlled and consequently found that the defendants' conduct violated section 1.

In this case the defendants have offered no "public service or ethical norm" rationale for their discriminatory treatment of D.O.s. Indeed, their defense at trial was that they did not discriminate against D.O.s. Since the jury believed otherwise, we conclude that the per se rule governs this case,⁶¹ except to the extent that the defendants may defend as to the damage claims of Weiss or any class member on grounds of lack of professional capacity or unprofessional conduct.

d. The District Court's Charge and the Sherman Act Section 1 Verdict as to Weiss

As we have explained, the case was submitted to the jury on special interrogatories, and, based thereon, the district court made certain findings and granted injunctive relief. Because of our rulings on appealability, see supra Part III B, we ultimately review here, in terms of the plaintiffs' section 1 claims, only the injunctive order. We conclude that a per se analysis, coupled with the district court's findings, provide the substantive basis for the issuance of an injunction under section 1 of the Sherman Act in favor of the class and that, as a matter of law, there is no grounds for distinguishing Weiss and the class under section 1 for purposes of injunctive relief. The district court entered an injunction in favor of both Weiss and the class, but held that Weiss was entitled to relief under section two. Although we reverse that holding, see infra part IV.B., we conclude that Weiss was entitled to injunctive relief under section 1.

The question of whether Weiss or any class member is entitled to damages, however, is in no way settled by our conclusion. In the trial on the question of damages, the defendants may raise the defenses relating to individual osteopaths, including the demand requirement defense as to members of the class, see supra notes 30, 32, and the defense of lack of professional competence or character as to both Weiss and the class. This is so even though, as we have explained, no such defense has been interposed as to osteopaths generally, thus facilitating our disposition of the injunctive relief claim under section 16. See supra at Part III C 1.

We must also address the question whether the professional competence and character issue has already been resolved by the jury's verdict with regard to Weiss. This requires a consideration of the relevant portion of the district court's charge. The court charged that a combination rule-of-reason/per-se analysis applied to defendants' conduct:

Among the practices which the courts have deemed to be unlawful in and of themselves — that is the per se quality — are group boycotts or concerted refusals to deal.

In this case it is alleged that the York Hospital and members of its Medical Staff have conspired to exclude osteopathic physicians from the staff of the hospital or obtaining access to the staff. This would be a refusal to deal, per se and unreasonable restraint of trade.

If you find that the Defendants while acting in concert acted to exclude osteopathic physicians from the medical staff of York Hospital or treated osteopathic physicians in a way different from allopathic physicians, or acted unreasonably with the purpose or effect of excluding osteopathic physicians from the staff of York Hospital, I then instruct you that such conduct would be an unreasonable restraint of trade as a matter of law.

. . . .

In determining whether or not a per se unreasonable conspiracy existed among any of the defendants as co-conspirators to refuse to deal with the Plaintiff Weiss, or the Plaintiff class, you may consider the validity of the reasons which such parties have given for any refusal to deal with the Plaintiff or the Plaintiff class.

. . . .

Even if you do not find the defendants' behavior to be per se an unreasonable restraint of trade, you may still find that under all the circumstances the defendants' conduct was an unreasonable restraint of trade.

App. at 5690a-5695a. Apparently applying this instruction, the jury concluded that the defendants' conduct constituted an "unreasonable restraint" as to the class, but was not an "unreasonable restraint" as to Weiss. Weiss, 548 F.Supp. at 1051-52 (findings of fact Nos. 7 & 9). Based on these answers, the district court concluded that the medical staff was liable for violating Sherman Act section 1 as to the class but not as to Weiss.

This conclusion is flawed, however, because the instruction was either incorrect or misleading. The instruction was incorrect to the extent that the defendants' conduct in discriminating against D.O.s as a class is subject to the per se rule of illegality, hence it was irrelevant whether the defendants' conduct was an unreasonable restraint as to Weiss (or the class). In that respect the question should not have been submitted to the jury. See Jefferson Parish Hosp. Dist. No. 2 v. Hyde, ___ U.S. ___, 104 S.Ct. 1551, 1556, 80 L.Ed.2d 2 (1984); Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 49-50, 97 S.Ct. 2549, 2557-2558, 53 L.Ed.2d 568 (1977). To the extent that the charge posed to the jury the question whether it was not unreasonable to deny Weiss admission because he lacked professional competence or character, it was confusing, because the court did not properly define the relationship between the per se rule for concerted refusals to deal and the learned profession exception. The question of Weiss' professional competence or character, however, was neither properly nor squarely presented to the jury. The district court did not reach any conclusion arguably based on that question.⁶² Because of the confusion in the court's charge, and the lack of a specific special interrogatory to the jury, we cannot deem the issue of Weiss' professional competence and character as a defense to his claim for damages concluded. Hence, to the extent that the question was arguably resolved by the jury, we grant a partial new trial on that issue. In all other respects Weiss is entitled to the benefit of the district court's findings under section 1.

1. Substantiality of Effect on Interstate Commerce

In order to violate section 1 of the Sherman Act, a defendant's actions must relate to trade or commerce "among the several States."⁶³ There are two ways to satisfy this 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" on interstate commerce.⁶⁴ See, e.g., McLain v. Real Estate Bd. of New Orleans, Inc., 444 U.S. 232, 246, 100 S.Ct. 502, 511, 62 L.Ed.2d 441 (1980); Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738, 743, 96 S.Ct. 1848, 1851, 48 L.Ed.2d 338 (1976); Cardio-Medical Associates v. Crozer-Chester Medical Center, 721 F.2d 68, 71 (3d Cir.1983).

The district court focused its evidentiary inquiry on the effect on interstate commerce of the defendants' conduct and found the requisite "substantial and adverse" effect.⁶⁵ Both before the district court and on appeal the defendants have contended that the proper focus should have been whether the defendants' allegedly illegal conduct substantially affected the plaintiffs' activities in interstate commerce. The defendants concede that, if the district court was correct in focusing the inquiry on the effect of the defendants' activities, the evidence supports the jury's and court's conclusion that the effect on interstate commerce was "substantial and adverse."

The defendants' argument is premised primarily on a district court opinion, Cardio-Medical Associates v. Crozer-Chester Medical Center, 552 F.Supp. 1170 (E.D.Pa. 1982). Since the time of oral argument in this case, however, this court reversed that district court's opinion and held that:

We therefore decline to adopt the district court's theory that defendants' conduct is relevant to the jurisdictional inquiry only insofar as it affects interstate commerce through the person of the plaintiff .... [W]e are willing to examine the defendants' conduct both as it affects interstate commerce through the person of the plaintiff and as it affects commerce independently.

Cardio-Medical Assocs. Ltd. v. Crozer-Chester Med. Ctr., 721 F.2d 68, 75 (3d Cir.1983). Consequently, the district court was correct in focusing on the effect on interstate commerce of the defendants' activities.⁶⁶ We therefore affirm the finding of a "substantial and adverse" impact on interstate commerce in this case.

B. Section 2 of the Sherman Act

Section 2 reads in pertinent part:

Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor....

15 U.S.C. § 2. The test for determining whether a defendant has monopolized in violation of section 2 has been articulated by the Supreme Court as: "(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident." United States v. Grinnell Corp., 384 U.S. 563, 570-571, 86 S.Ct. 1698, 1703-1704, 16 L.Ed.2d 778 (1966). See also Borough of Lansdale v. Philadelphia Electric Co., 692 F.2d 307, 311 (3d Cir.1982).⁶⁷ The district court found the defendant York liable to both Weiss and the plaintiff class for unlawful monopolization in violation of section 2. York has appealed that finding.

York contends that the jury incorrectly concluded that the appropriate market was inpatient health care services provided by hospitals and their staffs; that it incorrectly concluded that York had monopoly power in that market; and that it incorrectly concluded that York acquired or maintained that power by means of "willful" conduct. We conclude that, although there was sufficient evidence to support the jury's conclusion as to relevant market and monopoly power, there was no evidence of willful conduct designed to acquire or maintain monopoly power, and therefore the judgment against York under section 2 must be reversed.

(1) Relevant Market

In order to define the relevant market for purposes of a section 2 claim, it is necessary to examine two aspects of that market: the product market and geographic market. York does not challenge the jury's finding that the relevant geographic market is the York MSA. York does, however, challenge the jury's finding on the product market. In answer to special verdict question number 14, the jury found that the relevant product market was "inpatient hospital health care services supplied by hospitals and their medical staffs." Weiss, 548 F.Supp. at 1052 (finding of fact No. 10). Market definition is a question of fact, Borough of Lansdale, 692 F.2d at 311-12, and we therefore must affirm the jury's conclusion unless the record is devoid of evidence upon which the jury might reasonably base its conclusion. See Dawson v. Chrysler Corp., 630 F.2d 950, 959 (3d Cir.1980), cert. denied, 450 U.S. 959, 101 S.Ct. 1418, 67 L.Ed.2d 383 (1981); Columbia Metal Culvert Co., Inc. v. Kaiser Aluminum & Chemical Corp., 579 F.2d 20, 28 (3d Cir.), cert. denied, 439 U.S. 876, 99 S.Ct. 214, 58 L.Ed.2d 190 (1978); Denneny v. Siegel, 407 F.2d 433, 439 (3d Cir.1969).

Recognizing their substantial burden in overturning a jury's factual finding, York argues that, as a matter of law, the product market is the narrowest market that includes all competing products that consumers perceive as reasonable substitutes for each other.⁶⁸ Defendants' Brief at 40. York contends that, since the plaintiff's expert did not support his conclusion that the relevant market was inpatient hospital care with "any study or evidence of any kind that patients perceive all health care to be essentially fungible," and since it is obvious that inpatient hospital services are not fungible, the jury's finding that the relevant product market is inpatient health care is incorrect as a matter of law. Id. at 41.

In defining a market in an antitrust case, the fact finder must take into account the realities of competition. See United States v. Grinnell Corp., 384 U.S. 563, 572-73, 86 S.Ct. 1698, 1704-1705, 16 L.Ed.2d 778 (1966); United States v. Philadelphia National Bank, 374 U.S. 321, 356-57, 83 S.Ct. 1715, 1737-1738, 10 L.Ed.2d 915 (1963); see also Brown Shoe Co. v. United States, 370 U.S. 294, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962). Since the purpose of market definition is to determine whether market power exists, see L. Sullivan, Handbook of the Law of Antitrust § 12 (1977), market definitions must account for all factors affecting the ability of the alleged monopolist to raise prices or restrict competition, but need not account for other factors which might affect an economist's definition of a product market.

