Petition for Writ of Certiorari — BRFHH Shreveport LLC, dba University Health Shreveport, Petitioner v. Willis-Knighton Medical Center, dba Willis-Knighton Health System
Supreme Court briefDec 19, 2022
Ask Donna
What actually matters in this document.
Text
No. 22In the
Supreme Court of the United States
BRFHH SHREVEPORT, L.L.C., DOING BUSINESS
AS UNIVERSITY HEALTH SHREVEPORT,
Petitioner,
v.
WILLIS-KNIGHTON MEDICAL CENTER,
DOING BUSINESS AS WILLIS-KNIGHTON
HEALTH SYSTEM,
Respondent.
On Petition for a Writ of Certiorari to the
United States Court of A ppeals for the Fifth Circuit
PETITION FOR A WRIT OF CERTIORARI
Reid A. Jones
Wiener Weiss
& Madison APC
330 Marshall Street
Suite 1000
Shreveport, LA 71107
317417
David A. Ettinger
Counsel of Record
Rian C. Dawson
Benjamin J. Vanderwerp
Honigman LLP
2290 First National Building
660 Woodward Avenue
Detroit, MI 48226
(313) 465-7368
dettinger@honigman.com
A
(800) 274-3321 • (800) 359-6859
i
QUESTIONS PRESENTED
First, Section 1 of the Sherman Act prohibits any
contract, combination, or conspiracy in restraint of trade.
This Court has held that to make out a Section 1 claim
and survive a motion to dismiss under Rule 12(b)(6), a
plaintiff must plead “only enough facts to state a claim
for relief that is plausible on its face.” Bell Atlantic Corp.
v. Twombly, 550 U.S. 556, 570 (2007). The First Question
Presented, upon which the circuits are divided, is:
May a Section 1 claim be dismissed pursuant to Fed.
R. Civ. P. 12(b)(6), consistent with Twombly, based on
evidence suggesting an alternative, non-conspiratorial
reason for the challenged conduct, where the complaint
also contains substantial factual allegations disputing that
alternative inference?
Second, Section 2 of the Sherman Act prohibits the
monopolization (or attempted monopolization) of any
trade or commerce through anticompetitive conduct. Such
anticompetitive conduct is “conduct which unnecessarily
excludes or handicaps competitors,” thereby “impairing
competition.” Aspen Skiing v. Aspen Highlands Skiing
Corp., 472 U.S. 585, 597 (1985). The Second Question
Presented is:
To adequately allege anticompetitive conduct for
purposes of a Section 2 claim involving a threatened
refusal to deal, must plaintiffs allege a “substantial
foreclosure” of competition?
ii
PARTIES TO THE PROCEEDING
Petitioner is BRFHH Shreveport, L.L.C., who was
plaintiff in the cases below. Respondent is Willis-Knighton
Medical Center, who was defendant in the cases below.
iii
CORPORATE DISCLOSURE STATEMENT
Pursuant to Supreme Court Rule 29.6, BRFHH
Shreveport, L.L.C. hereby states that it is a whollyowned subsidiary of Biomedical Research Foundation of
Northwest Louisiana, a Louisiana non-profit corporation.
No publicly held corporation owns 10% or more of the
stock of either entity.
iv
STATEMENT OF RELATED CASES
BRFHH Shreveport L.L.C. v. Willis-Knighton
Medical Center, No. 5:20-cv-00142, U.S. District Court
or the Western District of Louisiana. Judgment entered
Sept. 27, 2021.
BRFHH Shreveport L.L.C. v. Willis-Knighton
Medical Center, No. 21-30622, U.S. Court of Appeals for
the Fifth Circuit. Judgment entered Sept. 19, 2022.
v
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED . . . . . . . . . . . . . . . . . . . . . . . i
PARTIES TO THE PROCEEDING . . . . . . . . . . . . . . . . ii
CORPORATE DISCLOSURE STATEMENT . . . . . . iii
STATEMENT OF RELATED CASES . . . . . . . . . . . . . iv
TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . v
TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . vii
OPINIONS BELOW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PROVISIONS INVOLVED . . . . . . . . . . . . . . . . . . . . . . . 1
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . 4
I.
Factual Allegations in the Complaint . . . . . . . . . 4
A. The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
B. Willis-Knighton’s Coercion . . . . . . . . . . . . . . 7
C. LSU Health’s Actions Against Its
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
vi
Table of Contents
Page
D. Anticompetitive Effects . . . . . . . . . . . . . . . . 14
II. The District Court’s Decision . . . . . . . . . . . . . . . 16
III. The Fifth Circuit’s Decision . . . . . . . . . . . . . . . . 17
A. Section 1 Claim . . . . . . . . . . . . . . . . . . . . . . . 17
B. Section 2 Claims . . . . . . . . . . . . . . . . . . . . . . 20
IV. Federal Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . 20
REASONS FOR GRANTING THE PETITION . . . . 21
I.
The Fifth Circuit Dramatically Departed
from the Decisions of this Court and Numerous
Other Circuits, in Weighing Competing
Inferences on a Rule 12(b)(6) Motion. . . . . . . . . 21
II. In Holding that Foreclosure is a Prerequisite to
a Conditional Refusal to Deal Claim, the Fifth
Circuit Established an Unprecedented Rule
Completely at Variance with the Decisions
of this Court and the Circuit Courts . . . . . . . . . 29
III. These Issues A re of Major National
Importance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
vii
TABLE OF CITED AUTHORITIES
Page
Cases
Alvord-Polk, Inc. v. F. Schumacher & Co.,
37 F.3d 996 (3d Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . 28
Anderson News, L.L.C. v. Am. Media, Inc.,
680 F.3d 162 (2d Cir. 2012), cert. denied 568
U.S. 1087 (2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Ashcroft v. Iqbal,
556 U.S. 662 (2009) . . . . . . . . . . . . . . . . . . . . . . 2, 19, 25
Aspen Skiing v. Aspen Highlands Skiing Corp.,
472 U.S. 585 (1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Bell Atlantic Corp. v. Twombly,
550 U.S. 556 (2007) . . . . . . . . . . . . . . . . . . . . . . . passim
In re Beltone Elec. Corp.,
100 F.T.C. 68 (1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Big Apple BMW, Inc. v.
BMW of North America, Inc.,
974 F.2d 1358 (1992) . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Byars v. Bluff City News Co.,
609 F.2d 843 (6th Cir. 1979) . . . . . . . . . . . . . . . . . . . . 31
In re Chocolate Confectionary Antitrust Litig.,
801 F.3d 383 (3d Cir. 2015) . . . . . . . . . . . . . . . . . . . . . 27
viii
Cited Authorities
Page
Coalition for ICANN Transparency v.
VeriSign, Inc.,
611 F.3d 495 (9th Cir. 2010) . . . . . . . . . . . . . . . . . . . . 33
Conwood Co. v. U.S. Tobacco Co.,
290 F.3d 768 (6th Cir. 2002), cert. denied,
537 U.S. 1148 (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Data Gen. Corp. v.
Grumman Sys. Support Corp.,
36 F.3d 1147 (1st Cir. 1994), abrogated on other
grounds, Reed Elsevier, Inc. v. Muchnick, 559
U.S. 154 (2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Denison Mattress Factory v. Spring-Air Co.,
308 F.2d 403 (5th Cir. 1962) . . . . . . . . . . . . . . . . . . . . 20
Eastman Kodak Co. v. Image Tech. Servs., Inc.,
504 U.S. 451 (1992) . . . . . . . . . . . . . . . . . . . . . . . . 21, 34
Evergreen Partnering Group, Inc. v.
Pactiv Corp.,
720 F.3d 33 (1st Cir. 2013) . . . . . . . . . . . . . . . . . . 25, 26
Forsyth v. Humana, Inc.,
114 F.3d 1467 (9th Cir. 1997), aff’d on nonantitrust grounds, 525 U.S. 299 (1999) . . . . . . . . . . 32
FTC v. Penn State Hershey Med. Ctr.,
838 F.3d 327 (3d Cir. 2016) . . . . . . . . . . . . . . . . . . . . . 16
ix
Cited Authorities
Page
In re Insurance Brokerage Antitrust Litig.,
618 F.3d 300 (3d Cir. 2010) . . . . . . . . . . . . . . . . . . . . . 23
In re Musical Instruments & Equip. Antitrust
Litig.,
798 F.3d 1186 (9th Cir. 2015) . . . . . . . . . . . . . . . . . . . 27
Jacobs v. Tempur-Pedic Int’l, Inc.,
626 F.3d 1327 (11th Cir. 2010) . . . . . . . . . . . . . . . . . . 28
JTC Petroleum Co. v. Piasa Motor Fuels, Inc.,
190 F.3d 775 (7th Cir. 1999) . . . . . . . . . . . . . . . . . . . . 28
Lawlor v. National Screen Service Corp.,
349 U.S. 322 (1955) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Lorain Journal Co. v. United States,
342 U.S. 143 (1951) . . . . . . . . . . . . . . . . . . . . . . . . 34, 36
Matsushita Elec. Indus. Co., Ltd. v.
Zenith Radio Corp.,
475 U.S. 574 (1986) . . . . . . . . . . . . . . . . . . . . . . 2, 24, 25
Merck-Medco Managed Care, LLC v.
Rite Aid Corp.,
201 F.3d 436, 1999 WL 691840 (4th Cir. 1999) . . . . . 27
Monsanto Co. v. Spray-Rite Service Corp.,
465 U.S. 752 (1984) . . . . . . . . . . . . . . . . . . . . . . 2, 24, 25
x
Cited Authorities
Page
Multistate Legal Studies, Inc. v. Harcourt Brace
Jovanovich Legal & Prof’l Publications, Inc.,
63 F.3d 1540 (10th Cir. 1995), cert. denied, 516
U.S. 1044 (1996) . . . . . . . . . . . . . . . . . . . . . . . . 31, 32, 33
Name.Space, Inc. v. Internet Corp. for Assigned
Names & Numbers,
795 F.3d 1124 (9th Cir. 2015) . . . . . . . . . . . . . . . . 23, 28
Premier Elec. Constr. Co. v.
National Elec. Contractors Ass’n, Inc.,
814 F.2d 358 (7th Cir. 1987) . . . . . . . . . . . . . . . . . . . . 33
Realcomp II, Ltd. v. F.T.C.,
635 F.3d 815 (6th Cir. 2011), cert. denied, 565
U.S. 942 (2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SD3, LLC v. Black & Decker (U.S.) Inc.,
801 F.3d 412 (4th Cir. 2015), cert. denied, 579
U.S. 917 (2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Starr v. Sony BMG Music Ent.,
592 F.3d 314 (2d Cir. 2010) . . . . . . . . . . . . . . . . . . . . . 26
Watson Carpet & Floor Covering, Inc. v.
Mohawk Indus., Inc.,
648 F.3d 452 (6th Cir. 2011) . . . . . . . . . . . . . . . . . . . . 26
xi
Cited Authorities
Page
Statutes
15 U.S.C. § 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 4, 35
15 U.S.C. § 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
15 U.S.C. § 15(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
28 U.S.C. § 1254(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Other Authorities
Fed. R. Civ. P. 12(b)(6) . . . . . . . . . . . . . . . . . . . . . . 1, 21, 26
Scholarly Publiciations
Phillip Areeda & Herbert Hovenkamp, Antitrust
Law: An Analysis of Antitrust Principles and
Their Application ¶ 651g (4th ed. 2020) . . . . . . . . . . . 31
Jonathan B. Baker & Judith A. Chevalier, The
Competitive Consequences of Most-FavoredNation Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Susan A. Creighton & Jonathan M. Jacobson, TwentyFive Years of Access Denials, A ntitrust Mag.,
Fall 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
xii
Cited Authorities
Page
Jonathan M. Jacobson and Daniel P. Weick,
Contracts That Reference Rivals as an Antitrust
Category, 11 A ntitrust Source, April 2012 . . . . . . 32
William E. Kovacic, et al., Plus Factors & Agreement
in Antitrust Law, 110 Mich. L. Rev. 393 (2011) . . . 27
Thomas G. Krattenmaker & Steven C. Salop,
Anticompetitive Exclusion: Raising Rivals’ Costs
to Achieve Power over Price., 96 Yale L.J. 209
(1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
1
OPINIONS BELOW
The opinion of the court of appeals (Petition Appendix
(“Pet. Appx.”) 1a-22a), is reported at 49 F.4th 520 (5th Cir.
2022). The district court’s order dismissing petitioner’s
case (Pet. Appx. 23a-62a) is reported at 563 F. Supp. 3d
578 (W.D. La. 2021).
JURISDICTION
The judgment of the Fifth Circuit was entered
September 19, 2022. (Pet. Appx. 1a.) The Court has
jurisdiction under 28 U.S.C. 1254(1).
PROVISIONS INVOLVED
Sherman Act Section 1 (15 U.S.C. § 1) is reproduced
at Pet. Appx. 63a. Sherman Act Section 2 (15 U.S.C. § 2)
is reproduced at Pet. Appx. 64a. Federal Rule of Civil
Procedure 12(b)(6) is reproduced at Pet. Appx. 65a.
INTRODUCTION
The published decision by the Fifth Circuit Court
of Appeals affirming the dismissal of the Complaint
by BRFHH Shreveport, L.L.C. (“University Health
Shreveport” or “UHS”) against Willis-Knighton Medical
Center was based on two legal principles that involve a
“sea change” in antitrust law, and is directly at odds with
decisions in many other circuits and the legal principles
enunciated by this Court:
1. The Court held that UHS’ conspiracy claim under
Section 1 of the Sherman Act must be dismissed because
2
of the existence of a possible independent explanation
for the behavior claimed to be conspiratorial. The Court
declared that the existence of this alternative explanation
compelled “the end of [UHS’] Section 1 claim,” despite four
different categories of factual allegations that directly
disputed this explanation. The Fifth Circuit expressly
weighed substantial conflicting evidence in deciding which
conclusion is most probable (not merely plausible), and
thereby imposed a standard for the viability of antitrust
complaints that completely usurps the role of the jury.
By its actions, the Fifth Circuit disregarded all the
guardrails that this Court and other circuits have imposed
to limit a court’s discretion at the motion to dismiss or
summary judgment stages including the requirement
that an alternative explanation is sufficient for dismissal
only when it is “obvious,” Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 567 (2007), that the complaint’s allegations
need only “tend[] to” exclude alternative explanations,
Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752,
761 (1984), and that a complaint need only “suggest” a
conspiracy. Twombly, 550 US. at 556.