Defendants argue that "inpatient health care services" is not a single market, but an amalgam of numerous markets for individual types of services. Where, however, several goods or services are generally offered by the same providers, it is not unreasonable for a jury to conclude that the market for antitrust purposes includes all of those goods or services. See Grinnell Corp., 384 U.S. at 572, 86 S.Ct. at 1704;⁶⁹ Philadelphia National Bank, 374 U.S. at 363, 83 S.Ct. at 1741. In this case, the medical staffs. App. at 3851a. The defendants' expert also testified that a patient may require several different types of services during his stay at a hospital depending on the course of his treatment. App. at 5136a-37a. The jury could reasonably have concluded based on this testimony that a consumer of hospital services makes one "purchase decision" — where to be hospitalized — and that further decisions concerning his treatment are relatively insulated from any competitive effect.⁷⁰ This conclusion was clearly supported by the evidence, and therefore we affirm the jury's finding that the relevant product market was inpatient hospital health care. See Grinnell Corp., 384 U.S. 563, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966).

(2) Monopoly Power.

Monopoly power is defined as the ability to control price in or to exclude or restrict competition from a relevant geographic market. United States v. Grinnell Corp., 384 U.S. 563, 571, 86 S.Ct. 1698, 1704, 16 L.Ed.2d 778 (1966); United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 391, 76 S.Ct. 994, 1005, 100 L.Ed. 1264 (1956); Columbia Metal Culvert Co., Inc. v. Kaiser Aluminum & Chemical Corp., 579 F.2d 20, 26 (3d Cir.1978), cert. denied, 439 U.S. 876, 99 S.Ct. 214, 58 L.Ed.2d 190 (1978).⁷¹ In their answers to special verdict questions numbers 16 and 18, the jury expressly determined that York had such power. On appeal York asserts that there was insufficient evidence to support the jury's conclusion on this point. We find this contention to be without merit.

A primary criterion used to assess the existence of monopoly power is the defendant's market share. See L. Sullivan, Handbook of the Law of Antitrust § 22 (1977).⁷² In this case, the plaintiffs' expert testified that York possessed a market share in excess of eighty percent, and that in his expert opinion the defendants possessed "the power to exclude competition" and "the power to raise and control prices." App. at 3861a. Since monopoly power is a question of fact, Borough of Lansdale v. Philadelphia Electric Co., 692 F.2d 307, 311 (3d Cir.1982), and since we believe that the expert's testimony and York's market share is sufficient evidence upon which the jury could reasonably have concluded that monopoly power existed in this case, we affirm the jury's and district court's finding on this point. See Dawson v. Chrysler Corp., 630 F.2d 950, 959 (3d Cir.1980), cert. denied, 450 U.S. 959, 101 S.Ct. 1418, 67 L.Ed.2d 383 (1981).

1. Willful Acquisition or Maintenance of Monopoly Power

In addition to proving monopoly power in the relevant market, an antitrust plaintiff must also show that the defendant willfully acquired or maintained that power. United States v. Grinnell Corp., 384 U.S. 563, 570, 86 S.Ct. 1698, 1703, 16 L.Ed.2d 778 (1966); Borough of Lansdale v. Philadelphia Electric Co., 692 F.2d 307, 311 (3d Cir.1982).⁷³ The plaintiffs concede that York lawfully acquired its monopoly power; therefore, the relevant issue is whether the plaintiffs adduced sufficient evidence to demonstrate that York "willfully" maintained this power. The only evidence that plaintiffs offered on this point was the testimony of their expert that M.D.s have a strong economic interest in excluding D.O.s from access to York Hospital because, if D.O.s are given access to York on the same terms and conditions as M.D.s, M.D.s will be forced to compete directly and on equal terms with D.O.s. This testimony is a sufficient basis on which to imply an anticompetitive purpose on the part of the M.D.s in excluding the D.O.s, but it does not explain an economic motive on the part of the hospital to discriminate against D.O.s.

On this point, the uncontradicted evidence of both the plaintiffs' and the defendants' experts was that York, like any hospital, would maximize its revenues by giving staff privileges to every qualified doctor who applied. Hospitals are in the business of providing facilities (rooms and equipment) and support staff (nurses, administrators, etc.). These resources are fixed in the short run, and the hospital maximizes its revenues by encouraging competition for its hospital beds and operating rooms. Since only physicians with staff privileges can admit and treat patients, York can maximize competition for its facilities by granting staff privileges to every qualified doctor who applies. Excluding D.O.s. on the other hand, is likely to weaken York's monopoly position in the long run, since a potential rival, such as Memorial Hospital, would have an incentive to provide competing services for the D.O.s excluded from York.

Recognizing this problem with their section 2 claim, plaintiffs assert that, although the hospital itself has no economic reason to discriminate against D.O.s, the hospital's medical staff, which as a matter of law is a single entity with the hospital, see supra text preceding note 51, is a combination of M.D.s, each of whom have a strong economic motive to exclude D.O.s. Thus, the plaintiffs argue, we should ascribe the anti-competitive motives of the individual M.D.s to the hospital.

There are two problems with this argument. First, the fact that the individual M.D.s who make up the medical staff have parallel anticompetitive motives was the reason we concluded that, as a matter of law, the medical staff is a combination of doctors within the meaning of section 1. We believe, however, that it would be improper to attribute the economic motive of the M.D.s' to York because the M.D.'s motive is to restrict competition in a market in which York is not involved, and because in fact York's economic interest is directly contradictory to that of the individual doctors. Second, even if the anticompetitive motive of the individual doctors could be attributed to the hospital, the actions taken in furtherance of that motive have nothing to do with the maintenance of York's monopoly position; restricting the access of D.O.s to York will not aid York in maintaining that monopoly power.

In sum, we conclude that there is no evidence that York "willfully" maintained its monopoly position as the dominant provider of inpatient health care services in the York MSA. For this reason we reverse the district court's finding that York violated section 2 of the Sherman Act.

C. The Propriety and Scope of the Injunction under Section 16 of the Clayton Act

The final issue we must confront is the propriety and scope of the injunction granted by the district court. The defendants challenge both the propriety of injunctive relief in this case, and the scope of the injunction issued. We conclude that the issuance of an injunction was within the discretion of the district court, but that, given the fact that we have modified the district court's conclusions concerning liability of the defendants under sections 1 and 2, the district court should reexamine the scope of that injunction.

Section 16 of the Clayton Act,⁷⁴ which authorizes injunctive relief in private antitrust cases, focuses on "threatened loss or damage" resulting from a violation of the antitrust laws, and it authorizes an injunction when and under the same conditions as injunctions are granted by "courts of equity." See Mid-West Paper Products Co. v. Continental Group, Inc., 596 F.2d 573, 589-94 (3d Cir.1979); Jeffrey v. Southwestern Bell, 518 F.2d 1129, 1132 (5th Cir.1975). Mindful of the language and purpose of section 16, courts have held that, in order to be entitled to injunctive relief, plaintiffs in an antitrust suit "need only demonstrate a significant threat of injury from an impending violation of the antitrust laws or from a contemporary violation likely to continue or recur." Mid-West Paper, 596 F.2d at 591.

The jury found that both Weiss and the class had been injured by discriminatory admission practices at York,⁷⁵ and the district court adopted both of these findings. Weiss, 548 F.Supp. at 1051-52 (findings of fact Nos. 5 & 9). In addition, the district court expressly concluded that "absent an injunction, there is no guarantee that the injuries by the York Hospital and the York Hospital Medical and Dental Staff will abate." Weiss, 548 F.Supp. at 1058. Thus the district court concluded that there was a significant threat of injury from a continuing violation of the antitrust laws. Id. (citing Mid-West Paper, 596 F.2d at 594 n. 85).

The defendants suggest two reasons for their contention that the jury's findings that Weiss and the class were injured by the defendants' conduct are unsupported by any evidence in the record of this case. First, they claim that there is no evidence on which the jury could have based its conclusion that the medical staff discriminated against D.O.s, and therefore, if the staff did not discriminate against D.O.s, then the D.O.s could not have been injured by the staff. We have already concluded, however, that there was substantial evidence supporting the jury's conclusion of discrimination, and therefore we reject the defendants' contrary contention. Second, defendants suggest that primary care physicians, such as Weiss and the majority of the D.O. class members, do not need hospital admitting and attending privileges because they can provide their services solely by "visiting" their patients at York, and that therefore the plaintiffs were not injured by the alleged discriminatory conduct in denying them staff privileges.⁷⁶ We agree with plaintiff that:

This suggestion is preposterous .... [A] primary care physician will frequently need to admit his patients to the hospital and participate in their hospital care. (5262a-5265a) As the physician with greatest familiarity with a patient, he is often the best one to coordinate the varied consultations, diagnostic services and therapeutic applications necessary to track down and treat disease. (Id.; 5903a; 3553a; 3572a) Often, he will have primary responsibility for the hospital management of a primary disease with a specialist having the responsibility for treatment of complications. Id. Like the specialist, if a primary care physician is foreclosed from privileges at York Hospital, he loses the ability to admit and treat patients there and the patient income which would otherwise be attributable thereto.

Plaintiffs' Brief at 57 n. 25.

Because the district court's conclusion that Weiss and the class were threatened with significant injury due to the discriminatory treatment of D.O.s at York is supported by the evidence, we conclude that the court did not abuse its discretion in granting injunctive relief pursuant to section 16.

The injunction issued by the district court in this case was tailored to prevent possible future harm to Weiss and the class resulting from further discriminatory practices at York:

Pursuant to the Court's authority under 15 U.S.C. § 26, this Court hereby declares that the following equitable relief shall be entered against Defendants York Hospital and York Hospital Medical and Dental Staff:

1.1 The York Hospital and the York Hospital Medical and Dental Staff are restrained and enjoined from undertaking any overt act against either Plaintiff Weiss or members of the Plaintiff Class which would in any way impede or deny the Plaintiffs full, reasonable, fair, or equal access to the facilities of York Hospital and full, reasonable, fair or equal access to staff privileges at the York Hospital.

1.2 The York Hospital and the York Hospital Medical and Dental Staff are restrained and enjoined from applying standards of review to applications by osteopathic physicians for staff privileges at the York Hospital different from the standards of review applicable to similar applications of allopathic physicians.

1.3 The York Hospital and the York Hospital Medical and Dental staff are restrained and enjoined from interpreting the expression "American Board of Medical Specialty" as used in the York Hospital Medical Staff By-Laws to exclude osteopathic boards of medical specialty.

Weiss, 548 F.Supp. at 1061. Our scope of review over questions of the scope of an injunction issued pursuant to section 16 is abuse of discretion, William Goldman Theatres, Inc. v. Loew's, Inc., 164 F.2d 1021 (3d Cir.), cert. denied, 334 U.S. 811, 68 S.Ct. 1016, 92 L.Ed. 1742 (1948), and it appears that the injunction entered in this case falls within allowable discretion. However, given the fact that we have modified the district court's conclusions concerning the liability of the defendants under sections 1 and 2, we believe that the prudent course is to remand to the district court to reconsider the proper scope of injunctive relief given our decision on the sections 1 and 2 claims. Accordingly, we remand the question to the district court so that it may consider whether or not the injunction should be modified. We do, however, note our concern that certain phraseology within the order might be subject to overbroad interpretation ("full ... access ... to the facilities"), though we leave that matter to the district court as well.⁷⁷

V. CONCLUSION

In summary, we reach the following conclusions. First, we find that the district court's decision that the medical staff violated Sherman Act section 1 as to the plaintiff class is supported by sufficient evidence, and we therefore will affirm the district court on this point. Since we also conclude that, as a matter of law, there was no distinction between Weiss and the class for purposes of injunctive relief under section 1, we hold that Weiss was entitled to the same relief as the class on that claim. Second, since there was no evidence adduced at trial that York engaged in any willful conduct designed to acquire or maintain its monopoly power, we will reverse the district court's finding of liability in favor of Weiss and the class and against York on section 2 grounds. Third, we also agree that the issuance of an injunction by the district court in this case was proper. Although the scope of the injunction also appears to fall within the district court's discretion, given our modification of the district court's determinations on the liability of the defendants under Sherman Act sections 1 and 2, we will remand the case to the district court for reconsideration of the scope of the injunction in light of our opinion here.

On remand, the court will also have to try the damage claims, affording the defendants the opportunity to raise the defenses that members of the class did not make demand for staff privileges, and that any such application, including that of Weiss, was properly refused because of the doctor's lack of professional competence or character. See supra note 18. To the extent that the district court may have addressed the latter question with respect to Weiss in its findings and judgment, we grant a partial new trial. Finally, although we did not address the question in the text, we have concluded, see supra note 29, that the district court's decisions absolving various of the defendants on various of the claims, which decisions are based on the jury's answers to the special verdict questions, are supported by the evidence, and we therefore will affirm them.⁷⁸

Our conclusion that the district court did not err as a matter of law in trying the case in Williamsport should not, of course, be taken as a suggestion that the ensuing phase of the trial also be tried in Williamsport as opposed to Harrisburg.

The jury also believed that the defendants had conspired against plaintiff Weiss as reflected in the verdict form reproduced in the body of the opinion. However, because the jury concluded that the conspiracy against Weiss did not unreasonably restrain interstate commerce, Special Verdict No. 8, the jury was not required to answer Special Verdict No. 10, which asked them to identify the conspirators.

We acknowledge that there are factual distinctions between Silver and Associated Press on the one hand, and this case on the other. York Hospital is more than simply an association of doctors; it is a separate economic entity which provides services separate from those provided by the doctors on the medical staff. This case, however, involves only the question of the medical staff's decision about which doctors would be allowed to practice at York. For these purposes, we believe that the principles of Silver and Associated Press are applicable.

Id. (footnotes omitted). Some commentators have suggested the creation of a rebuttable presumption of agreement between the hospital and the medical staff. See Antitrust and Hospital Privileges, supra note 4, at 642; Note, A Suggested Role for Rebuttable Presumptions in the Antitrust Restraint of Trade Litigation, 1972 Duke L.J. 595, 605-624. These authors focus on the relationship between the hospital and the members of its medical staff. We focus instead on the relationship between the entities (individual doctors) who make up the medical staff, and conclude that it is they who provide the requisite joint action element for a section 1 violation.

This case can be viewed as presenting the question whether the relationship between York Hospital and the M.D.s is like a parent-subsidiary relationship, or more closely akin to a traditional boycott. But the rationale for treating the parent-subsidiary relationship differently — that the subsidiaries cannot pressure the parent to act against its own interests — does not apply where independent economic entities such as the M.D.s on the medical staff control the staff-privileges decision-making of an entity — York — at another level of production. Therefore we conclude that this case does not involve a parent-subsidiary relationship. We note, in this regard, our cognizance of the fact that the staff-privileges decision of the medical staff is subject to ultimate review by the Hospital Board. However, given the dominant role of the medical staff and the limited nature of the review process in that area, see supra at pp. 796-799, we believe that the jury's findings as to the culpability of the medical staff are supported.

We add that the defendants adduced certain evidence that tended to show that Dr. Weiss was boisterous and discourteous to nurses in areas of the hospital where patients might have overheard and have been disturbed. See supra note 18. Although this evidence was not the central focus of the trial — the major issue was whether the defendants applied two levels of scrutiny to applicants; a very deferential review to M.D. applicants and a substantially more rigorous review of osteopathic applicants — we do not doubt that a hospital could exclude an applicant from staff privileges either because he is not medically qualified or because of unprofessional conduct, so long as the hospital applies the same standards to all applicants. This result does not skew our antitrust analysis. First, as to medical ability, restricting staff privileges to doctors who have achieved a specified level of medical ability falls within the scope of a hospital's "public service" function, and therefore the rule of reason analysis, not the per se rule of illegality, would control. Applying the rule of reason analysis, it seems obvious that by restricting staff privileges to doctors who have achieved a predetermined level of medical competence, a hospital will enhance its reputation and the quality of the medical care that it delivers. Thus such action is pro-competitive and, therefore, permissible under the rule of reason. See infra note 61. The analysis for professional conduct is basically identical. The "public service" function of a hospital is to provide for effective and efficient medical treatment for its patients. One factor in the effective and efficient running of a hospital is a medical staff that can work together and be courteous to patients and staff. Doctors who have a history of trouble in interpersonal relations can legitimately be excluded because, if admitted, they will reduce the effectiveness of the medical staff, thereby reducing the ability of the hospital to provide top-flight service. In sum, doctors who have trouble getting along with other people will reduce efficiency, thereby reducing the hospital's competitive position, and, therefore, exclusion of such doctors is pro-competitive and permissible under the rule of reason.

See generally Dolan & Ralston, supra note 4, at 719, 735.

Finally, in Kreuzer v. American Academy of Periodontology, 735 F.2d 1479 (D.C.Cir.1984), the D.C. Circuit Court held that the rule of reason analysis governed a section 1 challenge to a rule promulgated by the American Academy of Periodontology (AAP) that limited membership in the AAP to licensed dentists who practice periodontics exclusively, and who do not practice other forms of dentistry. The court labeled the effect of the AAP's rule a "group boycott" but concluded that "[w]hen a conspiracy of this sort is alleged in the context of one of the learned professions, the nature and extent of its anticompetitive effect are often too uncertain to be amendable to per se treatment." Id. at 1492. We believe the "boycott" involved in the Kreuzer case is not a classical boycott, in that a group of competitors at one level of production — i.e., the periodontists — were not trying to use their position to coerce some entity on some other level of production to discriminate against competitors of the periodontists, and therefore Kreuzer is inapposite to the facts of the instant case. Even if we were to conclude that a rule of reasons analysis governs in this case simply because a learned profession is involved, we would conclude that the defendants' conduct here was an unreasonable restraint because: (1) Weiss met his burden of production and persuasion that the purpose and effect of the defendants' discriminatory conduct was to "foreclose so much of the market from penetration by [the M.D.s'] competitors [i.e., the D.O.s] as to unreasonably restrain competition in the affected market, the market for [inpatient medical care]," see Jefferson Parish Hosp. Dist. No. 2 v. Hyde, ___ U.S. ___, 104 S.Ct. 1551, 1568 n. 51, 80 L.Ed.2d 2 (1984), and (2) the defendants — who relied solely on the defense they had not discriminated against D.O.s — made no attempt to counter this evidence.

Id. The court did not include in its order any specific declaration that Weiss did not prevail as to section 1.