The Fifth Circuit’s decision is the most extreme
example of the trend in some circuits to conflate the
plaintiff’s burden at the motion to dismiss stage, at
summary judgment and at trial. It thus fails to consider
the balance between dismissal of “groundless” claims and
the need to be “cautious before dismissing an antitrust
complaint in advance of discovery. . . .” Twombly, 550
U.S. at 558. This is an issue of exceptional importance,
since it affects a large number of antitrust claims, and
implicates issues this Court has addressed multiple times
in Twombly, Monsanto, Ashcroft v. Iqbal, 556 U.S. 662
(2009) and Matsushita Elec. Indus. Co., Ltd. v. Zenith
3
Radio Corp., 475 U.S. 574 (1986). The Fifth Circuit’s
decision is an unprecedented intrusion into the role of
the trier of fact.
While this Court has denied many petitions for
certiorari in cases applying the “plausibility” standard
in Twombly, the Fifth Circuit’s decision here represents
a dramatic departure from the standard applied in all
those cases. The decision essentially tells defendants – and
possible plaintiffs considering an action – if there is any
possible alternative explanation that can be hypothesized
for a claim of conspiracy, then that claim will be dismissed
if the judges in question regard that hypothesis as more
likely than what can be inferred from specific, well-pleaded
factual allegations. This will significantly deter the pursuit
of antitrust cases that are very far from “groundless,”
Twombly, 550 U.S. at 559, and seriously undermine the
role of private antitrust plaintiffs as “private attorneys
general.” Lawlor v. National Screen Service Corp., 349
U.S. 322, 329 (1955). The standard in the Fifth Circuit’s
decision essentially allows courts to decide significant
disputes as to fact even at the motion to dismiss phase
without any opportunity to develop a record in support
of those well pleaded facts.
Because the decision so dramatically changes the
relevant standard, it is an appropriate case for this Court
to explain how far its decision in Twombly does, and does
not, reach.
2. The Fifth Circuit concluded that conduct involving a
refusal to deal cannot violate Section 2 of the Sherman Act
unless it results in substantial foreclosure. This ruling also
contradicts prior decisions of this Court and numerous
4
other circuits. As such, the Fifth Circuit’s decision
eliminates the protections under Section 2 against a wide
variety of anticompetitive acts and consequences that
harm competition even where no channels of distribution
or purchase are completely foreclosed to competitors.
Together, these two rulings by the Fifth Circuit
create a new and significant bar to antitrust claims under
either Section 1 or Section 2 of the Sherman Act. It is
critical that certiorari be granted in order to resolve these
issues and clarify that antitrust claims of conspiracy and
monopolization cannot be as severely circumscribed as
the Fifth Circuit has indicated.
STATEMENT OF THE CASE
I.
Factual Allegations in the Complaint
A.
The Parties
UHS filed its Complaint on January 30, 2020
alleging antitrust violations under Sections 1 and 2 of
the Sherman Act. Section 1 provides in part that “[e]very
contract, combination in the form of trust or otherwise,
or conspiracy, in restraint of trade or commerce among
the several States, or with foreign nations, is declared to
be illegal.” Section 2 states in part that “[e]very person
who shall monopolize, or attempt to monopolize, . . . any
part of the trade or commerce . . . shall be deemed guilty
of a felony.”
The Complaint alleges that Willis-Knighton, the
dominant hospital system in Shreveport-Bossier City,
Louisiana, undertook an anticompetitive scheme to
5
suppress competition from its largest rival, UHS, after
facing substantially increased competition by UHS, in
order to preserve its monopoly power and ability to impose
high prices on health plans, employers and consumers.
Willis-Knighton has a market share of 75% or more
among commercially insured patients, which is alleged
to be the relevant market. (D. Ct. Dkt. 1, Complaint
at ¶¶ 27, 159-170.) Willis-Knighton has only two local
competitors—CHRISTUS Health Northern Louisiana
(“Christus”) and UHS. (Id. at ¶¶ 12, 176.) As a result of this
dominance, according to its CEO, Willis-Knighton was
able to obtain “commercial insurance reimbursements”
that “are significantly above the norms.” (Id. at ¶¶ 3536.) Compared with Willis-Knighton, UHS’ rates were
substantially lower. (Id. at ¶ 92.)
For years, Willis-Knighton had not viewed the
Shreveport hospital that UHS later operated as a
competitor, because Willis-Knighton did not consider
it a rival for the more lucrative commercially insured
patients. (See id. at ¶¶ 21, 64.) But when UHS took over
management of the Shreveport hospital, it dramatically
improved operations, including the following:
a. Reduced clinic patient referral queues;
b. Achieved record surgical volumes;
c. Developed an ICU step down unit and new
stroke center;
d. Enha nced Bone Ma r row T ra nspla nt
program;
6
e. R e s t o r e d L e ve l 1 T r a u m a C e nt e r
certification;
f. Established a new Baby Friendly Program;
g. Established a Minority and Women’s Owned
Business Program;
h. Reduced labor and benefit costs despite
increasing volume;
i. Experienced a substantial reduction in
patient complaints;
j. Reduced wait times for MRI and CT Scans;
and
k. Reduced average length of stay by 7%.
(Id. at ¶ 24.) As a result, UHS became a much greater
competitive threat to Willis-Knighton:
In 2014 (as compared to 2012, before UHS’s
acquisition of the Shreveport hospital), UHS
accomplished the following:
a. Increased admissions by 15%;
b. Increased clinic visits by 6%;
c. Increased emergency department visits by
15%;
7
d. Improved EBITDA (earnings before interest,
taxes, depreciation and amortization) since
transition of approximately $80,000,000;
and
e. Reduced expenses to the State of Louisiana
by $49,000,000 as reported by the State
of Louisiana’s Department of Health &
Hospitals.
(Id. at ¶25.)
Willis-Knighton stated in a 2014 draft letter that
“with the privatization of LSU, the new University Health
hospital will be seeking to draw private [commercially
insured] patients from Willis-Knighton and Christus
Highland. So the LSU hospital that once was an ally is
now a competitor.” (Id. at ¶ 64.)
B. Willis-Knighton’s Coercion
Willis-Knighton’s response included coercing LSU
Health, the medical school whose faculty represents the
sole medical staff at UHS, from engaging in the normal
cooperation with the hospital that is common to any
medical staff. (Id. at ¶¶ 39, 43-48, 62-63.) The coercion
resulted from Willis-Knighton’s willingness to provide
LSU Health (which was in its own words “IN CRISIS”)
critically needed funds, but only if it ceased cooperation
with UHS, the hospital at which LSU Health’s doctors
primarily practiced. (Id. at ¶¶ 70-75.)
The Complaint explains that before 2016, UHS and
LSU Health had successfully worked together on a number
8
of initiatives. UHS and LSU Health administration held
weekly meetings to improve hospital and physician
operations. (Id. at ¶ 40.) And UHS executives also enjoyed
free and open communication with the chairs of various
LSU Health departments. (Id.) Before 2016, UHS and
LSU Health had also worked cooperatively to recruit
many physicians to Shreveport, including several pediatric
and oncological subspecialists. (Id. at ¶ 111.)
For these reasons, relations between Willis-Knighton
and LSU Health leadership had been strained. (Id. at ¶ 59.)
Willis Knighton had an “issue of trust” with Dr. Robert
Barish, LSU Health’s chancellor, and questioned whether
he and his team “actually desire—and will support—a
partnership with” Willis-Knighton. (Id.)
LSU Health’s behavior changed after a January
2016 Willis-Knighton PowerPoint presentation to LSU
Health which conditioned Willis-Knighton’s provision
of funds on LSU Health’s “cooperation” with WillisKnighton. (Id. ¶ 71.) The Complaint alleges that LSU
Health knew that such cooperation with Willis-Knighton
entailed a refusal to work with UHS, since LSU Health
had been earlier informed that Willis-Knighton desired
to “accelerate the demise” of UHS. Moreover, previous
cooperation between LSU Health and UHS in exploring a
(then unconsummated) venture with Ochsner Health had
resulted in a Willis-Knighton threat to withhold funds
from LSU Health. (Id. ¶¶ 65, 69, 77.)
Cooperation between LSU Heath and UHS ceased
after Dr. G.E. Ghali was appointed interim chancellor
at LSU Health in early 2016, replacing Dr. Barish. (Id.
at ¶¶ 39-41, 56-59.) At the time of his appointment, Dr.
9
Ghali was a senior partner in Willis-Knighton’s Oral and
Maxillofacial Surgery Institute and a member of the
Willis-Knighton Physician’s Network. (Id. at ¶ 56.) WillisKnighton provided Dr. Ghali’s department at LSU Health
significant seven-figure funding annually, and Dr. Ghali
also routinely used Willis-Knighton’s private plane. (Id.)
After his appointment as chancellor, Dr. Ghali habitually
forwarded internal UHS documents to Willis-Knighton
and engaged in political advocacy, on behalf of WillisKnighton. (Id. at ¶ 60.)
A series of emails from Willis-Knighton representatives
to LSU in the summer of 2016 stated that Willis-Knighton
would only consider “the advance of funding” to LSU
when it had “confidence in knowing the future permanent
Chancellor and the key leadership of LSUHSC-S [LSU
Health].” (Id. at ¶ 58.) Shortly after those emails, Dr.
Ghali’s interim appointment as Chancellor of LSU Health
became permanent. (Id.)
After Dr. Ghali was appointed, his subordinate Bruce
Solomon directed that all communications from UHS
must go through him, and that LSU Health department
chairs were no longer permitted to directly communicate
with UHS. (Id. at ¶ 41.) He also cancelled the regular
weekly meetings between UHS and LSU Health. (Id.)
Mr. Solomon often stated that he was “too busy” to
communicate with UHS executives. (Id. at ¶ 43.)
After LSU Health began to resist any cooperation
with UHS, an LSU Health executive reported in an
internal document that Willis-Knighton had “conceptually
agreed” to supply the promised funds. (Id. at ¶ 73.) In a
later communication to the president of Louisiana State
10
University, the same executive said that LSU Health
needed to cease cooperation with UHS in order to take
advantage of Willis-Knighton’s “mother lode” of funds.
(Id. at ¶ 79.) The executive referred to a “partnership”
with Willis-Knighton. (Id. at ¶ 80.)
The Complaint alleges:
In the very same email, Mr. Yick [of LSU
Health] said that “we need to calibrate our
strategy that we have to refocus our energy to
rebuild rather than to collaborate with BRF.”
(Emphasis added.) Instead, the conclusion was
that LSU Health Shreveport should “form
a sustainable long term partnership with
WKMC . . .” Thus, LSU Health Shreveport
agreed to meet Willis-Knighton’s demand to
not collaborate with BRF or UHS in order
to gain the additional funding promised by
Willis-Knighton and to avoid losing the funding
already provided by Willis-Knighton.
(Id. at ¶ 86.)
LSU Health admitted in an email that it had entered
into agreements with hospitals other than Willis-Knighton
“for cover,” i.e., as a cover-up of its arrangement with
Willis-Knighton. (Id. at ¶ 81.)
While not referenced in the Complaint, the Fifth
Circuit relied upon extrinsic evidence regarding a lawsuit
LSU filed against UHS and its affiliates in July 2015,
seeking to terminate the operation of the Shreveport
hospital and its affiliated Monroe hospital (Conway) by
11
UHS and its affiliates. (Pet. Appx. 3a, 13a; see also id.
at 66a-68a.) However, as described above, LSU Health’s
cooperation with UHS in Shreveport did not cease at the
time of the lawsuit, but ended only in 2016. Moreover,
LSU Health continued to fully cooperate with UHS’ sister
hospital, Conway in Monroe, where Willis-Knighton does
not compete. (D. Ct. Dkt. 1, Complaint at ¶ 45.) WillisKnighton’s coercive activities described in the Complaint
only occurred with regard to the hospital in Shreveport.
C.
LSU Health’s Actions Against Its Interest
The Complaint also alleges in great detail how LSU
Health’s refusals to cooperate with UHS in Shreveport in
at least ten different areas were contrary to its individual
self-interest:
Cost Sharing. In 2016 UHS approached LSU Health
about combining many overhead functions. (Id. at ¶ 96.)
Despite the millions of dollars in savings that cooperation
with UHS would have provided LSU, LSU Health rejected
each proposal. (Id.)
Productivity Improvements. LSU Health also refused
to cooperate with UHS to improve the productivity of
several of its departments, many of which ranked at the
lower quartile nationally. (Id. at ¶¶ 107-108.) Because of
this inadequate productivity, physicians were not seeing
as many patients as would have been possible, resulting
in significant backlogs. (Id. at ¶ 109.) Accepting UHS’
assistance in improving physician productivity would have
earned LSU Health millions of dollars in incremental
revenue and provided UHS with significant increases in
market share, because more patients would be able to be
12
seen and treated by physicians. (Id. at ¶ 110.) Despite the
demonstrated need to improve physician productivity,
LSU Health refused to even provide productivity data
for its physicians to UHS. (Id. at ¶ 108.)
Similar efforts by UHS at its Conway hospital
that were accepted by LSU Health led to significant
improvements in productivity. (Id. at ¶ 110.) At Conway,
unlike UHS, the LSU administration worked closely with
UHS in improving productivity, on recruitment, and in
other areas. (Id. at ¶ 45.) Willis-Knighton was not active
in Monroe, where Conway was located. (Id.)
Hospitalists. UHS proposed the creation of a
hospitalists program. (Id. at ¶¶ 118-120.) Many hospitals
in the United States employ such physicians, who do not
have independent practices and instead specialize in
taking care of patients while they are in the hospital. (Id.
at ¶ 118.) A hospitalist program also frees up physicians
to spend more time in the office seeing patients. (Id. at
¶ 119.) Yet LSU Health effectively rejected adopting such
a program, and so forewent the substantial revenue it
could have realized by virtue of being able to treat more
patients. (Id. at ¶ 120.)
Refusal to Cooperate in Staffing Clinics. The failure
by LSU Health to fully staff the Provenance clinic, UHS’
first facility that mainly served commercially insured
patients, led to a substantial loss of revenues to LSU
Health. (Id. at ¶ 121.)
Adoption of a Common Formulary. UHS tried to
persuade LSU Health to adopt a common formulary
for the purchase of drugs and medical supplies, rather
13
than leave such decisions to the discretion of individual
physicians. (Id. at ¶ 131.) Hospitals frequently work with
their physicians to adopt such formularies, as they allow
hospitals to purchase in larger quantities and obtain
greater discounts, as well as reduce inefficiencies and
potential errors. (Id.) LSU Health’s refusal to cooperate
with UHS resulted in LSU Health missing out on
substantial shared savings. (Id.)
Physician Training in Documentation. UHS
approached LSU Health about training physicians in
clinical documentation. (Id. at ¶ 132.) Proper documentation
is important because it not only improves patient care, but
without proper documentation managed care payors will
not pay for the care provided. (Id.) Thus, better and more
accurate documentation improves results for patients and
increases revenues. (Id.) By foregoing participation in
such training, LSU Health forewent substantial additional
revenue. (Id.)