1. 1.Dorland's Illustrated Medical Dictionary defines Osteopathy as: a system of therapy founded by Andrew Taylor Still (1828-1917) and based on the theory that the body is capable of making its own remedies against disease and other toxic conditions when it is in normal structural relationship and has favorable environmental conditions and adequate nutrition. It utilizes generally accepted physical, medicinal, and surgical methods of diagnosis and therapy, while placing chief emphasis on the importance of normal body mechanics and manipulative methods of detecting and correcting faulty structure. Osteopathic physicians signify their degree as D.O.
2. 2.The York MSA is the area surrounding York Hospital and includes most of York County, Pennsylvania. The area was designated by the Pennsylvania Health Systems Agency as part of that state agency's system of regulation of the provision of health care in Pennsylvania. For purposes of this case the York MSA was found by the jury to be the relevant geographic area within which to measure York Hospital's economic power.
3. 3.Allopathy is defined as a system of remedial treatment in which it is sought to cure a disease by producing, through medicines, a condition incompatible with the disease. See Funk & Wagnalls New Standard Dictionary of the English Language (1942). Allopathy constitutes the common or "regular" system of medical practice. Allopathic doctors, signify their degree as M.D.
4. 4.At trial Dr. Merle S. Bacastow, an M.D. and the Vice-President of Medical Affairs at York, testified that at least since the mid-1960's there has been no difference in terms of medical training and ability to provide medical care between graduates of osteopathic medical schools and graduates of allopathic medical schools. App. at 3806a-3809a & 4014a-4015a. This observation is born out by the fact that osteopaths and allopaths are equally qualified for state licensure to practice medicine and surgery within the Commonwealth of Pennsylvania. Compare Pa.Stat.Ann. tit. 63, § 271.1 et seq. (Purdon 1984) ("Osteopathic Medical Practice Act") with Pa.Stat.Ann. tit. 63, § 421.1 et seq. (Purdon 1984) ("Medical Practice Act of 1974"). See also Blackstone, The A.M.A. and The Osteopaths: A Study of the Power of Organized Medicine, 22 Antitrust Bulletin 405, 408-14 (1977). Professor Blackstone concludes that in general D.O.s receive somewhat shorter, less expensive, and less specialized training than today's highly specialized M.D.s. Id. at 408-10. He states that this difference may justify limitations on the privileges of osteopaths that are similar to limitations imposed upon general practice M.D.s and family practitioners, but that it would not seem to justify the total exclusion of osteopaths. See id. at 411; Kissam, Webber, Bigers, and Holzgraefe, Antitrust and Hospital Privileges: Testing the Conventional Wisdom, 70 Calif.L.Rev. 595, 641 n. 218 (1982) [hereinafter cited as Antitrust and Hospital Privileges]: Dolan & Ralston, Hospital Admitting Privileges and the Sherman Act, 18 Houston L.Rev. 707, 728 (1981) ("Osteopaths undergo training regimens quite similar to that of M.D. practitioners, except that greater emphasis is placed on family practice and on some manipulative practices. Regardless of the situation thirty years ago, it is highly unlikely that any significant qualitative difference between the two groups exists today.").
5. 5.The facts set forth below were culled from the evidence presented to the jury.
6. 6.The record does not reveal how many employees Memorial has.
7. 7."Tertiary care" is a term used by the parties in this litigation to signify highly specialized "third level" hospital care. Testimony at trial indicated that there are three "levels" of hospital care. The first or primary level involves "the relationship between patient and physician usually in an outpatient setting." The second level usually involves "the application of a specialist, an internist in a hospital setting." The third or tertiary level is the "most sophisticated type of care involving intensive care and the use of subspecialists." App. at 5133a-38a.
8. 8.There appear to be two major reasons why Memorial does not offer tertiary care services and facilities. The first reason relates to the availability of the necessary equipment. State and federal regulations require a hospital to first obtain a "certificate of need" before purchasing expensive equipment. These certificates will not be issued when another hospital in the same service area already has the equipment and that other hospital can handle the total patient demand for that service in that area. Note, Health Professionals' Access to Hospitals: A Retrospective and Prospective Analysis, 34 Vanderbilt L.Rev. 1161, 1183-84 (1981); Blumstein & Sloan, Redefining Government's Role in Health Care: Is a Dose of Competition What the Doctor Should Order?. 34 Vanderbilt L.Rev. 849, 920-924 (1981); Blumstein & Calvani, State Action As A Shield and a Sword in a Medical Services Antitrust Context: Parker v. Brown in Constitutional Perspective, 1978 Duke L.J. 389, 435-437 (1978). Since most tertiary care equipment is highly sophisticated and thus very expensive, and since York already possesses the equipment and can handle the total patient demand for the York MSA. Memorial cannot obtain the required "certificates of need" to purchase tertiary care equipment for itself. The second reason is medical training. Tertiary care is only provided by highly specialized physicians. Because most D.O.s do not highly specialize, see Blackstone, supra note 4, at 407 & 427, there are few who are qualified to provide tertiary care services. By contrast, M.D.s tend to highly specialize, even outside large metropolitan areas, id., hence an M.D. hospital like York is a natural place for providing tertiary care services.
9. 9.Apparently Memorial acquired a CAT scan during the course of this litigation.
10. 10.See generally Dolan & Ralston, supra note 4, at 713-714.
11. 11.See also Dolan & Ralston, supra note 4, at 714.
12. 12.In the ten years proceding the date of the trial, York and its staff received approximately 200 applications by M.D.s. During this period the only M.D. to ever be denied privileges was suffering from psychiatric problems. The presumption enjoyed by M.D.s was even strong enough to permit the admission to staff privileges at York of a certain Dr. "A" [actual name held confidential by the district court] even after the following report was made to the medical staff by one of its senior members based on extensive personal evaluation: [Dr. A] has demonstrated poor judgment in decisions about therapy without obtaining all the facts at hand or necessary to make these judgments or decisions. Moreover he has proceeded in an over-confident manner such as administration of hydrochloric acid ... to correct metabolic alkalosis where other modes of therapy were indicated. I have discussed these actions with him but they tend to recur. He answers questions about events and dates on patients without knowing the facts. He is not able to provide total patient care. He has serious deficiencies in medical knowledge. And moreover compounds these deficiencies by neglecting to obtain the facts before treatment of patients.
13. 13.Since the time of Weiss' application for staff privileges, six other D.O.s have applied to York. Of those six, five were accepted and one application is dormant awaiting supplementation by the applicant. Thus eight D.O.s have applied to York since the medical staff bylaws were changed, and only one applicant — Dr. Weiss — has been rejected. Weiss, 548 F.Supp. at 1053 (findings of fact Nos. 36-40). The defendants assert that these facts can only be interpreted to mean that the defendants did not discriminate against D.O.s and that D.O.s are not dissuaded by fear of rejection from applying to York hospital for staff privileges. The plaintiffs counter that the jury reasonably concluded that during the pendency of this litigation the defendants had decided not overtly to discriminate against D.O.s and that the six D.O.s who applied since Weiss' rejection anticipated this decision. The district court apparently agreed and in addition concluded that many more than six D.O.s would have applied for staff privileges at York but for York's discriminatory treatment of D.O.s and the adverse professional consequences of rejection. Weiss, 548 F.Supp. at 1058.
14. 14.For a discussion of the relationship between the Medical Staff Executive Committee and the Board of Directors, see generally Antitrust and Hospital Privileges, supra note 4, at 641. ("[B]ecause the medical staff, like an agency, has the authority' to evaluate applicants for privileges, the hospital board functions as a reviewing court that recognizes substantial discretion in the staff and upholds the staff's decision if it is supported by any rational basis' or `substantial evidence.'"); See also Dolan and Ralston, supra note 4, at 711-712 ("[F]ormalities are misleading .... [T]he significant entity in the application process is the medical staff.")
15. 15.The hearing proceedings are stenographically transcribed, but the committee is not bound by the strict rules of evidence.
16. 16.The ordinary procedure is described in Dolan & Ralston, supra note 4, at 712 ("When an application is received, it is referred to the specialty service or services for which privileges have been requested .... After the application is approved or disapproved, it percolates back up through the system where deference to the decision increases as the application reaches higher levels of review. Absent extraordinary circumstances, the decision to grant a physician privileges approved by the relevant entity is rarely overturned by the entire medical staff committee, which makes the ultimate recommendation to the governing board.").
17. 17.For example, one M.D., Dr. Bauer, who was contacted by the Committee responded with the following comment: [C]oncerning Dr. Weiss, my only contacts with him have been at the York Squash Club social gatherings several years ago. I must confess that at the time I found Dr. Weiss rather outspoken, [and] extremely aggressive, but you must understand that these are only my personal observations at some social functions and do not relate directly to Dr. Weiss' medical training and/or skills.
18. 18.For example, one M.D., Dr. Woerthwein, wrote that although he did not know Dr. Weiss personally, "some" of Dr. Weiss' patients had complained that Dr. Weiss' examinations were "superficial" and his diagnoses were "unfounded." Another M.D., Dr. Myers, wrote that an unnamed D.O. on the staff of Memorial had called Dr. Weiss a "rebel" and said that 90% of Dr. Weiss' patients were medical assistance patients whom he sees "at a very fast rate." A third doctor, an D.O. named Dr. Kammer, reported that Dr. Weiss' contract with Memorial to work in that hospital's emergency room was terminated because Dr. Weiss "related so badly to people of the lower socio-economic class." However, this contention was directly contradicted by other evidence that Dr. Weiss (and Dr. Zittle) had resigned from service in the emergency room because of a dispute over their salary. Finally, the Committee received a letter from Dr. Herman, an M.D., stating that he had been told by someone working in the York office of the Pennsylvania Department of Public Assistance that the office had received "many complaints from patients about incomplete exams by Dr. Weiss and about his lack of rapport with them." Although it was not known to the committees at York considering Weiss' application for staff privileges, and only revealed in discovery proceedings in this case, the defendants adduced certain evidence tending to show that Dr. Weiss was discourteous to nurses in areas of the hospital where patients might have overheard and been distracted. This evidence was contained in hospital files that the defendants characterized as business records, but the evidence was never admitted, apparently either because the defendants did not authenticate the records or because the district court exercised its discretion to exclude them under Fed.R.Evid. 403 (they were offered solely for impeachment purposes). App. at 5160a-5171a. It is possible that this evidence may be offered again, and we express no view concerning its admissibility at that time since no objection was taken by the defendants to its exclusion at the first phase of this trial.