Scheduling. When UHS approached LSU Health
about improvements to scheduling, LSU Health was
unwilling to change its system. (Id. at ¶ 134.) LSU Health’s
existing system impeded the efficiency of the physicians
and prevented them from seeing more patients. (Id.) LSU
Health’s refusal to cooperate in improving this scheduling
system led to lost revenue and fewer patients seen. (Id.)
Outpatient Imaging Center. UHS also proposed that
LSU Health and the hospital establish a joint venture
outpatient imaging center at a location apart from the
hospital campus. (Id. at ¶ 133.) LSU Health ignored the
request. (Id.)
14
Recruiting. Beginning in May 2016, LSU Health
refused to work with UHS to recruit additional physicians
in areas like neurology and cardiology despite LSU
executives’ expressed concern over their inability to
recruit physicians, and despite the substantial shortfalls
in medical school and hospital revenues created by the
departure of existing physicians. (Id. at ¶¶ 47, 111-114.)
In some cases, LSU Health executives specifically
admitted that they refused cooperation with UHS at
Willis-Knighton’s behest. For example, Blue Cross Blue
Shield of Louisiana approached UHS and LSU Health
about offering a network to patients that would exclude
Willis-Knighton hospitals and physicians, and thus be
available at a far lower cost to subscribers. (Id. at ¶ 44.)
Such an effort would have garnered millions of dollars in
new funds to LSU Health. (Id.) But LSU Health refused
to even participate in meetings on the subject, because,
according to Dr. Ghali, such a strategy would upset WillisKnighton’s CEO James Elrod. (Id. at ¶ 89.)
D.
Anticompetitive Effects
The Complaint contains numerous specific allegations
that indicate that this conduct was anticompetitive
and exclusionary. Willis-Knighton’s actions prevented
UHS from reducing its costs or increasing its revenue
and stymied UHS’ efforts to further challenge WillisKnighton. (Id. at ¶¶ 6, 43, 101, 105, 147.) These actions thus
allowed Willis-Knighton to maintain its high market share
and high prices without fear of increased competition.
Willis-Knighton thereby maintained its monopolylevel market share, by suppressing UHS’ ability to
15
compete for greater volumes of patients. The narrow
network opportunity with Blue Cross that UHS had to
forego because of Wills-Knighton’s coercive pressure on
LSU would have increased UHS’ volumes and revenues
significantly by attracting more subscribers. (Id. at ¶ 90.)
LSU Health’s actions specifically stymied an effort by
Blue Cross to create greater managed care competition
for Willis-Knighton, which would have undercut WillisKnighton’s position as a “must-have” hospital which could
effectively set its own rates. (Id. at ¶¶ 85-93.)
If Willis-Knighton had not interfered in UHS’
recruiting efforts, UHS would have been able to attract
more doctors to the hospital, compete more effectively
in certain specialty areas, and increase its revenues by
increasing the volume of patients UHS treated. (Id. at
¶ 47.) Likewise, LSU Health’s refusal to cooperate with
UHS on adopting productivity standards for physicians
and adopting a more efficient scheduling system also
prevented UHS from seeing as many patients as it
otherwise would have been able to. (Id. at ¶¶ 107-110, 134.)
UHS would have also been able to increase its volume
of commercially insured patients seen, and therefore
its revenues, had LSU cooperated in staffing UHS’
Provenance clinic. (Id. at ¶ 121.) The UHS-proposed
outpatient imaging center would also have created a new
revenue stream that it wasn’t able to realize because of
Willis-Knighton’s coercion. (Id. at ¶ 133.)
If UHS had gained additional funds through the
rejected cooperative ventures, it would have engaged in
substantial additional competitive activities, including
additional marketing, facility improvements, and expansion
of programs and services, thereby potentially reducing
16
Willis-Knighton’s dominant position. (Id. at ¶ 178.) Given
Willis-Knighton’s dominant position in the market, and
the fact that UHS was one of only two competitors to
Willis-Knighton, even a small change in market shares
would have impacted competition. (Id. at ¶ 179.) Indeed,
economic research shows that high market concentration
substantially increases hospital prices. (Id. at ¶ 181.)
Willis-Knighton’s coercion maintained that high level of
concentration. (Id. at ¶ 179.) The Complaint alleges that
improvements at UHS would be desirable to consumers,
since UHS had been increasing its market share through
its increased competitive efforts. (Id. at ¶¶ 24, 52, 105,
178.) The Complaint also states that managed care payors,
and in particular Blue Cross of Louisiana, specifically
expressed interest in a joint contractual relationship with
UHS and LSU Health. (Id. at ¶ 86.) Since managed care
plans are considered the “customers” in health antitrust
cases, FTC v. Penn State Hershey Med. Ctr., 838 F.3d
327, 342 (3d Cir. 2016), this establishes evidence of harm
to consumers.
II. The District Court’s Decision
Willis-Knighton moved to dismiss the Complaint for
failure to state a claim on May 22, 2020. (D. Ct. Dkt. 20.)
UHS moved for oral argument on June 18, 2020. (D. Ct.
Dkt. 28.) The Court denied the motion for oral argument
on March 30, 2021. (D. Ct. Dkt. 35.) After briefing and
without oral argument, the district court granted WillisKnighton’s motion and dismissed UHS’ complaint on
September 27, 2021 on the basis that UHS “failed to
sufficiently allege antitrust violations in more than a
nonspeculative manner.” (Pet. Appx. 24a.)
17
III. The Fifth Circuit’s Decision
A.
Section 1 Claim
The Fifth Circuit affirmed the district court’s
dismissal of UHS’ Section 1 claim, holding—as a matter of
first impression—that Willis-Knighton’s threats and LSU
Health’s numerous actions acceding to those threats were
insufficient to plausibly suggest a “threat-and-accession”
conspiracy because “LSU had a completely independent
reason for refusing to cooperate with [UHS] . . . .” (Pet.
Appx. 13a.) The Court inferred this “independent reason”
from a 2015 lawsuit between LSU Health and UHS, in
which LSU Health alleged, among other things, that UHS
was failing to adequately collaborate in achieving LSU
Health’s mission. (Id.) Accordingly, the Court reasoned,
LSU Health had a reason to “sever its ties” with UHS
that “predated any alleged coercion by Willis-Knighton.”
(Id.) Choosing to believe the inference that LSU Health
ceased cooperating with UHS for the reasons stated in a
prior lawsuit rather than in response to Willis-Knighton’s
coercion, the Court declared it “the end of [UHS]’s
Section 1 claim.” (Id. at 14a.)
T he F i f t h C i r c u it r e a c he d t h i s c onc lu s ion
notwithstanding the fact that the Complaint contained
specific allegations explaining that LSU Health continued
to cooperate with UHS in Shreveport until after WillisKnighton’s January 2016 proposal and the appointment
of Willis-Knighton’s agent Dr. Ghali as LSU Health’s
interim chancellor:
Prior to the appointment of Dr. Ghali and
Mr. Solomon, LSU Health Shrevepor t’s
18
administration had worked closely with UHS,
through weekly meetings, to cooperate with the
hospital to improve both hospital and physician
operations. Additionally, UHS executives
enjoyed free and open communication with the
chairs of the various LSU Health Shreveport
departments, and worked with them on common
goals.
Commencing in the spring of 2016, this
cooperation ceased. In fact, Mr. Solomon
[appointed by Dr. Ghali] directed that all
communications from UHS go through him,
and that LSU Health Shreveport department
chairs not directly communicate with UHS.
The regular weekly meetings between UHS
and LSU Health Shreveport executives were
cancelled. When UHS proposed a number of
cooperative initiatives, LSU Health Shreveport
consistently refused to participate, even though
it would have been in its individual self-interest
to do so.
(D. Ct. Dkt. 1, Complaint at ¶¶ 40-41. See also id. at ¶ 39.)
On nearly a dozen occasions, the Complaint explains that
LSU Health’s refusal of cooperation was directed by
Dr. Ghali and his subordinate Mr. Solomon, who did not
assume their positions until 2016. (Id. at ¶¶ 42-44, 47-49.)
The Fifth Circuit rejected these well-pleaded specific
facts as a “made-to-order account” and “wishful thinking”,
and therefore not plausible. (Pet. Appx. 15a.) As such,
the Fifth Circuit expressly weighed specific, conflicting
evidence in deciding whether the claim was plausible.
19
Because of this express evaluation of well pleaded specific
factual allegations, the Fifth Circuit’s decision presents
a strong vehicle for determination of the appropriate
standard for plausibility under Twombly and Iqbal.
The Fifth Circuit ignored the fact that LSU Health
continued to cooperate with UHS’ sister hospital, Conway
in Monroe, Louisiana (also part of the same lawsuit) where
Willis-Knighton was not a competitor. (D. Ct. Dkt. 1,
Complaint at ¶¶ 45, 47, 108, 114.) The existence of the prior
lawsuit could not possibly explain these facts.
The Fifth Circuit also effectively treated as irrelevant
the direct evidence of agreement here, including LSU
Health’s reference to its “partnership” with WillisKnighton, the fact that LSU Health and Willis-Knighton
had “conceptually agreed” on the payment of funds which
Willis-Knighton had conditioned on cooperation and LSU
Health’s cover-up of that relationship. (Id. at ¶¶ 59, 73,
80-81.) The mere fact of an alternative explanation for an
alleged conspirator’s behavior cannot explain away direct
evidence of agreement of this sort.
The Fifth Circuit also failed to address the extremely
detailed allegations in the Complaint that LSU Health’s
actions were clearly against its own interest in 10 separate
areas. (Id. at ¶¶ 90, 96-100, 103-105, 110, 113, 115, 119,
132.) The Fifth Circuit did not explain why LSU Health
would seek to cause itself such substantial harm once it
lost the lawsuit and it became clear that its doctors would
need to continue to serve as UHS’ medical staff. Again,
the Fifth Circuit ignored this evidence and effectively
found implausible the notion that a firm’s actions against
its unilateral interests could suggest a conspiracy.
20
The Fifth Circuit thus ignored or belittled four
different categories of evidence inconsistent with the
alternative explanation that it considered dispositive.
The Fifth Circuit weighed the evidence and rejected
evidence that it concluded was (for unknown reasons)
insufficient, without any opportunity for UHS to present
actual testimony regarding the inconsistency between its
allegations and the Fifth Circuit’s theory. As such, the
Fifth Circuit acted as the finder of fact.
B. Section 2 Claims
The Fifth Circuit also affirmed the district court’s
dismissal of UHS’ Section 2 claims. The Court reasoned
that, although UHS had offered numerous theories of
harm upon which to find anticompetitive conduct, the
“likeliest candidate[]” is a “conditional refusal to deal”,
which, the Court concluded, is “functionally equivalent” to
an exclusive-dealing arrangement. (Pet. Appx. 17a.) The
Court therefore held that “[s]ubstantial foreclosure is a
prerequisite for every exclusive-dealing Section 2 claim.”
(Id. at 18a (citing Denison Mattress Factory v. SpringAir Co., 308 F.2d 403, 410 (5th Cir. 1962).) Concluding
that UHS failed to allege substantial foreclosure of the
“medical services market” resulting from the exclusivedealing arrangement between Willis-Knighton and LSU
Health, the Court held that UHS failed to state a claim
under Section 2 of the Sherman Act. (Id. at 19a-22a.)
IV. Federal Jurisdiction
UHS’ Complaint alleges violations of Sections 1 and 2
of the Sherman Act. By statute, “any person who shall be
injured in his business or property by reason of anything
21
forbidden in the antitrust laws may sue therefor in any
district court of the United States in which the defendant
resides or is found or has an agent . . . .” 15 U.S.C. § 15(a).
REASONS FOR GRANTING THE PETITION
I.
The Fifth Circuit Dramatically Departed from
the Decisions of this Court and Numerous Other
Circuits, in Weighing Competing Inferences on a
Rule 12(b)(6) Motion
The Fifth Circuit’s willingness to dismiss UHS’
Complaint as long as there was a possible (though
controverted) non-conspiratorial explanation for LSU
Health’s behavior directly conflicts with the decisions of
this Court and at least the First, Second, Fourth and Sixth
circuits. Bell Atlantic Corp. v. Twombly requires only
that “a complaint [present] enough factual matter (taken
as true) to suggest that” a violation of the Sherman Act
occurred. 550 U.S. 544, 556 n.5, 559 (2007). The presence
of such factual allegations are sufficient to permit a
complaint to “proceed even if it strikes a savvy judge
that actual proof of those facts is improbable” or recovery
“very remote and unlikely.” Id. at 556 (quotation omitted).
It is sufficient that a complaint offer “only enough facts to
state a claim for relief that is plausible on its face.” Id. at
570 (emphasis added). “Rule 12(b)(6) does not countenance
… dismissals based on a judge’s disbelief of a complaint’s
factual allegations.” Id. at 556. Even in the summary
judgment context, a plaintiff’s evidence “is to be believed,
and all justifiable inferences are to be drawn in their
favor.” Eastman Kodak Co. v. Image Tech. Servs., Inc.,
504 U.S. 451, 456 (1992) (brackets omitted).
22
The Fifth Circuit’s decision set requirements far
beyond this Court’s standard in Twombly. The Fifth
Circuit demanded, not merely “factually suggestive”
allegations, but also (in a highly selective way) weighed
the factual allegations and decided which it believed
were more likely. It chose to disbelieve specific factual
allegations as “wishful thinking” and “made-to-order.”
It labeled UHS’ allegations as implausible based on its
own assessment of certain factual allegations, and failed
to even address others. This went far beyond what is
appropriate at the complaint stage.
The allegations here certainly meet the standard set
forth in Twombly for “enough fact to raise a reasonable
expectation that discovery will reveal evidence of illegal
agreement.” 550 U.S. at 556. For example, here, it is
certainly foreseeable that discovery will show in even more
detail than is set forth in the Complaint, that LSU Health
decided to abandon its effort to terminate UHS, and
therefore decided to do what was necessary to make the
relationship work, until the conspiracy began. Discovery
could also reveal that LSU Health cannot explain why it
rejected a series of opportunities to profitably cooperate
with UHS. Similarly, discovery could reveal that LSU
Health’s decision to cooperate with UHS’ affiliate at its
Conway Hospital in Monroe was significant and therefore
contrasts dramatically with LSU Health’s behavior in
Shreveport, where Willis-Knighton was dominant and
had a significant stake in the outcome.
By weighing these factual allegations, and simply
disregarding many of them, the Fifth Circuit ignored
the prospect that these allegations could be supported in
discovery and precluded UHS’ opportunity to do so. It was
23
not “cautious before dismissing an antitrust complaint in
advance of discovery,” 550 U.S. at 558, but eager to do so.
The Fifth Circuit also transformed the “alternative
explanation” language in Twombly into a formulation far
beyond what this Court and numerous circuits intended.
Twombly justifies dismissal where there is an “obvious
alternative explanation” for the behavior. 550 U.S. at 567.
Several circuits have agreed. See, e.g., In re Insurance
Brokerage Antitrust Litig., 618 F.3d 300, 322-23 (3d Cir.
2010); Name.Space, Inc. v. Internet Corp. for Assigned
Names & Numbers, 795 F.3d 1124, 1130 (9th Cir. 2015).
But an alternative explanation is “obvious” only if there
are no significant facts that suggest that the explanation
could be inadequate. Here, there clearly were such facts
alleged. If allowed to stand, the Fifth Circuit’s decision to
make its own assessment of those very substantial factual
allegations would allow dismissal when an alternative
explanation is far from “obvious.”
While this Court relied on an alternate explanation
to conspiracy in Twombly, that is because there were
no facts alleged to suggest a contrary inference. The
Court held that “nothing in the complaint intimates that
the resistance to the upstarts was anything more than
the natural, unilateral reaction of each ILEC intent on
keeping its regional dominance.” 550 U.S. at 566. It added
that “there is no reason to infer that the companies had
agreed among themselves to do what was only natural
anyway[.]” Id. In contrast, in the instant Complaint, there
were four categories of factual allegations supporting
an inference of agreement and rebutting the proposed
alternative explanation.
24
Indeed, the approach taken by the Fifth Circuit was
far more stringent than this Court has held applies even
at the summary judgment stage. In Monsanto Co. v.
Spray-Rite Service Company, 465 U.S. 752, 761 (1984),
this Court recognized that it is enough that the evidence
“tends to exclude the possibility that [the defendants]
were acting independently.” This Court recognized in
Monsanto that even ambiguous evidence is sufficient
to meet the “tends to exclude” standard. Referring to
a distributor newsletter, the Court found that it was
“reasonable to interpret this newsletter as referring to an
agreement or understanding . . .” 465 U.S. at 766. While
the Supreme Court acknowledged that this document
could be interpreted as reflecting either agreement or
a “reaction to unilateral Monsanto pronouncements,” it
concluded that that issue “properly was left to the jury.”
Id. at 766, n.11. In contrast, the Fifth Circuit took the
relevant issue from the jury at the motion to dismiss
phase before discovery, even where there were specific
and unambiguous allegations controverting evidence of
an independent decision.
In Matsushita, the Court said that “conduct as
consistent with permissible competition as with illegal
conspiracy does not, standing alone, support an inference
of antitrust conspiracy.” 475 U.S. at 588 (citing Monsanto,
465 U.S. at 764). But here there was substantial evidence
pleaded that was not “as consistent” with independent
action. The standard applied by the Fifth Circuit goes
far beyond even the “tends to exclude” standard set
forth in the summary judgment cases and the most prodefendant cases deciding motions to dismiss. Of course,
the words “tends to” in this standard are not accidental.
A requirement that evidence completely exclude the
25
possibility of independent action would impose far more
than a “preponderance of the evidence” standard on
plaintiffs. The “tends to exclude” formulation simply
indicates that there is evidence upon which a reasonable
fact finder could conclude that there was a conspiracy. By
ignoring or finding unpersuasive the extensive factual
allegations that were inconsistent with its hypothesis, the
Fifth Circuit rejected a host of evidence that certainly,
at the very least, “tended to” exclude the possibility of
independent action.
The Fifth’s Circuit’s decision thus directly conflicts
with the careful balance set forth in Twombly, Iqbal,
Monsanto and Matsushita between the need to preserve
legitimate factual disputes for trial and the need to end
cases based on groundless allegations. The Fifth Circuit
chose to decide several very specific factual disputes,
taking them from the jury.
Many circuits have rejected the Fifth Circuit’s
formulation. The First Circuit held in Evergreen
Partnering Group, Inc. v. Pactiv Corp., 720 F.3d 33 (1st
Cir. 2013), that the district court “improperly occupied
a factfinder role when it both chose among plausible
alternative theories interpreting defendants’ conduct
and adopted as true allegations made by defendants in
weighing the plausibility of theories put forward by the
parties.” Id. at 50. As the First Circuit explained:
[A]lthough an innocuous interpretation of the
defendants’ conduct may be plausible, that does
not mean that the plaintiff’s allegation that that
conduct was culpable is not also plausible . . . .
Id. at 45-46 (citation and quotations omitted).
26
The Second Circuit in Anderson News, L.L.C. v. Am.
Media, Inc., 680 F.3d 162 (2d Cir. 2012), cert. denied, 568,
U.S. 1087 (2013), enunciated the same principle:
[O]n a Rule 12(b)(6) motion it is not the province
of the court to dismiss the complaint on the
basis of the court’s choice among plausible
alternatives. Assuming that [plaintiff] can
adduce sufficient evidence to support its factual
allegations, the choice between or among
plausible interpretations of the evidence will
be a task for the factfinder.
Id. at 190; see also Starr v. Sony BMG Music Ent., 592
F.3d 314, 325 (2d Cir. 2010).
The Fifth Circuit thus contributed further to what
the Evergreen court recognized as a “slow influx of
unreasonably high pleading requirements at the earliest
stages of antitrust litigation. . . .” Evergreen, 720 F.3d at
44.
The Fifth Circuit’s ruling was also contrary to the
analysis of the Sixth Circuit in Watson Carpet & Floor
Covering, Inc. v. Mohawk Indus., Inc., 648 F.3d 452
(6th Cir. 2011). As the Watson court explained, though
a defendant’s refusal to deal may admit of several
plausible explanations, “[f]erreting out the most likely
reason for the defendants’ actions is not appropriate
at the pleadings stage.” Id. at 458. The plausibility of
alternative explanations “does not render all other reasons
implausible.” Id.
The Fourth Circuit’s analysis is also inconsistent with
the Fifth Circuit’s opinion. See generally SD3, LLC v.
27
Black & Decker (U.S.) Inc., 801 F.3d 412 (4th Cir. 2015),
cert. denied, 579 U.S. 917 (2016). The Fourth Circuit
explained that “[w]hen a court confuses probability and
plausibility, it inevitably begins weighing the competing
inferences that can be drawn from the complaint. But it is
not our task at the motion-to-dismiss stage to determine
‘whether a lawful alternative explanation appear[s] more
likely’ from the facts of the complaint. Post-Twombly
appellate courts have often been called upon to correct
district courts that mistakenly engaged in this sort of
premature weighing exercise in antitrust cases.” Id. at
425.
The Fifth Circuit’s approach is also at odds with
the decisions by many circuits holding that evidence of
actions against self-interest is compelling evidence of
conspiracy, more than sufficient to make a conspiracy
plausible. As such it rejected the “plus factor” analysis
frequently employed at the motion to dismiss or summary
judgment stage. Evidence of actions against interest “is
perhaps the strongest plus factor indicative of conspiracy.”
Merck-Medco Managed Care, LLC v. Rite Aid Corp., 201
F.3d 436, 1999 WL 691840, at *10 (4th Cir. 1999); see also
In re Chocolate Confectionary Antitrust Litig., 801 F.3d
383, 399 (3d Cir. 2015) (“[E]vidence of actions against selfinterest means there is evidence of behavior inconsistent
with a competitive market.”); In re Musical Instruments
& Equip. Antitrust Litig., 798 F.3d 1186, 1195 (9th
Cir. 2015); William E. Kovacic, et al., Plus Factors &
Agreement in Antitrust Law, 110 Mich. L. Rev. 393, 405
(2011) (“Actions contrary to each defendant’s self-interest”
is one of the “chief plus factors.”). The Fifth Circuit’s
failure to even consider “plus factors” was at odds with
decisions in these circuits.
28
The Fifth Circuit’s decision to ignore even direct
evidence is also contrary to decisions in many circuits.
Other cases have inferred conspiracy from “coverups” or
pretextual explanations of the sort revealed here. AlvordPolk, Inc. v. F. Schumacher & Co., 37 F.3d 996, 1012 (3d
Cir. 1994); see also Big Apple BMW, Inc. v. BMW of
North America, Inc., 974 F.2d 1358, 1374-80 (1992), JTC
Petroleum Co. v. Piasa Motor Fuels, Inc., 190 F.3d 775,
779 (7th Cir. 1999).
Even those circuits affirming dismissals of antitrust
claims did so only where the alternative explanation was
“obvious,” i.e. unrefuted. As the Ninth Circuit explained
in Name.Space, Inc. v. Internet Corp. for Assigned Names
and Numbers, 795 F.3d 1124 (9th Cir. 2015): “We cannot,
however, infer an anticompetitive agreement when factual
allegations ‘just as easily suggest rational, legal business
behavior.’” Id. at 1130 (citations omitted) (emphasis
added). Here, the four different specific categories of
factual allegations, discussed supra at 17-20, cannot
possibly “just as easily” suggest “rational, legal business
behavior.” Indeed no explanation for this behavior (other
than the conclusory “made to order” phrase) was even
addressed by the Fifth Circuit. Similarly, the Eleventh
Circuit dismissed an antitrust claim where independent
self-interest completely explained the behavior of the
parties. See Jacobs v. Tempur-Pedic Int’l, Inc., 626 F.3d
1327, 1342 (11th Cir. 2010).
No circuit, other than the Fifth Circuit, has conflated
the existence of an “obvious” alternative explanation for
conspiracy with a “probable” or even “possible” alternative
explanations. No circuit, other than the Fifth Circuit, has
“ferret[ed] out” what it believed to be “the most likely
29
reason” for the actions alleged at the motion to dismiss
phase. As such, the Fifth Circuit’s decision provides
the most extreme example of what the First Circuit
has described as a “slow influx” of summary judgment
standards at the motion to dismiss phase. The Fifth
Circuit’s decision is unique among many other cases where
certiorari was denied because it represents far more
than such a “slow influx.” It exceeds even the summary
judgment cases in treating the burden at the motion to
dismiss phase identically to what would be assessed at trial
if the allegations in question were supported by evidence.
This dramatic departure from the careful standard set
forth by this Court and many circuits creates a significant
and unjustified deterrent to future antitrust cases.
This conflict between the circuits should be resolved
by this Court.
II. In Holding that Foreclosure is a Prerequisite to
a Conditional Refusal to Deal Claim, the Fifth
Circuit Established an Unprecedented Rule
Completely at Variance with the Decisions of this
Court and the Circuit Courts
The Fifth Circuit held that UHS had failed to state
a Section 2 claim because it did not plausibly allege
“substantial foreclosure” in the relevant market, “a
prerequisite for every exclusive-dealing Section 2 claim,”
which the Court held is the “functional equivalent” of a
conditional refusal to deal. (Pet. Appx. 17a-18a.) The Fifth
Circuit’s decision clearly conflicts with the precedents of
the Supreme Court and at least five circuits.
This Court has frequently made clear that complete
foreclosure of any business opportunities, i.e. the complete
30
unavailability of any inputs or customers, is not necessary
for a Section 2 violation. See Eastman Kodak, 504 U.S.
at 482–83 (holding that it is unlawful to “foreclose
competition, to gain a competitive advantage or to deny a
competitor” (emphasis added)). Similarly, in Aspen Skiing
v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985) this
Court made clear that it was “concerned with conduct
which unnecessarily excludes or handicaps competitors,”
because this can have “the effect of impairing competition.”
Id. at 597 (emphasis added). Unlawful monopolization can
result from “practices which tend to exclude or restrict
competition. . . .” Id. at 604 (emphasis added).
In Aspen Skiing, there was no finding that the
plaintiff was foreclosed from competing in the relevant
market. One method of distribution – joint lift tickets –
was eliminated. In response, the plaintiff “attempt[ed]
to develop a substitute product,” and that “proved to be
prohibitively expensive. As a result, Highlands’ share of
the relevant market steadily declined after the four-area
ticket was terminated.” Id. at 607-608. As this Court noted,
quoting from Professor Bork’s “The Antitrust Paradox”,
“[b]y disturbing optimal distribution patterns one rival
can impose costs upon another, that is, force the other
to accept higher costs.” Id. at 604 n.31. Similarly, here,
Willis-Knighton’s actions disturbed the optimal methods
by which a hospital and its medical staff cooperate. That
kept UHS from increasing its revenues and cutting its
costs. That is more than sufficient for anticompetitive
effects, whether or not foreclosure was involved.
The First, Sixth and Tenth circuits have held
that anticompetitive conduct is “conduct, other than
competition on the merits or restraints reasonably
31
necessary to competition on the merits, that reasonably
appears capable of making a significant contribution to
creating or maintaining monopoly power.” Data Gen.
Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147, 1182
(1st Cir. 1994), abrogated on other grounds, Reed Elsevier,
Inc. v. Muchnick, 559 U.S. 154, (2010); Realcomp II, Ltd.
v. F.T.C., 635 F.3d 815, 830 (6th Cir. 2011), cert. denied, 565
U.S. 942 (2011); Multistate Legal Studies, Inc. v. Harcourt
Brace Jovanovich Legal & Prof’l Publications, Inc., 63
F.3d 1540, 1550 (10th Cir. 1995), cert. denied, 516 U.S. 1044
(1996). See also Phillip Areeda & Herbert Hovenkamp,
Antitrust Law: An Analysis of Antitrust Principles and
Their Application ¶ 651g (4th ed. 2020). None of these
cases even mentions—let alone imposes—a “substantial
foreclosure” requirement.
Numerous courts have held, echoing this Court, that
foreclosure of competition is one—but hardly the only—
source of competitive harm. As the Sixth Circuit held in
Byars v. Bluff City News Co., 609 F.2d 843 (6th Cir. 1979),
“the use of monopoly power, however lawfully acquired,
to foreclose competition, to gain a competitive advantage,
or to destroy a competitor, is unlawful.” Id. at 857 n.38
(emphasis added); see also In re Beltone Elec. Corp., 100
F.T.C. 68, 92 (1982) (holding that substantial foreclosure
is “only one of several variables to be weighed in the ruleof-reason analysis now applied to all nonprice vertical
restraints”). The conduct at issue in Byars included,
among other things, covering up newspaper racks and
disparagement, conduct that does not involve foreclosure.
609 F.2d at 854; see also Conwood Co. v. U.S. Tobacco Co.,
290 F.3d 768, 784-796 (6th Cir. 2002), cert. denied, 537
U.S. 1148 (2003) (conduct included hiding and damaging
product racks, and removing racks, some of which were
later replaced).
32
Actions short of foreclosure often have the potential
to cause substantial anticompetitive effects. In Multistate
Legal Studies, the Tenth Circuit held that alleged attempts
by a legal studies service to create scheduling conflicts in
order to discourage attendance at the plaintiff’s workshops
gave rise a monopolization claim under Section 2 of the
Sherman Act. 63 F.3d at 1553. The Tenth Circuit rejected
the argument that “to be actionable, the schedule conflicts
had to make it impossible, rather than merely inconvenient,
for BAR/BRI students to take PMBR’s workshop.” Id.
A number of other circuit court decisions have found
that competitive harm can occur without foreclosure.