19. 19.The Executive Committee was composed of Doctors Ardison, Bauer, Butler, Kline, and Kushner. These five physicians are named defendants.
20. 20.The vote was six for denial of the application, five for acceptance, one abstaining, and two absent.
21. 21.The Committee consisted of Doctors Laucks, MacDougall, MacKenzie, Whiteley, and Deisher. These five doctors are named defendants.
22. 22.The ten individual defendants were added in an amended complaint after the district court granted the defendants' motion to dismiss the initial complaint.
23. 23.On May 28, 1981, following a two-day hearing, the district court granted plaintiff's motion for class action certification, determining that the action could be maintained under Fed.R. Civ.P. 23(b)(2) on behalf of a class of all osteopathic physicians practicing medicine in the York MSA. On September 25, 1981, the district court denied the motion by all defendants for summary judgment. Weiss v. York Hospital, 524 F.Supp. 433, 442 (M.D.Pa.1981). Subsequently the defendants sought two writs of mandamus and prohibition from this Court. In one matter, No. 81-2191, the petition was directed to the district court's certification of the plaintiff class. This Court denied the petition holding that mandamus and prohibition were not available. In the other matter, No. 81-2171, the court denied a petition directed to the district court's order authorizing discovery of confidential income data of approximately 100 M.D.s in the York area until completion of the liability portion of the bifurcated trial, and retained — and still retains — jurisdiction in the matter. The opinion in both matters is reported as DeMasi v. Weiss, 669 F.2d 114 (3d Cir.1982). Thereafter, defendants filed a motion before the district court to decertify the class. The motion was denied on August 18, 1982.
24. 24.There were three sets of "findings" made during the trial of this case. First, the jury made findings when it answered the 42 special verdict questions propounded to it by the district court. Weiss, 548 F.Supp. at 1051. Second, the district court, in a written opinion subsequent to the jury verdict, made 40 findings of fact, the first 28 of which were explicitly based on (and in fact were merely restatements of) the jury's answers to the special verdict questions. Id. at 1051-53. Third, the remaining 12 findings of fact were apparently made by the district court in its role as a court of equity deciding whether or not to issue an injunction against the defendants. In addition, of course, the district court made conclusions of law which were essentially molding the jury's answers into verdict form. Id. at 1060-61.
25. 25.The defendants have provided the following chart, which is helpful in visualizing the district court's conclusions of law: [chart omitted in this extraction but preserved in original as table showing liability findings per defendant and claim].
26. 26.The injunction was entered on September 30, 1982, and the defendants appealed it on October 28, 1982, within the thirty days provided by Fed.R.App.P. 4(a)(1). However, on October 12, 1982, the defendants made a motion under Rule 50(b) for judgment notwithstanding the verdict or for a new trial and that motion was not denied by the district court until November 22, 1982. Under the rule announced in Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 103 S.Ct. 400, 74 L.Ed.2d 225 (1983), a timely-filed Rule 50(b) motion prevents the parties from appealing the judgment until the district court decides the motion. See Fed.R.App.P. 4(a)(4). Therefore, if the defendants Rule 50(b) motion was timely filed, the October 28th appeal was void. Fortunately for defendants, however, their Rule 50(b) motion was not timely filed because it was brought one day late, see Turner v. Evers, 726 F.2d 112, 113 n. 2 (3d Cir.1984) (explaining computation rules of Fed. R.Civ.P. 6(a)), and therefore the appeal from the injunction was valid. Fed.R.App.P. 4(a)(4).
27. 27.Rule 54(b) states: (b) Judgment Upon Multiple Claims or Involving Multiple Parties. When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment.
28. 28.The case was not certified under 28 U.S.C. § 1292(b), nor does it fall under the collateral order or other judge-made exceptions to the finality doctrine.
29. 29.The final judgments entered against plaintiff Weiss are: — on the section 1 claim: in favor of York, the staff, and all individual defendants; — on the section 2 claim: in favor of the staff and all individual defendants; — on the state law claims: in favor of the staff and Doctors Ardison, Kline, Laucks, MacDougall, MacKenzie, and Whiteley. The final judgments entered against the plaintiff class are: — on the section 1 claim: in favor of York and all individual defendants; — on the section 2 claim: in favor of the staff and all individual defendants; — on the state law claims: the class made no state law claims. We affirm all the dismissals as to the individual defendants because we believe the evidence supports the jury's conclusions on these claims. We also affirm the dismissal of Weiss' and the class' section 2 claims, against the medical staff, on the same ground. We reverse the dismissal of Weiss' section 1 claim against the medical staff for the reasons stated infra text accompanying notes 52-63. Finally, we affirm the dismissal of Weiss' and the class' claims against York because we believe that these decisions are also supported by evidence in the record. We note however that exoneration of York Hospital on the section 1 claims does not necessarily result in the dismissal of the action as to York. The medical staff (which the jury found liable on section 1 grounds, and which decision we affirm, see infra text accompanying notes 43-66) does not exist independent of the hospital, and therefore the hospital may be liable to pay any award of money damages in favor of the plaintiffs and against the staff under section 4 which may result in the future, on a respondeat superior theory of liability. We leave this question to another day.
30. 30.We reserve the question of the right of class members to recover treble damages under section 4 of the Clayton Act in the absence of a demand. See infra note 32.
31. 31.Moreover, even beyond the requirement of causation, the federal courts, where "pervasive reasons of antitrust policy" warrant, have fastened certain artificial limitations upon the plaintiff's right to recover treble damages. See generally Bogosian v. Gulf Oil Corp., 561 F.2d 434, 454-55 (3d Cir.1977), cert. denied, 434 U.S. 1086, 98 S.Ct. 1280, 55 L.Ed.2d 791 (1978). For example, in Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), the court concluded that, in view of the potential for duplicative recoveries and problems of proof, the right to recover damages for price fixing should generally be confined to the direct purchasers of the price-fixed products.
32. 32.We express no view as to whether a demand is required in non-(b)(2) class situations. Nor do we decide whether the individual members of a (b)(2) class must prove a demand and refusal in order to recover treble damages under section 4 of the Clayton Act. That matter will have to be resolved in a subsequent phase of this case.
33. 33.The scope of review of an order denying or granting a motion to maintain a class is narrow. "If the district court properly applies the relevant criteria, we may reverse its order only for an abuse of discretion." Mazus v. Dept. of Transp., Commonwealth of Pa., 629 F.2d 870, 876 (3d Cir.1980), cert. denied, 449 U.S. 1126, 101 S.Ct. 945, 67 L.Ed.2d 113 (1981); see Paton v. La Prade, 524 F.2d 862, 875 (3d Cir.1975); Katz v. Carte Blanche Corp., 496 F.2d 747, 756-57 (3d Cir.) (en banc), cert. denied, 419 U.S. 885, 95 S.Ct. 152, 42 L.Ed.2d 125 (1974).
34. 34.Weiss v. York County Hospital, Civ. No. 80-0134, at 3 (M.D.Pa. filed 3/28/81) (findings of fact Nos. 8-10) [App. at 1507a].
35. 35.On the subject of how many is enough, Professor Moore has written: While the attitude taken towards a given number may vary, each opinion reflects a practical judgment on the particular facts of the case. Thus no hard and fast number rule can or should be stated, since "numerosity" is tied to "impracticability" of joinder under the specific circumstances. Nevertheless, some general tendencies can be observed. While there are exceptions, numbers under twenty-one have generally been held to be too few. Numbers between twenty-one and forty have evoked mixed responses and again, while there are exceptions, numbers in excess of forty, particularly those exceeding one hundred or one thousand have sustained the requirement. 3B J. Moore, Moore's Federal Practice ¶ 23.05[1], at 23-150 (2d ed. 1982) (footnotes omitted).
36. 36.Professor Moore has concluded that there is no need for this subsection at all, "since all meanings attributable to it duplicate requirements prescribed by other provisions in Rule 23." 3B J. Moore & J. Kennedy, Moore's Federal Practice ¶ 23.06-2, at 23-185 (2d ed. 1982). Some courts have equated typically with commonality, while others have held that it is more akin to the Rule 23(a)(4) requirement that the representative party adequately protect the interests of the class. 4 Newberg on Class Actions § 7983. See 7 C. Wright & A. Miller, Federal Practice and Procedure § 1764 (1972) and cases cited therein. Still other courts and commentators have attempted, quite correctly we think, to ascribe an independent meaning to Rule 23(a)(3) and have posited various tests by which the court may determine whether the prerequisite has been met. A widely utilized formulation has been that advanced in 7 Wright and Miller, supra, § 1763, at 614: ... [P]laintiff has satisfied Rule 23(a)(3) if the claims or defenses of the representatives and the members of the class stem from a single event or are based on the same legal or remedial theory. Of course, when this is true the standard under subdivision (a)(3) is closely related to the test for the common-question prerequisite in subdivision (a)(2). On the other hand, Rule 23(a)(3) may have independent significance if it is used to screen out class actions when the legal or factual position of the representatives is markedly different from that of other members of the class even though common questions of law or fact are raised. This approach focuses on the legal and/or factual stance assumed by the class representative as compared with that of the class members. Under this approach, while factual variations will not defeat certification where the various claims arise from the same legal theory, where the named plaintiff's individual circumstances are markedly different or where the legal theory upon which the claims are based differs from that upon which the claims of other class members will perforce be based, there exists the danger that the unique circumstances or legal theory will receive inordinate emphasis and that the other claims will not be pressed with equal vigor or will go unrepresented. Wofford v. Safeway Stores, Inc., 78 F.R.D. 460, 489 (N.D.Cal.1978); Karan v. Nabisco, Inc., 78 F.R.D. 388, 405 (W.D.Pa.1978); Cohen v. Uniroyal, Inc., 77 F.R.D. 685, 691-92 (E.D.Pa.1977). ("[M]ere anticipation that all class members will benefit from the suit ... is not enough. But interests sufficiently parallel to ensure a vigorous and full presentation of all potential claims for relief should satisfy Rule 23(a)(3)"). See Scott v. University of Delaware, 601 F.2d 76, 84 (3d Cir.), cert. denied, 444 U.S. 931, 100 S.Ct. 275, 62 L.Ed.2d 189 (1979). Illustrative of this approach is Donaldson v. Pillsbury Co., 554 F.2d 825 (8th Cir.), cert. denied, 434 U.S. 856, 98 S.Ct. 177, 54 L.Ed.2d 128 (1977), in which the court described the typicality prerequisite variously as a requirement that there be other members of the class who have the same