Forsyth v. Humana, Inc., 114 F.3d 1467, 1478 (9th Cir.
1997), aff’d on non-antitrust grounds, 525 U.S. 299
(1999) (healthcare provider’s policy of shifting indigent
patients to rivals could have effect of raising their costs);
Premier Elec. Constr. Co. v. National Elec. Contractors
Ass’n, Inc., 814 F.2d 358, 368 (7th Cir. 1987) (alleged
agreement between union and contractors’ association
under which union would obtain fee from all employers
without whom it had collective bargaining agreements,
whether or not they were association members, to be paid
to the association, probably intended to raise the costs of
nonmember contractors).
Most favored nations clauses, which raise prices to
rivals, but do not totally foreclose competition, are widely
viewed as potentially anticompetitive. See, e.g., Jonathan
B. Baker and Judith A. Chevalier, The Competitive
Consequences of Most-Favored-Nation Provisions, 27
A ntitrust, Spring 2013, at 24-25; Jonathan M. Jacobson
and Daniel P. Weick, Contracts That Reference Rivals as
an Antitrust Category, 11 A ntitrust Source, April 2012,
at 6-7.
33
Conduct that raises a rival’s costs is a well-established
antitrust violation. See Multistate Legal Stud., Inc., 63
F.3d at 1553 n.12 (practice could raise competitor’s costs,
and therefore, “would qualify as anticompetitive conduct”);
Premier Elec. Constr. Co., 814 F.2d at 368 (observing that,
when defendant “raised its rivals’ costs,” it “raised the
market price to its own advantage”); Coalition for ICANN
Transparency v. VeriSign, Inc., 611 F.3d 495, 500-507 (9th
Cir. 2010) (actions to harass ICANN in order to cause it to
raise its prices could constitute monopolization). As these
cases illustrate, costs can be increased, and competition
harmed, without completely foreclosing any purchases
or sales by the plaintiff-competitor. See also Thomas
G. Krattenmaker & Steven C. Salop, Anticompetitive
Exclusion: Raising Rivals’ Costs to Achieve Power over
Price., 96 Yale L.J. 209, 261 (1986) (rivals’ costs can be
increased by a refusal to deal on advantageous terms).
That analysis applies foursquare in this case. Here,
the threatened refusal to deal by Willis-Knighton was
directed at LSU Health, not UHS. The threat was not
intended to cause LSU Health to cut off all contacts with
University Health; LSU Health physicians certainly could
not readily completely cease practicing at the hospital
at which they were based. The threatened harm was
of another sort: that LSU Health would not work with
University Health to cut costs, improve productivity, and
attract additional physicians, the kinds of cooperative
functions in which hospitals and medical staffs typically
engage. The harm from such a refusal to cooperate was
not foreclosure, but higher costs, fewer physicians on
staff, less efficient operations and fewer opportunities
to attract business through managed care plans. By
dismissing those claims, the Fifth Circuit held – without
34
any analysis or support – that such actions could not as a
matter of law harm competition, no matter what discovery
revealed. As such, the Fifth Circuit rejected this Court’s
requirement of fact-based rulings in antitrust cases in
favor of a formalistic rule that made no sense in this (and
many other) contexts. “Legal presumptions that rest on
formalistic distinctions rather than actual market realities
are generally disfavored in antitrust law.” Eastman
Kodak, 504 U.S. at 466–67.
The Fifth Circuit confused a refusal to deal with the
plaintiff – a so-called horizontal refusal to deal – with a
refusal to deal with a supplier to the plaintiff – a “vertical”
refusal to deal, which was at issue in this case. See Susan
A. Creighton & Jonathan M. Jacobson, Twenty-Five Years
of Access Denials, A ntitrust M ag., Fall 2012, at 50-51.
The Fifth Circuit’s decision effectively established a
rule that any refusal to deal at any stage of the market,
whether horizontal or vertical, cannot harm competition
unless there is substantial foreclosure. But that makes
no sense. A vertical refusal to deal with a supplier of a
competitor can, as in Lorain Journal Co. v. United States,
342 U.S. 143 (1951), result in an absolute refusal to deal by
the supplier with the competitor. But it can also (as here)
pressure the supplier to engage in other disadvantageous
behavior which can harm the competitor and thereby,
under the right circumstances, harm competition.
For example, in addition to the facts presented here,
a threat of a refusal to deal could be used to compel a
supplier’s imposition of a most favored nations clause
or discriminatory higher prices on competitors of the
monopolist. The Fifth Circuit’s ruling would preclude any
remedy in these situations.
35
Effectively, the Fifth Circuit’s rule means that no
matter how much LSU Health’s refusal to cooperate with
UHS harmed UHS, and no matter how much that harm
impaired overall competition in a market in which WillisKnighton was the dominant, high-priced hospital, that
could not create an antitrust violation as long as UHS was
not entirely foreclosed from some portion of a market.
If allowed to stand, that decision allows monopolists to
unlawfully harm their rivals in any way they choose,
whatever the impact, unless there is complete foreclosure
of some portion of the market from the rival. There is
nothing in the antitrust laws to support that conclusion.
The Fifth Circuit’s decision drastically truncates the
remedies available to victims of monopolization.
III. These Issues Are of Major National Importance
Both these issues will have a major impact on the
course of antitrust jurisprudence and antitrust litigation.
The application of Twombly to antitrust complaints
arises in virtually every claim under Section 1 of the
Sherman Act. If courts are permitted to disregard wellpleaded factual allegations in assessing plausibility, many
antitrust cases will be ended in their infancy, without any
opportunity for plaintiffs to prove their claims. Many
district and circuit courts will likely conclude that they
are justified in dismissing antitrust cases if they do not
find the plaintiffs’ factual allegations, though specific and
relevant, to be persuasive.
The Fifth Circuit’s resolution of the Section 2 issue is
equally important. The significance of refusals to deal by a
monopolist as a lever to force anticompetitive behavior by
36
suppliers and customers of the monopolist’s competitors
has been recognized in antitrust jurisprudence since
at least Lorain Journal. Under the Fifth Circuit’s
standard, such coercion would be permissible, as long
as the competitor could still purchase inputs and sell
to customers. Other anticompetitive uses of refusals to
deal, which may severely impede the opportunities of
competitors, would become per se legal, notwithstanding
their competitive consequences. That would severely
circumscribe the scope of the antitrust laws.
CONCLUSION
For the foregoing reasons, the petition for writ of
certiorari should be granted.
Reid A. Jones
Wiener Weiss
& Madison APC
330 Marshall Street
Suite 1000
Shreveport, LA 71107
Respectfully submitted,
David A. Ettinger
Counsel of Record
Rian C. Dawson
Benjamin J. Vanderwerp
Honigman LLP
2290 First National Building
660 Woodward Avenue
Detroit, MI 48226
(313) 465-7368
dettinger@honigman.com
APPENDIX
i
TABLE OF APPENDICES
Page
APPENDIX A — OPINION OF THE UNITED
STATES COURT OF APPEALS FOR THE
FIFTH CIRCUIT, FILED SEPTEMBER
19, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1a
A PPEN DI X B — M EMOR A N DU M
RU LING OF T H E U NI T ED STAT ES
DISTRICT COURT FOR THE
WESTERN DISTRICT OF LOUISIANA,
SH R E V EP ORT DI V I SION, F I L ED
SEPTEMBER 27, 2021 . . . . . . . . . . . . . . . . . . . . . . . 23a
A PPEN DI X C — S TAT U T E S A N D
REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63a
APPENDIX D — RULING ON EXCEPTIONS
OF THE 19 TH J U DICI A L DISTRICT
C OU R T PA R I S H OF E A S T B A T ON
ROUGE, STAT E OF LOU ISI A NA ,
DATED NOVEMBER 19, 2015 . . . . . . . . . . . . . . . . 66a
1a
Appendix A — Appendix
opinionAof the UNITED
STATES COURT OF APPEALS FOR THE FIFTH
CIRCUIT, filed September 19, 2022
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 21-30622
BRFHH SHREVEPORT, LLC, DOING BUSINESS
AS UNIVERSITY HEALTH SHREVEPORT,
Plaintiff-Appellant,
versus
WILLIS-KNIGHTON MEDICAL CENTER,
DOING BUSINESS AS WILLIS-KNIGHTON
HEALTH SYSTEM,
Defendant-Appellee.
September 19, 2022, Filed
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 5:20-cv-142
Before Smith, Duncan, and Oldham, Circuit Judges.
A ndrew S. Oldham, Circuit Judge:
2a
Appendix A
BRFHH Shreveport sued Willis-Knighton Medical
Center for antitrust violations. The district court
dismissed the complaint for failure to state a claim. We
affirm.
I.
A.
We “accept all well-pleaded facts as true and view
them in the light most favorable to the non-movant.”
Turner v. Lieutenant Driver, 848 F.3d 678, 684 (5th Cir.
2017). Here, that’s BRFHH Shreveport (“BRF”).
We begin by describing the three main players.
First is Louisiana State University’s medical school in
Shreveport, known as “LSU Health Shreveport” or “LSU”
for short. LSU long owned and, until 2013, operated a
clinical teaching hospital in Shreveport. That hospital
was one of six in the city.
Second is BRF. In 2013, LSU hired BRF to operate
its Shreveport hospital (along with a separate hospital in
Monroe). The hospital then became known as University
Health Shreveport (“UHS”).1 BRF ran UHS until 2018,
at which point another medical company, Ochsner, took
1. BRF often refers to itself as UHS, which can be confusing.
Throughout most of this opinion, the distinction between UHS and
BRF isn’t important. So we generally use the term “BRF” to refer
to both BRF itself and to UHS while under BRF’s management.
We use the term “UHS” only when the distinction between the
hospital and its (former) managing company makes a difference.
3a
Appendix A
its place. Since 2018, an entity jointly owned by LSU and
Ochsner has managed the hospital.
Third is Willis-Knighton Medical Center. WillisKnighton was the largest provider of medical care in the
Shreveport area, and it controlled four of the city’s six
hospitals. It enjoyed a concomitantly large portion of the
market share for commercially insured patients. WillisKnighton regularly made charitable donations to LSU,
and LSU depended heavily on those donations.
Less than two years into the BRF/LSU collaboration,
the relationship soured. That gave rise to a spate of
litigation separate from, but relevant to, the current
lawsuit. First, LSU issued a notice of breach to BRF
in 2015. See Petition for Declaratory Judgment and
Injunction at 96, BRFHH Shreveport, LLC v. Willis
Knighton Med. Ctr., No. 5:15-cv-2057 (W.D. La. Sept. 28,
2015), ECF No. 77-1 (copy of the July 10, 2015 breach notice,
attached as part of a docket entry in the first antitrust
suit); Lake Eugenie Land & Dev., Inc. v. Halliburton
Energy Servs. (In re Deepwater Horizon), 934 F.3d 434,
440 (5th Cir. 2019) (“We may take judicial notice of prior
court proceedings as matters of public record.”). Second,
BRF sued Willis-Knighton (but not LSU) in July 2015 for
antitrust violations. See Complaint, BRFHH Shreveport,
No. 5:15-cv-2057 (W.D. La. July 16, 2015), ECF No. 1. It
alleged that Willis-Knighton and LSU made an illegal
agreement, wherein LSU would direct its physicians to
steer commercially insured patients to Willis-Knighton.
Third, LSU filed a state-court lawsuit against BRF. See
Petition for Declaratory Judgment and Injunction, supra
4a
Appendix A
(LSU’s initial state-court pleading, attached as a docket
entry in the first antitrust suit). LSU alleged that BRF
had breached its obligations in various ways and sought
to end BRF’s management of UHS.
The way BRF tells the story, its 2013 takeover of
UHS was massively successful. The hospital had been
poorly run and inefficient, but BRF turned things around
completely. BRF cut expenses, decreased wait times,
increased the quality of care, and so on. Willis-Knighton
looked on with envy.
Willis-Knighton began to worry that BRF would
threaten its power in the Shreveport healthcare market.
Willis-Knighton enjoyed a market share of 75% of
commercially insured patients and controlled 80% of
primary care physicians during the relevant times. WillisKnighton’s internal documents said that the insurer “Blue
Cross [Blue Shield] told another hospital system there is
only one health care system they must have in Louisiana:
Willis-Knighton.” Willis-Knighton’s then-CEO even
boasted about the company’s market power in a 2013 book.
On his telling, a significant portion of Willis-Knighton’s
profits came from its dominant position in the Shreveport
healthcare market.
In the spring of 2016, LSU found itself in a budget
crisis. It had been running at a deficit of $40 million to
$50 million each year since BRF’s 2013 takeover of UHS.
In 2016, that deficit combined with Louisiana’s broader
budgetary problems to create at least the perception (and
presumably the reality) that LSU desperately needed
5a
Appendix A
more money. LSU asked BRF for a $100 million donation
to help close the gap, but BRF couldn’t muster the funds.
LSU’s crisis and BRF’s inability to help gave WillisKnighton an opportunity. Willis-Knighton decided to
take advantage of LSU’s situation by conditioning cash
donations on LSU’s behavior. The alleged approach was
carrot-and-stick. The carrot: Willis-Knighton tentatively
agreed to give LSU a $50 million donation if LSU backed
off on its cooperation with BRF. The stick: Willis-Knighton
hinted on several occasions that, if LSU didn’t comply,
Willis-Knighton would cut off donations.
BRF suggest s Wi l l i s -K n ight on ex per ienced
competitive pressure in the Shreveport market as early
as 2014. But the complaint plainly alleges that it was
not until 2016 that Willis-Knighton made the relevant
anticompetitive threats. That’s because, even though
Willis-Knighton presumably wanted to destroy BRF
before then, Willis-Knighton wasn’t able to effectively
pressure LSU with money until the 2016 budget crisis hit.
LSU subsequently did what Willis-Knighton wanted.
The complaint isn’t clear as to whether LSU decreased its
existing cooperative activities with BRF or merely refused
BRF’s offers to increase cooperation. In any event, the
complaint does allege specific refusals to cooperate.
BRF then alleges that LSU’s non-cooperation harmed
it in various ways. The basic idea is that cooperation from
LSU would have allowed BRF to decrease costs, provide
better care to patients, charge patients and insurers
6a
Appendix A
less, gain market share, and generally outcompete
Willis-Knighton. See infra, Part II.B.2 (discussing these
allegations in more depth).
BRF and LSU parted ways in 2018 when Ochsner
took over management of LSU’s Shreveport hospital
(and the Monroe hospital, for that matter). The Ochsner
relationship improved LSU’s financial position, and BRF
notes that LSU now cooperates with Ochsner in ways it
refused to do with BRF. BRF says this shows that, once
LSU was no longer strapped for cash, Willis-Knighton’s
coercive influence faded away.
B.