or similar grievances, id. at 830; that the charge be based on patterns or practices not special or unique to plaintiff, id. at 831; that a significant number of other members of the class have been similarly victimized by the same patterns or practices. Id. The approach of Donaldson and of other courts adopting the Wright and Miller formulation thus appears to be an attempt to attribute semantic integrity to the term "typicality," by using what is essentially its common sense definition and positing that where the plaintiff's factual or legal stance is not characteristic of that of other class members, the typicality prerequisite has not been met. In something of a variation of the above analysis, other courts have held that in order to satisfy the typicality requirement, plaintiff must show that the issues of law or fact he or she shares in common with the class occupy "the same degree of centrality" to his or her claims as to those of unnamed class members. Parker v. Bell Helicopter Co., 78 F.R.D. 507 (N.D.Tex.1978); Cottrell v. Virginia Electric & Power Co., 62 F.R.D. 516 (E.D.Va. 1974); see Wofford, 78 F.R.D. at 489. A similar formulation is the "nexus text." See Hannigan v. Aydin Corp., 76 F.R.D. 502, 508 (E.D.Pa.1977), a Title VII case where Chief Judge Joseph S. Lord, III wrote that typicality exists where plaintiff has demonstrated some "nexus" with the claims of other class members, which can be shown by demonstrating the similarity between the conditions of employment of plaintiff and those of other class members, the similarity between the alleged discrimination practices on the named plaintiff and that affecting the class, and by the compatability of the relief requested and that appropriate for the class. We view the "centrality" and "nexus" tests as functionally indistinguishable from the Wright-Miller/Donaldson "marked difference" formulation; each test attributes to the typicality requirement what we have termed a semantic integrity by focusing on its dictionary or common sense meaning. We see no point in attempting an additional formulation, for we could not improve on the foregoing.
37. 37.In Falcon, a Mexican-American employee filed suit in federal court under Title VII claiming racial discrimination in defendant's refusal to promote him. Without conducting a hearing on whether the prerequisites of Rule 23(a) were met, the district court, pursuant to the Fifth Circuit's rule permitting the victim of racial discrimination in employment to maintain an "across-the-board" attack on all the employer's racially discriminatory policies, certified a class consisting of Mexican-American employees of the employer and Mexican-American applicants who had not been hired by the employer. The Supreme Court rejected the contention that the requirements of Rule 23(a) could be by-passed in Title VII cases. Instead, the Court held that the requirements of Rule 23(a) "limit the class claims to those fairly encompassed by the named plaintiff's claim." 457 U.S. at 156, 102 S.Ct. at 2370 (citing General Telephone Co. of the Northwest, Inc. v. EEOC, 446 U.S. 318, 330, 100 S.Ct. 1698, 1706, 64 L.Ed.2d 319 (1980)). The Court went on to hold that it was error for the district court to presume "[w]ithout any specific presentation identifying the questions of law or fact that were common to the claims of [the plaintiff] and of the members of the class he sought to represent," that the plaintiff's claims against the employer were typical of the claims of other Mexican-American employees and applicants. Id. 457 U.S. at 158, 102 S.Ct. at 2371.
38. 38.Fed.R.Civ.P. 23(b)(2) provides: (b) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition: . . . . (2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole: . . . .
39. 39.The trial in this case was held at the Lewisburg/Williamsport Courthouse because the district court determined that no courtrooms were available in the Harrisburg courthouse during the time scheduled for the trial.
40. 40.We note that by its express terms section 1393(a) does not appear to apply to this case because this suit is not against a "single defendant," but against multiple defendants. However, the section has been applied by several district courts to cases where multiple defendants all reside in the same division. See, e.g., McCroskey v. Texas Marine Survey Co., Inc., 87 F.R.D. 691 (S.D.Tex.1980); Roark v. Bauer, 181 F.Supp. 330 (N.D.Ohio 1960); Lavietes v. Ferro Stamping & Mfg. Co., 19 F.Supp. 561 (E.D.Mich. 1937); Barfield v. Zenith Tire & Rubber Co., 9 F.2d 204 (N.D.Ohio 1924); see generally 1 J. Moore, Moore's Federal Practice ¶ 0.143[4], at 1466 (2d ed. 1984); see also Torres v. Continental Bus System, Inc., 204 F.Supp. 347 (S.D.Tex. 1962) (statute applies to a corporate defendant that is a resident of the division). Because we hold that section 1393 applies only to congressionally created divisions, we need not decide here whether we would extend the statute to cases involving multiple defendants.
41. 41.In order to demonstrate that they were substantially harmed by having the trial held at Lewisburg/Williamsport rather than Harrisburg the defendants point to 28 U.S.C. § 1861, which guarantees all litigants the right to a trial before a jury "selected at random from a fair cross section of the community in the district or division wherein the court convenes." The defendants argue that, if the trial had taken place in Harrisburg as allegedly required by 28 U.S.C. § 1393(a), they would have had a jury from the Harrisburg area — one "drawn from a community containing the diversity of minority groups who inhabit both York itself and the Harrisburg Division, but [] not found in any substantial number in the rural counties from which juries in Lewisburg and Williamsport are drawn." Defendants' Brief, at 64 — and that, with such a jury the outcome of the trial might well have been different.
42. 42.Local Rule 407.1 of the Middle District Rules does not require a different result. Rule 407.1, which is merely precatory, provides that the trial should be held as close as practical to the defendant's place of residence or principal place of business. Local Rule 407.3 provides that "notwithstanding any other provisions of this Rule, in all actions the court shall have the right to designate the place of trial for the convenience of the court or of all the parties and witnesses." In this case the district court attempted to accommodate the convenience of all concerned. Trial was scheduled for Lewisburg/Williamsport only after the district court determined that no courtroom was available in Harrisburg. Its decision in this regard certainly cannot be characterized as an abuse of discretion. Our conclusion that the district court did not err as a matter of law in trying the case in Williamsport should not, of course, be taken as a suggestion that the ensuing phase of the trial also be tried in Williamsport as opposed to Harrisburg.
43. 43.If corporate officers or employees act for their own interests, and outside the interests of the corporation, they are legally capable of conspiring with their employer for purposes of section 1. See Johnston v. Baker, 445 F.2d 424, 426-27 (3d Cir.1971); see also H & B Equipment Co., Inc. v. International Harvester Co., 577 F.2d 239, 244 (5th Cir.1978); Greenville Publishing Co., Inc. v. Daily Reflector, Inc. 496 F.2d 391, 399 (4th Cir.1974). In Copperweld the Supreme Court noted this exception but did not otherwise comment on it. 104 S.Ct. at 2741 n. 15. Because the jury did not find any of the named individual defendants to be conspirators, we do not have occasion to discuss this exception further.
44. 44.The district court instructed the jury: York Hospital is a corporation and as such it can act only through its employees, officers or representatives. The York Hospital does not violate the Sherman Act if it exercises its rights through its officers and agents, which is the only medium through which it can possibly act: likewise the corporation cannot conspire with its unincorporated division here, the medical and dental staff of the York Hospital. Thus I instruct you that York Hospital and the Medical and Dental Staff of York Hospital must be regarded by you as a matter of law as a single entity which cannot conspire with itself. App. at 5685a.
45. 45.Special Verdict No. 13 took the following form: 13. If your answer to the previous question is "yes," check the name or names of the Defendants listed below who were involved in that conspiracy. [list of defendants with X by York Hospital Medical and Dental Staff]. App. at 6250a. It would appear that since the court instructed the jury that the hospital was one in the same with the medical staff and that therefore it was legally impossible for the two to conspire, it was internally inconsistent to provide one space to be checked for York Hospital and a separate space for the York Hospital Medical and Dental Staff. The jury also believed that the defendants had conspired against plaintiff Weiss: 7. Did any of the Defendants conspire with any other person or persons, entity or entities, whether or not a Defendant, to deny Plaintiff Weiss staff privileges at the York Hospital because Weiss was an osteopathic physician? Answer: Yes. App. at 6243a. However, because the jury concluded that the conspiracy against Weiss did not unreasonably restrain interstate commerce, Special Verdict No. 8, the jury was not required to answer Special Verdict No. 10, which asked them to identify the conspirators.
46. 46.15 U.S.C. § 1 (1982).
47. 47.15 U.S.C. § 2 (1982).
48. 48.The "substance" of an arrangement often depends on the economic incentive of the parties. The York medical staff is a group of doctors, all of whom practice medicine in their individual capacities, and each of whom is an independent economic entity in competition with other doctors in the York medical community. Each staff member, therefore, has an economic interest separate from and in many cases in competition with the interests of other medical staff members. Under these circumstances, the medical staff cannot be considered a single economic entity for purposes of antitrust analysis.
49. 49.In the past, the Supreme Court has had occasion to address the problems created by cooperative ventures among otherwise competing entities in a single market. See Silver v. New York Stock Exchange, 373 U.S. 341, 83 S.Ct. 1246, 10 L.Ed.2d 389 (1963); Associated Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013 (1945). Both the AP and NYSE are organizations which serve an economically useful purpose: the AP allows smaller newspapers to combine their resources for the purpose of collecting, assembling, and distributing news; NYSE provides an organized market for the purchase and sale of securities. Yet in both cases, the fact that the defendant organization was a combination of otherwise competing entities was deemed sufficient to satisfy the "contract, combination, ... or conspiracy" requirement of section 1.
50. 50.The foregoing summary does not, however, end our discussion on this point, for we must consider whether errors in the district court's charge harmed any of the parties. The district court instructed the jury that "York Hospital and the Medical and Dental Staff of York Hospital must be regarded by you as a matter of law as a single entity which cannot conspire with itself." App. at 5685a. To the extent that this instruction indicates that the medical staff must be considered a single entity for antitrust purposes, it is at variance with our holding that the medical staff is a combination of the individual doctors who make it up. The plaintiffs, however, were not harmed by this error. In answer to the special verdict questions propounded by the trial judge the jury found that a conspiracy did exist, but that the medical staff was the only defendant that participated. See supra note 45 and accompanying text. Since the legal result of this finding is identical to that of our conclusion that the medical staff is a "combination," the district court's error was harmless.
51. 51.But see Antitrust and Hospital Privileges, supra note 4, at 639-40. ↩