BRF brought this antitrust suit in federal court. As in
its first suit, BRF named Willis-Knighton but not LSU as
a defendant. The complaint alleges that Willis-Knighton
entered a conspiracy in restraint of trade, in violation of
Section 1 of the Sherman Antitrust Act. See 15 U.S.C. § 1.
It also alleges that Willis-Knighton committed both actual
and attempted monopolization, in violation of Section 2 of
the Act. See 15 U.S.C. § 2.
Willis-Knighton raised four arguments in a motion to
dismiss. First, BRF hadn’t alleged antitrust injury, which
is a component of antitrust standing. See Atl. Richfield Co.
v. USA Petroleum Co., 495 U.S. 328, 334, 110 S. Ct. 1884,
109 L. Ed. 2d 333 (1990). Second, BRF failed to state a
plausible Section 1 claim. Third, likewise for Section 2.
And fourth, the Noerr-Pennington doctrine barred BRF’s
claims. See E. R.R. Presidents Conf. v. Noerr Motor
7a
Appendix A
Freight, Inc., 365 U.S. 127, 81 S. Ct. 523, 5 L. Ed. 2d 464
(1961); United Mine Workers v. Pennington, 381 U.S. 657,
85 S. Ct. 1585, 14 L. Ed. 2d 626 (1965).
The district court dismissed BRF’s claims. The court
held BRF plausibly alleged an antitrust injury. But for the
Section 1 claim, BRF failed to allege an agreement—a
fatal defect. As for the Section 2 claim, BRF failed to
allege anticompetitive conduct. Thus, even though WillisKnighton didn’t contest its status as a monopolist, the
Section 2 claim failed as well. With both claims gone, the
court saw no need to rule on the Noerr-Pennington issue
and declined to do so. BRF timely appealed.
II.
We review a district court’s grant of a 12(b)(6) motion
de novo. Heinze v. Tesco Corp., 971 F.3d 475, 479 (5th Cir.
2020). A complaint cannot survive a motion to dismiss by
stating facts “merely consistent with” liability. Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 557, 127 S. Ct. 1955, 167
L. Ed. 2d 929 (2007). The complaint must instead state “a
plausible claim for relief.” Ashcroft v. Iqbal, 556 U.S. 662,
679, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009). We accept
all well-pleaded facts as true and construe the facts in the
light most favorable to the non-movant. Turner, 848 F.3d
at 684. But we don’t accept as true “conclusory allegations,
unwarranted factual inferences, or legal conclusions.” In
re Great Lakes Dredge & Dock Co., 624 F.3d 201, 210 (5th
Cir. 2010) (quotation omitted).
8a
Appendix A
We hold (A) BRF’s Section 1 claim fails because BRF
hasn’t plausibly alleged an agreement between WillisKnighton and LSU. Then we hold (B) BRF’s Section 2
claim fails because BRF hasn’t plausibly alleged market
foreclosure. That’s enough for affirmance, so we don’t reach
antitrust injury or Noerr-Pennington. See McCormack v.
NCAA, 845 F.2d 1338, 1343 (5th Cir. 1988) (“Whether a
plaintiff has antitrust standing does not raise a question
of jurisdiction on which we are required without exception
to satisfy ourselves.”); Pulse Network, LLC v. Visa, Inc.,
30 F.4th 480, 488 (5th Cir. 2022) (differentiating antitrust
standing from Article III standing).
A.
Section 1 of the Sherman Antitrust Act makes
unlawful “[e]very contract, combination in the form of
trust or otherwise, or conspiracy, in restraint of trade
or commerce among the several States, or with foreign
nations.” 15 U.S.C. § 1; see also id. § 15(a) (Clayton Act
provision creating a private cause of action for “any
person who shall be injured in his business or property”
by antitrust violations, including violations of Section 1).
To establish a Section 1 violation, “a plaintiff must show
that the defendant[] (1) engaged in a conspiracy (2) that
restrained trade (3) in a particular market.” MM Steel, LP
v. JSW Steel (USA) Inc., 806 F.3d 835, 843 (5th Cir. 2015)
(quotation omitted); see also Golden Bridge Tech., Inc. v.
Motorola, Inc. 547 F.3d 266, 271 (5th Cir. 2008) (providing
the same rule statement and elaborating).
9a
Appendix A
Only the first element is relevant here. It’s beyond
doubt that a conspiracy (or simply an “agreement”—we
use the two interchangeably unless otherwise noted)
is a necessary condition for Section 1 liability. That’s
because Section 1 “does not prohibit all unreasonable
restraints of trade[,] but only restraints effected by a
contract, combination, or conspiracy.” Twombly, 550
U.S. at 553 (quotation omitted); see also ibid. (explaining
that “independent decision[s]” aren’t actionable under
Section 1 (quotation omitted)); Marucci Sports, LLC
v. NCAA, 751 F.3d 368, 373-74 (5th Cir. 2014) (similar).
Notably, though, tacit agreements are still agreements.
See Twombly, 550 U.S. at 553 (“[T]he crucial question is
whether the challenged anticompetitive conduct stems
from independent decision or from an agreement, tacit
or express.” (emphasis added) (quotation omitted)).
Threat and accession is one way to form a tacit
agreement. In Monsanto Co. v. Spray-Rite Service Corp.,
465 U.S. 752, 104 S. Ct. 1464, 79 L. Ed. 2d 775 (1984),
the Supreme Court held that evidence of A’s threat to B,
coupled with B’s subsequent buckling to the pressure, could
constitute “substantial direct evidence” of an agreement
for Section 1 purposes. Id. at 765 (emphasis omitted); see
also ibid. (“Evidence of this kind plainly is relevant and
persuasive as to a meeting of minds.”). Our court has
since elaborated on this threat-and-accession theory. E.g.,
Spectators’ Commc’n Network Inc. v. Colonial Country
Club, 253 F.3d 215, 220-22 (5th Cir. 2001); Abraham &
Veneklasen Joint Venture v. Am. Quarter Horse Ass’n,
776 F.3d 321, 331-33 (5th Cir. 2015); Viazis v. Am. Ass’n
of Orthodontists, 314 F.3d 758, 763-64 (5th Cir. 2002);
10a
Appendix A
MM Steel, 806 F.3d at 844-45. We have always been clear,
however, that a threat itself is not enough: A’s threat can
give rise to an agreement with B only if B actually gives
in and does what A wants—and only if B gives in because
of A’s threat. See, e.g., Viazis, 314 F.3d at 764.
To our knowledge, this is the first time our circuit
has confronted a threat-and-accession case at the 12(b)
(6) stage. So we’ll pause here to fit the pieces together. A
plaintiff proceeding on a threat-and-accession theory must
plausibly allege three things: first, that A made a threat;
second, that B subsequently did what A wanted; and third,
that B did so because of A’s threat. That third requirement
is often the hardest to satisfy. It’s not enough to allege that
B’s behavior was “merely consistent with” caving to the
threat. See Twombly, 550 U.S. at 557. The plaintiff must do
more, providing “allegations plausibly suggesting” that B
acted in response to the threat rather than out of its own
self-interest. See ibid.; Viazis, 314 F.3d at 764 (affirming
a district court’s grant of judgment as a matter of law on
the ground that the plaintiff hadn’t shown the defendant
acted “in response to [the relevant] threats” rather than
“based on an independent evaluation of its best interests”
after “ignor[ing] the threats”); Abraham & Veneklasen,
776 F.3d at 333 (similar).
BRF first alleges that Willis-Knighton threatened
LSU. The complaint says Willis-Knighton viewed BRF
as a dangerous competitor in the Shreveport healthcare
market. Willis-Knighton responded by implementing a
scheme in 2016 to push BRF out of that market. WillisKnighton knew about LSU’s budget crisis and BRF’s
11a
Appendix A
inability to give LSU the needed donations, so it stepped
into the breach and offered $50 million in donations. But
that money came at a price: Willis-Knighton made clear, in
various ways, that it would donate the $50 million only if
LSU refused to cooperate with BRF and instead increased
its cooperation with Willis-Knighton.
BRF next alleges that LSU subsequently did what
Willis-Knighton wanted it to do: It cut back on its
preexisting cooperation with BRF, refused to undertake
new cooperative projects with it, and pivoted towards
Willis-Knighton instead. For example, LSU rejected a
Blue Cross Blue Shield proposal to include BRF in a care
network that would’ve competed with Willis-Knighton.
LSU refused to combine fixed costs like housekeeping with
BRF. LSU refused to collaborate with BRF to improve
physician productivity. LSU fired a neurosurgeon for
working with BRF and failing to send enough patients to
Willis-Knighton facilities. And LSU refused to let BRF
hire its physicians unless BRF paid an above-market rate.
That mattered because LSU’s by-laws stipulated that only
LSU physicians could practice at UHS. The complaint
includes other allegations to this effect, but we needn’t
recount them all here.
Even if we assume that BRF plausibly alleged those
first two parts of a threat-and-accession agreement,
BRF still loses on the third. 2 Per BRF’s own complaint,
2. BRF’s complaint also contains allegations about Dr. Ghali
Ghali, who was appointed as LSU’s chancellor in 2016. BRF
says Ghali was unqualified for the job and functioned as WillisKnighton’s “agent,” undermining BRF and responding to WillisKnighton’s whims.
12a
Appendix A
Willis-Knighton’s coercion would have been impossible
without LSU’s recognition that it was in a budget crisis.
No crisis, no desperation for cash, no need to give in to
threats, no problem. In the complaint’s words, WillisKnighton’s campaign “arose in particular as a result of
[LSU’s] perception of a ‘crisis’ reflecting a heightened
need for additional funds.” Further, the complaint says
Ochsner’s 2018 joint venture and the associated $40 million
funding increase to LSU annually “eliminated the source
of Willis-Knighton’s coercion over LSU.” Yet the complaint
also makes clear that the budget crisis (or at least LSU’s
awareness of it) didn’t happen until 2016—and hence the
coercion could not have started before then. 3
Because we assume for the sake of argument that BRF
plausibly alleged noncooperation from LSU, and because Ghali’s
alleged actions were merely means to the end of non-cooperation,
we need not evaluate the plausibility of these allegations. To
the extent BRF suggests that Ghali’s appointment somehow
independently establishes an agreement between Willis-Knighton
and LSU, we reject the suggestion as an “unwarranted factual
inference[].” Great Lakes Dredge & Dock, 624 F.3d at 210
(quotation omitted). BRF tries to avoid this result by rewriting
its complaint on appeal. Its brief says Willis-Knighton “assert[ed]
that it was willing to donate funds to [LSU] only if a person it
approved was appointed as LSU’s chancellor.” But that’s not what
the complaint says. The complaint merely says Willis-Knighton
refused to donate until (a) it knew who the next chancellor would
be, and (b) it knew LSU was going to cooperate more than it had
in the past.
3. For this reason, it doesn’t matter that the complaint contains
scattered mentions of Willis-Knighton’s pre-2016 behavior. That
includes, for example, an allegation that Willis-Knighton’s funding
strategy was a “longstanding position” and that, in 2012 and 2013,
13a
Appendix A
The problem is that LSU had a completely independent
reason for refusing to cooperate with BRF, which predated
any alleged coercion by Willis-Knighton. Specifically, LSU
issued a notice of breach to BRF in 2015—the year before
LSU’s cash crunch and Willis-Knighton’s alleged coercion.
See Petition for Declaratory Judgment and Injunction,
supra, at 96 (copy of the breach notice, attached as a
docket entry in the first antitrust suit). And LSU filed
suit against BRF shortly thereafter in Louisiana state
court. See id. at 1-45 (LSU’s initial state-court pleading,
attached in the same docket entry). In its initial state-court
pleading, LSU accused BRF of “failure to support LSU’s
teaching mission,” “bad-faith negotiation,” “failure to
complete . . . contemplated transactions,” id. at 9, “failure
to work collaboratively with LSU,” id. at 18, and failure
to “develop[] a financially sustainable business model,”
id. at 33—among many, many other things. LSU sought
declaratory and injunctive relief of various kinds, with
the dominant theme being a desire to sever its ties with
BRF. Id. at 41-44. The truth or falsity of these allegations
is irrelevant for present purposes; all that matters is that
LSU made them and that LSU attempted to cut ties with
BRF in 2015.
Willis-Knighton’s CEO “stated to the Willis-Knighton Board that
Willis-Knighton would only continue its current level of funding
to LSU ‘provided that [Willis-Knighton] and LSU Health remain
partners, not competitors.’” It also includes an allegation that WillisKnighton told LSU’s then-dean in 2015 that, if he attended a meeting
with BRF, Willis-Knighton would stop funding LSU.
The complaint is clear that any such moves wouldn’t have a
meaningfully coercive effect on LSU in the absence of a budget
crisis. We take the complaint at its word.
14a
Appendix A
And that’s the end of BRF’s Section 1 claim. To
plead an agreement, BRF needed to plausibly allege that
LSU’s refusal to cooperate with BRF was a response to
Willis-Knighton’s threat—as opposed to an ordinary,
self-interested decision that BRF wasn’t a good business
partner. See Twombly, 550 U.S. at 557 (allegations “merely
consistent with” an agreement aren’t good enough); Viazis,
314 F.3d at 762. But if LSU tried to cut off BRF before
Willis-Knighton’s alleged coercion even began, then how
can LSU’s refusals to collaborate with BRF have been
a response to the coercion? At the very most, BRF’s
allegations are consistent with an agreement. But that’s
not enough. See Twombly, 550 U.S. at 557 (laying out
“[t]he need at the pleading stage for allegations plausibly
suggesting (not merely consistent with) agreement”).
Pressed with this point at oral argument, BRF
offered two responses. First, even though LSU had
already been cooling on its relationship with BRF before
Willis-Knighton’s alleged threats, the relationship really
deteriorated after the threats began. Perhaps that
explanation is conceivable. But given LSU’s unambiguous
efforts to cut ties through state-court litigation, it’s not
plausible. See Twombly, 550 U.S. at 570 (“Because the
plaintiffs here have not nudged their claims across the
line from conceivable to plausible, their complaint must
be dismissed.”). Second, BRF asserts that, in the months
after LSU filed its 2015 state-court lawsuit and before
Willis-Knighton’s coercion began, LSU had decided to
continue partnering with BRF after all. And it was only
Willis-Knighton’s threats that caused LSU to renew its
efforts to cut off BRF. But BRF can’t muster any reason
15a
Appendix A
(besides, perhaps, wishful thinking) to find that made-toorder account plausible. See ibid.
B.
BRF also says Willis-Knighton violated Section 2 of
the Sherman Antitrust Act by committing actual and/
or attempted monopolization. We (1) lay out the rules
governing Section 2 claims and explain that BRF is relying
on an exclusive-dealing theory. Then we (2) explain that
BRF’s failure to plausibly allege market foreclosure is
fatal to this theory.
1.
In relevant part, Section 2 bans attempts to monopolize
or monopolization of “any part of the trade or commerce
among the several States.” 15 U.S.C. § 2; see also id.