52. 52.As its name suggests, the rule of reason requires the factfinder to decide whether, under all the circumstances of the case, the restrictive practice imposes an unreasonable restraint on competition. ↩
53. 53.The development of per se rules has resulted from a recognition that the case-by-case approach inherent in the rule of reason has significant costs. ↩
54. 54.In this case, the plaintiffs argued that the actions of the defendants were the equivalent of a boycott, or as it is sometimes called, a concerted refusal to deal, and thus illegal per se. ↩
55. 55.Weiss, 548 F.Supp. at 1053 (finding of fact No. 31). ↩
56. 56.The question before us is whether these actions should properly be characterized as a "group boycott" or "concerted refusal to deal." ↩
57. 57.L. Sullivan, Handbook of the Law of Antitrust § 83, at 230 (1977). ↩
58. 58.The underlying antitrust violation is the same: a group of firms at one level of distribution, i.e., the doctors' level, have used their existing relationship with a supplier to exclude their competitors from dealing with the supplier. ↩
59. 59.See generally L. Sullivan, Handbook of the Law of Antitrust §§ 86-88 (1977). ↩
60. 60.Id. ↩
61. 61.Since the jury believed otherwise, we conclude that the per se rule governs this case. ↩
62. 62.The district court did not reach any conclusion arguably based on that question. ↩
63. 63.In order to violate section 1 of the Sherman Act, a defendant's actions must relate to trade or commerce "among the several States." ↩
64. 64.There are two ways to satisfy this 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" on interstate commerce. ↩
65. 65.The district court focused its evidentiary inquiry on the effect on interstate commerce of the defendants' conduct and found the requisite "substantial and adverse" effect. ↩
66. 66.Consequently, the district court was correct in focusing on the effect on interstate commerce of the defendants' activities. ↩
67. 67.See also Borough of Lansdale v. Philadelphia Electric Co., 692 F.2d 307, 311 (3d Cir.1982). ↩
68. 68.York argues that, as a matter of law, the product market is the narrowest market that includes all competing products that consumers perceive as reasonable substitutes for each other. ↩
69. 69.See Grinnell Corp., 384 U.S. at 572, 86 S.Ct. at 1704. ↩
70. 70.The jury could reasonably have concluded based on this testimony that a consumer of hospital services makes one "purchase decision" — where to be hospitalized — and that further decisions concerning his treatment are relatively insulated from any competitive effect. ↩
71. 71.United States v. Grinnell Corp., 384 U.S. 563, 571, 86 S.Ct. 1698, 1704, 16 L.Ed.2d 778 (1966); United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 391, 76 S.Ct. 994, 1005, 100 L.Ed. 1264 (1956); Columbia Metal Culvert Co., Inc. v. Kaiser Aluminum & Chemical Corp., 579 F.2d 20, 26 (3d Cir.1978), cert. denied, 439 U.S. 876, 99 S.Ct. 214, 58 L.Ed.2d 190 (1978). ↩
72. 72.See L. Sullivan, Handbook of the Law of Antitrust § 22 (1977). ↩
73. 73.United States v. Grinnell Corp., 384 U.S. 563, 570, 86 S.Ct. 1698, 1703, 16 L.Ed.2d 778 (1966); Borough of Lansdale v. Philadelphia Electric Co., 692 F.2d 307, 311 (3d Cir.1982). ↩
74. 74.Section 16 of the Clayton Act. ↩
75. 75.The jury found that both Weiss and the class had been injured by discriminatory admission practices at York. ↩
76. 76.Second, defendants suggest that primary care physicians, such as Weiss and the majority of the D.O. class members, do not need hospital admitting and attending privileges because they can provide their services solely by "visiting" their patients at York, and that therefore the plaintiffs were not injured by the alleged discriminatory conduct in denying them staff privileges. ↩
77. 77.We do, however, note our concern that certain phraseology within the order might be subject to overbroad interpretation ("full ... access ... to the facilities"), though we leave that matter to the district court as well. ↩
78. 78.Finally, although we did not address the question in the text, we have concluded, see supra note 29, that the district court's decisions absolving various of the defendants on various of the claims, which decisions are based on the jury's answers to the special verdict questions, are supported by the evidence, and we therefore will affirm them. ↩
79. 79.The preceding paragraph constitutes the substance of footnote 41 in the original opinion.
80. 80.Local Rule 407.1 of the Middle District Rules does not require a different result. Rule 407.1, which is merely precatory, provides that the trial should be held as close as practical to the defendant's place of residence or principal place of business. Local Rule 407.3 provides that "notwithstanding any other provisions of this Rule, in all actions the court shall have the right to designate the place of trial for the convenience of the court or of all the parties and witnesses." In this case the district court attempted to accommodate the convenience of all concerned. Trial was scheduled for Lewisburg/Williamsport only after the district court determined that no courtroom was available in Harrisburg. Its decision in this regard certainly cannot be characterized as an abuse of discretion.
81. 81.If corporate officers or employees act for their own interests, and outside the interests of the corporation, they are legally capable of conspiring with their employer for purposes of section 1. See Johnston v. Baker, 445 F.2d 424, 426-27 (3d Cir.1971); see also H & B Equipment Co., Inc. v. International Harvester Co., 577 F.2d 239, 244 (5th Cir.1978); Greenville Publishing Co., Inc. v. Daily Reflector, Inc. 496 F.2d 391, 399 (4th Cir.1974). In Copperweld the Supreme Court noted this exception but did not otherwise comment on it. 104 S.Ct. at 2741 n. 15. Because the jury did not find any of the named individual defendants to be conspirators, we do not have occasion to discuss this exception further.
82. 82.The district court instructed the jury as quoted in the body of the opinion.
83. 83.Special Verdict No. 13 took the form reproduced in the body of the opinion. It would appear that since the court instructed the jury that the hospital was one in the same with the medical staff and that therefore it was legally impossible for the two to conspire, it was internally inconsistent to provide one space to be checked for York Hospital and a separate space for the York Hospital Medical and Dental Staff.
84. 84.Based on the jury's answers to Special Verdict Nos. 13 & 8, the court in its conclusion of law No. 5 stated: "The individual Defendants have not violated the antitrust laws." Weiss, 548 F.Supp. at 1061.
85. 85.Whether antitrust defendants have engaged in a "contract, combination or conspiracy" to restrain trade is a question of fact. See Theatre Enterprises v. Paramount Film Distributing Corp., 346 U.S. 537, 541-42, 74 S.Ct. 257, 259-260, 98 L.Ed. 273 (1954); Interstate Circuit, Inc. v. United States, 306 U.S. 208, 221 (1939). If there is evidence supporting the jury's finding of a conspiracy, we must affirm. See Dawson v. Chrysler Corp., 630 F.2d 950, 959 (3d Cir.1980), cert. denied, 450 U.S. 959, 101 S.Ct. 1418, 67 L.Ed.2d 383 (1981).
86. 86.Utilizing this principle, the Supreme Court, in Copperweld, explained why a corporation and its wholly owned subsidiary could not legally conspire (quotation reproduced in body of opinion).
87. 87.In Associated Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013 (1945), the Court did not discuss, and indeed seemed to think it was indisputable that the requisite joint action for section 1 purposes was present. However the Court did expressly state that (quotation reproduced in body of opinion). In Silver v. New York Stock Exchange, 373 U.S. 341, 83 S.Ct. 1246, 10 L.Ed.2d 389 (1963), the Court, on the issue of joint action, stated only (quotation reproduced in body of opinion).
88. 88.We also reject the defendants' argument that because the jury exonerated all defendants except the medical staff of conspiracy, and because there was no evidence of any other possible conspirator, the jury's section 1 verdict cannot stand. Because the medical staff itself is a combination within the meaning of section 1, no other co-conspirators are required for section 1 liability.
89. 89.In this article the authors examine the role of medical staff members in relation to the hospital and conclude that these physicians should be treated as "outside agents" of the hospital and thus capable of conspiring under the antitrust laws (quotation reproduced in body of opinion).
90. 90.Justice Brandeis provided the classic statement of the rule of reason in Board of Trade of City of Chicago v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 244, 62 L.Ed. 683 (1918) (quotation reproduced in body of opinion).
91. 91.These costs are a product of the detailed factual analysis necessary to evaluate the myriad of business practices challenged under the antitrust laws. Litigation of the effect or purpose of a practice often is extensive and complex. Northern Pacific Ry. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958). Judges often lack the necessary expert understanding of market structures and behavior to make accurate determinations about a practice's effect on competition. United States v. Topco Associates, Inc., 92 S.Ct. 1126, 1134-1135, 31 L.Ed.2d 515, 405 U.S. 596, 609-10 (1972). One result of the specific nature of a determination under the rule of reason is that prior adjudications may provide little certainty or guidance about the legality of a practice in another situation. Id. at 609 n. 10, 92 S.Ct. at 1134 n. 10; Northern Pacific Ry. Co., 356 U.S. at 5, 78 S.Ct. at 518.
92. 92."Among the practices which the courts have heretofore deemed to be unlawful in and of themselves are price fixing, division of markets, group boycotts, and tying arrangements." Northern Pacific Ry. Co. v. United States, 356 U.S. at 5, 78 S.Ct. at 518 (citations omitted). See United States v. Columbia Steel Co., 334 U.S. 495, 522-23, 68 S.Ct. 1107, 1121-1122, 92 L.Ed. 1533 (1948); Malley-Duff & Associates, Inc. v. Crown Life Ins. Co., 734 F.2d 133, 140 (3d Cir.1984); Cernuto, Inc. v. United Cabinet Corp., 595 F.2d 164, 166 (3d Cir.1979).
93. 93.These findings are clearly not "critically deficient of that minimum quantum of evidence from which a jury might reasonably afford relief." Dawson v. Chrysler Corp., 630 F.2d 950, 959 (3d Cir.1980), cert. denied, 450 U.S. 959, 101 S.Ct. 1418, 67 L.Ed.2d 383 (1981) (quoting Denneny v. Siegel, 407 F.2d 433, 439 (3d Cir.1969)), and therefore we affirm them.
94. 94.We use these two terms interchangeably. Professor Sullivan has pointed out that each term has its advantages and disadvantages: "boycott" is cryptic and emotionally charged, but "concerted refusal to deal" is imprecise and in some respects too narrow and in other respects too broad. See L. Sullivan, Handbook of the Law of Antitrust § 83, at 231 (1977).
95. 95.If the businesses are controlled at both levels by the same firm, and the divisions at one level of production urge the parent corporation not to deal with their rivals, there is no "concerted refusal to deal" under section 1. Copperweld, ___ U.S. ___, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984); supra note 48. In this situation, the law assumes that the vertically integrated firm will choose to maximize the profits of the firm as a whole. If the firm can reap a larger profit by selling to or buying from both its subsidiaries on a particular level of production or distribution and their competitors, it will have no incentive to refrain from doing so. The subsidiaries are not in a position to "boycott" their parent; therefore, there can be no coercive behavior by subsidiaries to force a parent to make a decision that is not in the best interests of the company as a whole. As a result, the "concerted refusal to deal" doctrine does not apply in the context of a subsidiary attempting to influence a parent's behavior.
96. 96.We note that in this case York possesses monopoly power in the York MSA with respect to inpatient hospital health care services. See infra text accompanying notes 71-72. We therefore need not reach the question whether, in order to constitute a per se illegal boycott, a conspiracy to exclude a group of potential competitors from hospital staff privileges requires that the hospital — i.e., the entity at the other level of "production" — possess substantial market power in the relevant market. This distinguishing factor might render the analysis in this case different from the analysis in a large metropolitan area. Cf. Jefferson Parish Hosp. Dist. No. 2 v. Hyde, ___ U.S. ___, 104 S.Ct. 1551, 1559, 80 L.Ed.2d 2 (1984) ("According, we have condemned tying arrangements [only] when the seller has some special ability — usually called `market power' — to force a purchaser to do something that he would not do in a competitive market.")
97. 97.As Professor Sullivan notes in his treatise, the initial question in "industry self-regulation" cases is whether the challenged restrictions have the "purpose and effect" of a classical boycott, and the scope of this initial analysis can be "so spacious that it matters little whether the inquiry is described as one aimed at determining whether a per se rule governs or as one in which the rule of reason is being applied, so that a judicial conclusion that this is a boycott and the per se rule governs' is very much the same as saying, considering everything this joint action is unreasonable.'" Id. § 88, at 248.
98. 98.In the Professional Engineers case, the Supreme Court stated (quotation reproduced in body of opinion). In the light of the Supreme Court's subsequent decision in Maricopa County, see text, we read Professional Engineers to hold that where an "ethical norm" of a learned profession is under attack on section 1 grounds, a rule of reason analysis governs even if the per se rule might otherwise apply, but that in order to prevail on the rule of reason inquiry the defendant must demonstrate that the challenged conduct has a pro-competitive effect. Cf. Antitrust and Hospital Privileges, supra note 4, at 644-45 n. 239 (commentators differ on whether Professional Engineers applied the rule of reason or the per se approach).
99. 99.Several circuit court opinions have held the rule of reason analysis, not the per se rule of illegality, controls in boycott cases involving the learned professions. We believe these cases are readily distinguishable from the instant case. In Wilk v. American Medical Ass'n., 719 F.2d 207 (7th Cir.1983), cert. denied, ___ U.S. ___, 104 S.Ct. 2399, 81 L.Ed.2d 355 (1984), a case involving the refusal of M.D.s to deal with chiropractors, the Seventh Circuit stated: "boycotts are illegal per se only if used to enforce agreements that are themselves illegal per se — for example price fixing agreements." Id. at 221 (quoting Marrese v. American Academy of Orthopaedic Surgeons, 706 F.2d 1488, 1495 (7th Cir.1983), on rehearing, 726 F.2d 1150 (7th Cir.), cert. granted, ___ U.S. ___, 104 S.Ct. 3553, 82 L.Ed.2d 854 (1984)). Since the court could find no per se illegal purpose for the A.M.A.'s medical ethics principle 3, which in essence provided that M.D.'s should not associate with chiropractors, it concluded that the rule of reason analysis governed in that case. We believe that the Seventh Circuit was correct in utilizing a rule of reasons analysis in the Wilk case because the defendants were plainly asserting a "public service or ethical norm" justification for their concerted refusal to deal with chiropractors. In Virginia Academy of Clinical Psychologists v. Blue Shield of Va., 624 F.2d 476, 484-85 (4th Cir.1980), the Fourth Circuit stated: "Because of the special considerations involved in the delivery of health services, we are not prepared to apply a per se rule of illegality to medical plans which refuse or condition payments to competing or potentially competing providers." First, we note that the Fourth Circuit did not have the benefit of the Supreme Court's opinion in Maricopa when it decided Virginia Academy, and indeed the court cited the Ninth Circuit's opinion in Maricopa, which was subsequently reversed by the Supreme Court, as support for its decision that the rule of reason governed. Second, a "medical necessity" justification was apparently raised by the defendants, and in our view that would have been sufficient to bring the defendants within the purview of Maricopa's exception for conduct based on "public service or ethical norms."
100. 100.After the jury returned its answers, Weiss moved for judgment in his favor on the section 1 count, notwithstanding the jury's determination that the defendants' conduct did not constitute an unreasonable restraint as to him, on the grounds that the per se rule of illegality should have been applied to defendants' conduct. Weiss, 548 F.Supp. at 1054. In response, the district court stated (quotation reproduced in body of opinion).
101. 101.This interstate impact requirement has been construed as an element of both jurisdiction and the substantive offense under the Sherman Act. See Mortensen v. First Federal Savings & Loan Ass'n. 549 F.2d 884, 890-91 (3d Cir.1977). The inquiry is the same for both elements. Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976); Englert v. City of McKeesport, 736 F.2d 96 (3d Cir.1984).
102. 102.Another formulation of the test, which apparently has the same meaning, is that the conduct must have a "not insubstantial effect" on interstate commerce.
103. 103.At trial the plaintiff presented evidence demonstrating that York's business activities had a substantial effect on interstate commerce. York's gross patient revenue for an average year was approximately 50 million dollars. App. at 493a. The testimony indicated that York made substantial purchases of drugs and equipment in interstate commerce. App. at 4505a. In addition York routinely treated out-of-state patients and billed them at their out-of-state residences. App. at 4473a-4475a. Finally, the overwhelming majority of patient bills were paid by third party payors (i.e., private insurance companies and federal and state insurers) many of whom are located outside Pennsylvania. App. at 4473a-4475a. Based on this evidence, the jury found that: "(1) the Defendants engaged in business activities in interstate commerce. Special Verdict No. 1; (2) Defendants' conduct concerning Plaintiff Weiss and the Plaintiff class occurred in interstate commerce, Special Verdict No. 2; (3) the Defendants' conduct had a not insubstantial effect' on interstate commerce, Special Verdict No. 3; and (4) the Defendants' conduct concerning Plaintiff Weiss and the Plaintiff class had a not insubstantial effect' on interstate commerce, Special Verdict No. 4." Weiss, 548 F.Supp. at 1051 (findings of fact Nos. 1-4).
104. 104.Most of the evidence on interstate impact concerned York Hospital's activities in interstate commerce, however, only the medical staff was found liable under section 1. We conclude that this discrepancy is irrelevant because the medical staff does not exist independent of the hospital, and therefore the hospital's activities in interstate commerce are attributable to the medical staff also.
105. 105.Section 2, like section 1, also contains the requirement that there be a substantial effect on interstate commerce; that requirement has been met in this case. See supra text accompanying notes 63-66.
106. 106.In the typical antitrust action the defendant attempts to prove the widest (and the plaintiff the narrowest) possible market. This is true because the fraction of the relevant market controlled by the defendant will usually be the most important indicator of monopoly power. Thus the larger the product market is, the larger the denominator of the equation will be, thereby decreasing the percentage of the defendant's market power and consequently the probability of establishing an offense. See Dolan & Ralston, supra note 4, at 763-764.
107. 107.In Grinnell Corp., which involved "central station protection" against losses such as burglary, fire, water overflow, and the like, the defendants there made essentially the same argument as that made by defendants here (quotation reproduced in body of opinion). The Supreme Court squarely rejected that argument, upholding a single service market for central alarm protection (quotation reproduced in body of opinion).
108. 108.On this point the district court charged the jury (quotation reproduced in body of opinion).
109. 109.This is precisely how the concept was defined to the jury in the district court's charge (quotation reproduced in body of opinion).
110. 110.The general rule was stated by the Supreme Court in Grinnell Corp. (quotation and citations reproduced in body of opinion). The courts consider more than just the percentage of the market share in determining monopoly power. Other relevant factors that the courts have identified include: the size and strength of competing firms, freedom of entry into the field, pricing trends and practices in the industry, ability of consumers to substitute comparable goods on services from outside the market, and consumer demand factors. A defendant's power either by itself or aided by these other factors must be enough to restrict entry, supply, or price. See L. Sullivan, Handbook of the Law of Antitrust §§ 22-32 (1977); see also Dolan & Ralston, supra note 4, at 767.
111. 111.This requirement represents a policy judgment that a firm that has acquired and maintained its position as a monopolist because of "growth or development as a result of superior product, business acumen, or historic accident," id., and not through anticompetitive conduct, should not be liable under the antitrust laws for its success.
112. 112.The text of section 16 is set forth supra text following note 31.
113. 113.As to Weiss, the jury concluded that "but for the fact that he was an osteopathic physician rather than an allopathic (M.D.) physician" he would have been granted staff privileges at York. Special Verdict No. 5. As to the plaintiff class, the jury concluded that the defendants' discriminatory actions "cause[d] injury to members of the Plaintiff class other than the Plaintiff in their business and property." Special Verdict No. 12.
114. 114.During the pendency of this class litigation, six out of the ninety-two class members applied and were accepted for staff privileges at York. Defendants contend that the admission of these six osteopaths, combined with the fact that Weiss is the only osteopath to ever be turned down for staff privileges at York, eliminated any threat of harm resulting from defendants' exclusionary conduct. The district court considered this contention and concluded that members of the plaintiff class nevertheless continued to be dissuaded from applying for staff privileges at York because of York's continued dual-track admissions policy. The court went on to find that the class collective fear that they would not be treated equally with M.D. applications was reasonable, despite the recent trend to admit osteopathic applicants, because denial of staff privileges is a significant adverse professional event for a physician. This conclusion is not clearly erroneous. Cf. Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 131-32, 89 S.Ct. 1562, 1580-1581, 23 L.Ed.2d 129 (1969) ("Neither the relative quiescence of the [conspiracy] during litigation nor claims that objectionable conduct would cease with the judgment negated the threat to [plaintiff's] foreign trade. That threat was too clear for argument, and injunctive relief against [defendant] ... was wholly proper.").
115. 115.We emphasize that we have not mandated that the district court should order York to admit Dr. Weiss. The plaintiffs requested this injunctive relief and the district court refused. The district court's injunction is tailored to require that the defendants treat M.D.s and D.O.s equally. Since the defendants have publicly maintained that they do treat M.D.s and D.O.s the same, the district court's injunction hardly seems burdensome.
116. 116.Defendants have requested that on remand the matter be reassigned to a different judge. We see no basis for so exercising our supervisory powers.