§ 15 (private cause of action). Unlike Section 1, Section
2 “covers both concerted and independent action.” Am.
Needle, Inc. v. NFL, 560 U.S. 183, 190, 130 S. Ct. 2201,
176 L. Ed. 2d 947 (2010). But monopolization is harder to
establish than the mere restraint of trade that suffices
in the Section 1 context. See ibid. That’s because “[t]he
mere possession of monopoly power, and the concomitant
charging of monopoly prices, is not only not unlawful; it
is an important element of the free-market system. The
opportunity to charge monopoly prices—at least for a
short period—is what attracts ‘business acumen’ in the
first place.” Verizon Commc’ns Inc. v. Law Off. of Curtis
V. Trinko, LLP, 540 U.S. 398, 407, 124 S. Ct. 872, 157 L.
Ed. 2d 823 (2004).
16a
Appendix A
The first element of a Section 2 actual-monopolization
claim is “possession of monopoly power.” Eastman Kodak
Co. v. Image Tech. Servs., 504 U.S. 451, 481, 112 S. Ct.
2072, 119 L. Ed. 2d 265 (1992); see also Trinko, 540 U.S. at
407 (similar). Willis-Knighton didn’t contest its monopoly
power in the district court, and it doesn’t do so now.
Thus, the Section 2 claim in this case turns on the
second element: anticompetitive (or “exclusionary”)
conduct. Anticompetitive conduct is “the use of monopoly
power to foreclose competition, to gain a competitive
advantage, or to destroy a competitor.” Eastman Kodak,
504 U.S. at 482-83 (quotation omitted); see also United
States v. Griffith, 334 U.S. 100, 108, 68 S. Ct. 941, 92 L. Ed.
1236 (1948) (similar). Attempted monopolization, of course,
is similar but allows for liability even if the monopoly never
came to fruition. See Spectrum Sports v. McQuillan, 506
U.S. 447, 456, 113 S. Ct. 884, 122 L. Ed. 2d 247 (1993) (A
defendant commits attempted monopolization if it “(1)
. . . has engaged in predatory or anticompetitive conduct
with (2) a specific intent to monopolize and (3) a dangerous
probability of achieving monopoly power.”); accord Bell
Atl. Corp. v. AT&T Corp., 339 F.3d 294, 302 (5th Cir. 2003).
2.
Within that general framework, plaintiffs avail
themselves of various theories in their efforts to establish
anticompetitive conduct. See, e.g., OJ Com. LLC v. KidKraft
Inc., 34 F.4th 1232, 1244 (11th Cir. 2022) (Pryor, C.J.)
(explaining that the plaintiffs “advance[d] two theories of
harm in support of” the anticompetitive-conduct element
and going on to address each theory separately); Apani
17a
Appendix A
Sw., Inc. v. Coca-Cola Enters., 300 F.3d 620, 625-26 (5th
Cir. 2002) (similar).
BRF hasn’t been entirely clear on its theory here.
Based on the complaint and the briefing, the two likeliest
candidates are conditional refusal to deal and flat refusal
to deal. But at oral argument, BRF expressly waived
reliance on the latter. So we limit our analysis to the
former.
Despite the long name, conditional refusals to deal are
functionally equivalent to exclusive-dealing arrangements.
As the Eleventh Circuit has explained, a conditional
refusal to deal amounts to “one firm unilaterally refusing
to deal with another firm unless some condition is met.” OJ
Com., 34 F.4th at 1247 (quotation omitted). An exclusivedealing arrangement is a conditional refusal to deal where
the condition is exclusivity. Because of that similarity,
the Eleventh Circuit “treats conditional refusals to deal
. . . and exclusive dealing as synonymous” for doctrinal
purposes. Ibid. (quotation omitted). We will do the same
here.
BRF says Willis-Knighton refused to deal with (i.e.,
donate to) LSU unless LSU refused to cooperate with
BRF. And on BRF’s view, that exclusivity condition was
anticompetitive because it aimed to decrease BRF’s supply
of LSU-trained physicians (and to harm BRF in other
ways) thereby excluding it from the Shreveport healthcare
market.4
4. BRF also suggests that Willis-Knighton attempted to
raise BRF’s costs. See Thomas Krattenmaker & Steven Salop,
18a
Appendix A
Substantial foreclosure is a prerequisite for every
exclusive-dealing Section 2 claim. Denison Mattress
Factory v. Spring-Air Co., 308 F.2d 403, 410 (5th Cir.
1962) (citing Tampa Elec. Co. v. Nashville Coal Co.,
365 U.S. 320, 329, 81 S. Ct. 623, 5 L. Ed. 2d 580 (1961));
see also OJ Com., 34 F.4th at 1249-50 (applying the
substantial-foreclosure requirement to a Section 2 claim
and rejecting the argument that substantial foreclosure
sometimes is not required). The substantial-foreclosure
analysis has three steps. First, identify the relevant
product market. Second, identify the relevant geographic
market. And third, “show that the competition foreclosed
by the arrangement constitutes a substantial share of
the relevant market.” Apani, 300 F.3d at 625 (quotation
omitted) (citing Tampa Elec., 365 U.S. at 327-28); accord
Anticompetitive Exclusion: Raising Rivals’ Costs to Achieve
Power Over Price, 96 Yale L.J. 209 (1986) (arguing that taking
actions to raise a rival’s costs can sometimes amount to a Section
2 violation). We don’t doubt that raised costs can be a form of
antitrust injury in cases where the defendant has already violated
antitrust law in some other way. See Premier Elec. Constr. Co. v.
Nat’l Elec. Contractors Ass’n, 814 F.2d 358, 368 (7th Cir. 1987)
(Easterbrook, J.) (discussing raised costs along these lines). But
we are skeptical of raised costs as a standalone theory. See Phillip
E. A reeda & Herbert Hovenkamp, A ntitrust Law: A n A nalysis
of A ntitrust P rinciples and T heir A pplication § 651 (2022)
(describing raising rivals costs as a “sometimes useful but also
incomplete definition of exclusionary practices.”). Regardless, in
this case, it’s clear that the only way Willis-Knighton might have
raised BRF’s costs is through its exclusive-dealing arrangement
with LSU. BRF’s raised-costs argument therefore stands or falls
with its exclusive-dealing theory. We need not decide whether
raised costs can ever function as a standalone Section 2 theory.
19a
Appendix A
Gurrola v. Walgreen Co., 791 F. App’x 503, 504 n.5 (5th
Cir. 2020) (per curiam).
BRF’s complaint alleges the first two steps. First,
it identifies two relevant product markets: “the market
for general acute care inpatient hospital services for
commercially insured patients,” and the market for
“general acute care outpatient services” to commercially
insured patients. Second, it identifies “the ShreveportBossier City area” as the relevant geographic market.
The district court adopted those market definitions for the
sake of argument, and Willis-Knighton does not contest
them in its briefing.
But BRF hasn’t plausibly alleged the third element.
An actual-monopolization plaintiff must allege that the
defendant’s exclusive-dealing arrangement has caused
substantial market foreclosure, and an attemptedmonopolization plaintiff must allege a “dangerous
probability” that it will do so. Spectrum Sports, 506 U.S.
at 455-56; see also Tampa Elec., 365 U.S. at 327; Apani,
300 F.3d at 625. BRF has done neither.
One set of BRF’s allegations—that Willis-Knighton’s
exclusive-dealing arrangement ended up hurting BRF’s
bottom line—is irrelevant. BRF gives a laundry list of
efficiency-enhancing, cooperative BRF/LSU projects that
LSU refused to undertake. And it says it would’ve been
significantly better off in a world where those projects
came to fruition rather than dying on the vine. But of
course, those allegations have nothing to do with BRF’s
getting shut out of any market at all. So they’re irrelevant
for foreclosure purposes.
20a
Appendix A
Other allegations do touch on the topic of foreclosure,
but they are conclusory. See Twombly, 550 U.S. at 557
(conclusory allegations are insufficient). The following
paragraph from the complaint is typical:
But for [Willis-Knighton’s] anticompetitive
activities, University Health-Shreveport would
have been a significantly more successful
competitor to Willis-Knighton, and would have
reduced Willis-Knighton’s dominant market
share, permitting more patients to receive care
at lower prices. As a result of Willis-Knighton’s
actions, its market dominance was maintained
and enhanced, and competition and the public
have been seriously harmed.
Another example: “LSU Health Shreveport’s refusal to
cooperate in [the area of physician recruitment] directly
eliminated competition for Willis-Knighton and stymied
[BRF’s] ability to directly challenge an important source
of Willis-Knighton’s dominance.” Another: “A portion
of the damages to [BRF] resulted from decreased
volumes, which also resulted in decreased market share,
maintaining and enhancing Willis-Knighton’s monopoly
power. The remainder of the damages resulted from
higher costs, which constrained [BRF] from making more
vigorous competitive efforts against Willis-Knighton.”
BRF also asserts that “[t]he actions described herein
reduced [BRF’s] share, or prevented [BRF] from
increasing its share, in each of the relevant markets by
at least” two percentage points—though it doesn’t offer
any explanation for that conclusion.
21a
Appendix A
Those allegations are little more than high-level
assertions about how wonderful things would be if WillisKnighton hadn’t formed an exclusive-dealing arrangement
with LSU. They don’t tell a coherent story about how the
arrangement prevented BRF from providing healthcare
services to any portion of the market. In short, they are
miles away from plausibly alleging that Willis-Knighton
came close to substantially foreclosing the Shreveport
healthcare market.
Even if those allegations weren’t conclusory, BRF’s
complaint would still fail. The complaint alleges that
Willis-Knighton’s exclusive dealing arrangement affected
the upstream market for physician services. Then the
complaint alleges foreclosure in the downstream medical
services market. But BRF doesn’t adequately connect the
two. After all, it’s not as though Willis-Knighton had an
exclusive deal with insurers or patients. One could imagine
how that sort of arrangement might affect the downstream
medical-services market. But as it is, BRF offers no
explanation for how Willis-Knighton’s exclusive-dealing
arrangement with LSU—whose main relevant function
seems to be supplying physicians to both Willis-Knighton
and BRF—could foreclose the medical-services market.
Perhaps BRF could have avoided this problem by
alleging a market for physicians and arguing WillisKnighton substantially foreclosed that market. But BRF
can’t take that route now for two reasons. First, the
complaint already chose which market to allege. And it
chose to focus on downstream markets for healthcare
services—not the upstream market for physicians. BRF
22a
Appendix A
can’t change horses midstream. See Rollins v. Home Depot
USA, Inc., 8 F.4th 393, 397 (5th Cir. 2021) (“A party forfeits
an argument by failing to raise it in the first instance
in the district court.”). Second, though the complaint
asserts that BRF had no choice but to get physicians from
LSU, it admits this was a pre-existing “provision in the
hospital by-laws.” All LSU did was “refuse[] to waive” that
provision and refuse to “freely provide courtesy faculty
appointments to independent physicians who wished to
practice at” BRF. But if the restriction admittedly preexisted anything Willis-Knighton did, there’s no way
Willis-Knighton’s behavior could have caused it. So even if
the restriction threatened substantial foreclosure—which
BRF hasn’t alleged—BRF still would’ve failed to plead
causation. See Bell Atl., 339 F.3d at 302 (explaining that
private antitrust plaintiffs must “establish that it was
the defendant’s conduct that actually caused” plaintiff’s
injury).
***
BRF failed to state a claim. We therefore need not
reach antitrust injury or the Noerr-Pennington doctrine.
AFFIRMED.
23a
B
APPENDIX B —Appendix
MEMORANDUM
RULING
OF THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF
LOUISIANA, SHREVEPORT DIVISION,
FILED SEPTEMBER 27, 2021
UNITED STATES DISTRICT COURT,
WESTERN DISTRICT OF LOUISIANA,
SHREVEPORT DIVISION
CIVIL ACTION NO. 20-142
BRFHH SHREVEPORT, LLC,
VERSUS
WILLIS-KNIGHTON MEDICAL CENTER.
September 27, 2021, Decided;
September 27, 2021, Filed
ELIZABETH E. FOOTE,
UNITED STATES DISTRICT JUDGE.
MAG. JUDGE KAYLA D. MCCLUSKY.
MEMORANDUM RULING
Before the Court is a motion to dismiss filed by the
Defendant, Willis-Knighton Medical Center (“WillisKnighton”). Record Document 20. Willis-Knighton seeks
to dismiss the complaint filed by the Plaintiff, BRFHH
Shreveport, LLC, which alleges, in broad terms, that
Willis-Knighton committed antitrust violations by
coercing LSU Health Shreveport to refuse to cooperate
24a
Appendix B
with BRFHH in the operations of its Shreveport hospital.
As the Court concludes that the Plaintiff has failed to
sufficiently allege antitrust violations in more than a
nonspeculative manner, Willis-Knighton’s motion to
dismiss [Record Document 20] is GRANTED.
Background
The Court begins by noting that this is the second
antitrust civil action filed by the Plaintiff against this
Defendant, the alleged violations stemming from the
same acrimonious relationship that has heretofore existed
between these two parties. See BRFHH Shreveport, LLC
v. Willis-Knighton Med. Ctr., 05:15-cv-2057 (W.D. La.) (the
“2015 case”). The allegations in the instant case concern a
more recent time period than those in the 2015 case and set
forth contentions regarding different antitrust activity;
nonetheless, the cases generally involve the same players
competing in the same relevant market.
I.
The Relevant Entities
LSU is a State university with a medical school
component which employs physician faculty members
throughout the State. Record Document 1 at 5. The
faculty physicians treat patients, teach students, and train
residents and fellows in their respective fields. Id. LSU
Health Shreveport is the medical school in Shreveport,
Louisiana. Id.
Plaintiff BRFHH, doing business as University Health
Shreveport (“UHS”), operated University Health Hospital
25a
Appendix B
in Shreveport. Once a state-owned and -operated charity
facility, the hospital was operated by BRFHH starting in
September of 2013, when LSU, whose neighboring medical
school traditionally supplied physicians for UHS, and the
parent entities of BRFHH signed a Cooperative Endeavor
Agreement transferring hospital management authority
from the State of Louisiana to BRFHH’s parent entity.
See generally BRFHH Shreveport v. Willis-Knighton,
15-cv-2057, Record Document 121. To be discussed in
more detail below, the hospital run by UHS is now run
by Ochsner (named Ochsner LSU), the result of UHS’s
sale of its hospital business to Ochsner. Thus, the Plaintiff
in this suit is no longer involved in the operations of the
current hospital. But, the alleged antitrust conduct in
this case preceded that sale and ceased when Ochsner
acquired the hospital.
As a result of the 2013 privatization of the hospital,
UHS treated a substantial portion of the Shreveport
area’s indigent population and was dependent upon
hospital admissions from LSU physicians. See id. One
of the underlying issues in the 2015 case stems from the
notion that in order for UHS to remain financially viable,
a critical, if minority, mass of the patients treated at
UHS needed to have private, commercial insurance; the
higher reimbursement rates associated with commercial
insurance would help offset the relatively low profitability
of treating the indigent. See id.
Defendant Willis-Knighton is a competing healthcare
provider that operates four hospitals and several freestanding clinics in Shreveport and Bossier City. See
26a
Appendix B
id. Besides Willis-Knighton and UHS, a third entity,
CHRISTUS Health Northern Louisiana (“Christus”)
also operates hospitals in the Shreveport and Bossier
City area. See id. The allegations in the prior suit regard
Willis-Knighton’s predominate share of the commerciallyinsured healthcare market, as opposed to the much
smaller shares held by UHS and Christus. See id. Suffice
it to say that UHS and Willis-Knighton were competing
healthcare providers, each trying to reduce costs while
increasing efficiency and profitability.
II. Post-Privatization
From the commencement of the privatization
agreement in 2013 until October of 2018, UHS was LSU
Health Shreveport’s clinical partner and its teaching
hospital. Record Document 1 at 6. The UHS medical
staff was limited to LSU Health Shreveport-approved
physicians. Id. UHS depended upon admissions from those
faculty physicians. Id.
When UHS took over the hospital from LSU, it took
on the lease of the hospital facilities from the State,
which owned the buildings on campus and the assets of
the hospital. Id. at 8. UHS alleges that when it assumed
those operations, the hospital was inefficient, experiencing
“extraordinarily high overtime use, an absence of
productivity standards and management dashboards, and
lengthy wait times at clinics.” Id. UHS submits that once
it took over the hospital, it created a much more “effective,
efficient and patient-friendly hospital.” Id. UHS articulates
several successful measures it experienced, which can be
27a
Appendix B
summarized as an increase in admissions, an increase
in clinic and emergency room visits, improved earnings,
and decreased expenses to the State of Louisiana. Id. at
9. According to UHS, these improvements attracted more
patients to the hospital, which resulted in UHS becoming
a significant competitor to Willis-Knighton. Id. at 9-10.
During this period, UHS and LSU Health Shreveport
worked closely together, engaging in weekly meetings,
cooperating to improve operations, and enjoying open
communications between the department chairs and UHS
executives. Id. at 15. Taking UHS’s allegations as true, in
response to UHS’s success,
Willis-Knighton attempted to prevent UHS’
competition by implementing a plan to divert
LSU Health Shreveport’s commercial patients
from UHS to Willis-Knighton. Accordingly,
UHS filed the 2015 Case. Because of the 2015
Case, Willis-Knighton put its efforts to fully
implement this plan on hold. However, . . . in
spring of 2016, it commenced a new scheme
intended to cause har m to UHS and to
keep it from improving its operations and
competitiveness, by coercing LSU Health
Shreveport into refusing to cooperate with
UHS’ new initiatives to further improve
the hospital and its competitiveness. WillisKnighton also coerced LSU into an effort to
terminate the contract whereby UHS owned
and operated the hospital.
Id . at 10. That contention—that Willis-K nighton
unlawfully and in violation of antitrust law, coerced LSU
28a
Appendix B
Health Shreveport into refusing to cooperate with UHS
in the improved operations of the hospital—is the crux of
the instant suit.
A.
The Financial Crisis
Historically, Willis-Knighton was a major donor to
LSU Health Shreveport; these donations predated the
alleged antitrust conduct at the heart of this suit. The
parties agree that during the relevant timeframe, LSU
Health Shreveport perceived it was facing a significant
financial crisis, with a “heightened need for additional
funds.” Id. at 14. Quite simply, LSU Health Shreveport
needed an influx of a large amount of money, and it required
support from outside sources, lest its school accreditation,
amongst other things, be placed at risk. Id. at 22 & 26.
Willis-Knighton was aware of LSU Health Shreveport’s
ongoing need for money, shortfalls historically caused by
State budget deficits and then more recently related to the
privatization of the hospital. The budget crisis allegedly
made LSU Health Shreveport susceptible to the whims
and demands of Willis-Knighton, the deep-pocket power
player in the local healthcare market.
By 2015 and 2016, LSU Health Shreveport desperately
needed millions of dollars. It was LSU Health Shreveport’s
need for continued funding that fueled the alleged
antitrust conduct here. The medical school’s ViceChancellor Victor Yick (“Yick”) authored a document
conceding that LSU Health Shreveport was in a financial
crisis, that it experienced an “operating loss of $40-$50M
per year since privatization of the hospital,” and that
29a
Appendix B
the “cash reserve can run out in [fiscal year] 2016-17.”
Id. at 27. Consequently, LSU Health Shreveport first
approached UHS and requested $100 million in “mission
support.” Id. UHS declined. Id. LSU Health Shreveport
then turned to Willis-Knighton, asking for a $50 million
“mission support” grant. Id. Yick later reported that
Willis-Knighton “conceptually agreed to provide working
capital” to the medical school. Id. UHS asserts this
statement is evidence that “LSU Health Shreveport
believed that it was acting in Willis-Knighton’s interest
by refusing to cooperate with . . . UHS.” Id. The alleged
lack of cooperation, as well as the inferences UHS draws
from LSU Health Shreveport’s actions, are discussed in
greater detail below.
B. Dr. Ghali
In early 2016, Dr. Ghali Ghali (“Dr. Ghali”) was named
as interim Chancellor of LSU Health Shreveport and
subsequently named the permanent Chancellor. Id. at 14
& 21. UHS insists that Willis-Knighton was instrumental
in Dr. Ghali’s promotion, as Dr. Ghali was otherwise
unqualified for such a prominent administrative position.
Id. at 21. Dr. Ghali was a senior partner in the WillisKnighton Oral and Maxillofacial Surgery Institute, a
member of the Willis-Knighton Physician Network, his
primary clinic practice for many years was at WillisKnighton and his income was determined in significant
part by his collections, and Willis-Knighton provided
Dr. Ghali’s department at LSU Health Shreveport—
presumably the Department of Oral and Maxillofacial
Surgery—with $1 million or more annually. Id. at 20. Dr.
30a
Appendix B
Ghali also allegedly used Willis-Knighton’s private plane
on occasion. Id. Thus, UHS asserts that Dr. Ghali “received
substantial benefit from working for Willis-Knighton, and
at its direction.” Id. “Dr. Ghali’s appointment as permanent
Chancellor cemented Willis-Knighton’s control over LSU
Health’s direction.” Id. at 22.
According to UHS, after Dr. Ghali assumed his new
role, he acted essentially as Willis-Knighton’s agent.
With Dr. Ghali at the helm, LSU Health Shreveport’s
administration ceased its cooperation with UHS. Id. at
15. Bruce Solomon of LSU Health Shreveport required
all UHS communications to go through him and also
restricted LSU Health Shreveport department chairs
from directly communicating with UHS. Id. The weekly
meetings were cancelled. Id. And, when UHS proposed
cooperative initiatives, LSU Health Shreveport refused
to participate. Id. Its refusal, it is alleged, was entirely
against its own self-interest and must, therefore, have
resulted from Willis-Knighton’s coercion. Id.
C.
Means of Coercion
1.
Allegedly Contingent Funding
UHS contends that Willis-Knighton linked its funding
to LSU Health Shreveport’s agreement not to cooperate
with UHS. That is, Willis-Knighton “would continue
to fund LSU Health Shreveport only if LSU Health
Shreveport did not support its competitors.” Id. at 23.
According to UHS, Willis-Knighton wanted to eliminate
UHS as the hospital operator, or at the very least, ensure
UHS could not be competitive. Id.
31a
Appendix B
As evidence, UHS cites to a time in 2012 when
James Elrod (“Elrod”), the President and CEO of WillisKnighton, told the Willis-Knighton Board that it would
only continue its current level of funding to LSU Health
Shreveport if the two entities “remain[ed] partners, not
competitors.” Id. at 23. Also in 2012, there was some
indication that Willis-Knighton was aware that if another
hospital corporation managed LSU Health Shreveport,
Willis-Knighton may encounter an adversarial relationship
with LSU Health Shreveport with respect to its market
share. Id. In 2013, at a Willis-Knighton Board meeting,
Elrod said that Willis-Knighton’s continued support of
the medical school would continue only so long as LSU
Health Shreveport did not directly compete with WillisKnighton and if Willis-Knighton could have some level of
oversight. Id. In 2014, Willis-Knighton drafted a letter to
its employees that said that UHS would begin “seeking to
draw private patients from Willis-Knighton and Christus
Highland. So the LSU hospital that once was an ally is now
a competitor.” Id. at 24. All of the comments above were
made prior to the antitrust activity alleged in this case.
Aside from Elrod’s and Willis-Knighton’s direct
statements about UHS and/or the medical school, UHS
also contends that Willis-Knighton had a pattern of
stymying LSU Health Shreveport’s efforts to work with
Willis-Knighton’s competitors. Id. at 25. In 2015, LSU
Health Shreveport’s department chairs were invited to
meet with UHS and Ochsner on a possible joint venture. Id.
In testimony in the 2015 case, the LSU Health Shreveport
Dean, Dr. Marymont, stated that Willis-Knighton told
him that if he went forward with the meeting, Willis-
32a
Appendix B
Knighton would cease funding the medical school. Id.
Dr. Marymont testified that “on other occasions,” WillisKnighton threatened to pull its funding from LSU Health
Shreveport “if it was unhappy with LSU actions.” Id. The
2015 meeting predates the antitrust activity in this case,
as well; and, UHS provides no temporal context for the
“other occasions” mentioned by Dr. Marymont.
In 2 016, Wi llis-K nighton gave a PowerPoint
presentation to Yick that represented it was aware of the
critical funding issues faced by LSU Health Shreveport
and that it was willing to increase its funding of programs
and services to LSU Health Shreveport if there was
“increased cooperation from leadership and the faculty.”
Id. at 26. Willis-Knighton also proposed a consolidation
of programs and services with LSU Health Shreveport,
though this never occurred. Id.
In July of 2016, Yick authored an email to the LSU
President and CFO stating that LSU Health Shreveport
still needed to raise $50 million in mission support. Id. at
29. He stated that Willis-Knighton “is our mother lode”
and that the medical school “still [has] work to do with
WK.” Id. Yick’s email further opined that LSU Health
Shreveport’s energy needed to be spent on rebuilding
rather than collaborating with UHS and that the
medical school needed to “form a sustainable long term
partnership” with Willis-Knighton. Id. Yick also stated
that letters of intent LSU had entered into with other
hospitals, aside from Willis-Knighton, were “initially just
for cover.” Id. That Yick felt the need for cover is, according
to UHS, proof of LSU Health Shreveport’s complicity
33a
Appendix B
in an unlawful scheme. Id. Nonetheless, because of the
2015 case, Willis-Knighton never provided the anticipated
funding to LSU Health Shreveport. Id. at 28.
Lastly, in a 2017 deposition, Elrod agreed that without
Willis-Knighton, LSU Health Shreveport would have a
difficult time surviving. Id. at 22.
2.
Noncompliant Physicians
UHS contends that Willis-Knighton engaged in
a pattern of threatening non cooperative physicians.
Id. at 24. In essence, the allegation seems to be that
Willis-Knighton would punish physicians who made
referrals to non-Willis-Knighton facilities by hiring
new Willis-Knighton physicians to compete with those
physicians. The new physicians would receive all of the
Willis-Knighton referrals, thus creating a “starvation
of referrals” to the non-compliant physicians. Id. UHS
claims that Elrod communicated this threat through the
publication of his book, and as such, the entire ShreveportBossier healthcare community was made aware of the
consequences of competing against Willis-Knighton. Id.
at 25.
UHS also asserts that Dr. Ghali fired Dr. Anil Nanda
(“Dr. Nanda”), the “most renowned physician at LSU
Health Shreveport” because Dr. Nanda “did not admit
sufficient numbers of patients at Willis-Knighton to satisfy
James Elrod, and because he had always cooperated with
UHS.” Id. at 43-44. Elrod allegedly told Dr. Ghali that
“the best thing Dr. Ghali ever did was to fire Dr. Nanda
34a
Appendix B
as head of the Neurosurgery Department.” Id. at 45.
The firing of Dr. Nanda is allegedly evidence of one form
of retaliation Willis-Knighton had in its arsenal to use
against non-compliant physicians.
D.
Lack of Cooperation
There are myriad ways in which LSU Health
Shreveport allegedly refused to cooperate with or acted
to undermine UHS, including: (1) its refusal to combine
fixed overhead activities to reduce costs; (2) its refusal to
participate in a narrow network product with Blue Cross;
(3) its refusal to improve productivity, efficiency, and
quality of care in various departments; (4) its refusal to
cooperate in recruitment of new physicians; (5) Dr. Ghali’s
dismissal of Dr. Jay Marion as Chair of the Department of
Medicine and Dr. Nanda as the Chair of the Neurosurgery
Department of LSU Health Shreveport; (6) Dr. Ghali’s
miscellaneous defamatory statements; and (7) LSU Health
Shreveport’s attempts in 2016 and 2017 to terminate UHS
as the owner and operator of the hospital, which caused
damage to UHS’s reputation. Id. at 16-19.1 UHS contends
that LSU Health Shreveport’s “conduct was inconsistent
with unilateral, self-interested behavior, and can only
be explained by [its] acquiescence in and agreement to
Willis-Knighton’s demands” because “no rational medical
school would have undertaken” the actions LSU Health
Shreveport did absent “coercion by Willis-Knighton.” Id.
at 19.
1. Not all of these issues are given equal attention in UHS’s
complaint. Some are mentioned in passing and never discussed again.
As such, the Court’s analysis will follow suit and focus on the issues
to which UHS has given its attention.
35a
Appendix B
In 2018, Ochsner bought an interest in both the
Shreveport and Monroe2 hospitals and created Ochsner
LSU. Id. at 48. As a result, LSU Health Shreveport
received an additional $40 million annually, plus a fifty
percent stake in the hospital. Id. Allegedly, LSU Health
Shreveport now cooperates in initiatives with Ochsner in
ways it refused to cooperate with UHS. Id. at 49. This is
so, UHS asserts, because LSU Health Shreveport is no
longer susceptible to Willis-Knighton’s coercion. Id.
III.
The Instant Suit
In 2020, UHS brought this suit, alleging that between
2016 and 2018, Willis-Knighton violated both Section 1
of the Sherman Act, which prohibits concerted activity
relating to unreasonable restraints of trade, 15 U.S.C.
§ 1; and Section 2 of the Sherman Act, which prohibits
monopolization and attempted monopolization, 15 U.S.C.
§ 2. UHS did not name LSU Health Shreveport as a
defendant in this matter.
Willis-Knighton has filed the instant motion to
dismiss under Federal Rule of Civil Procedure 12(b)(6).
It argues that there are five principal reasons to dismiss
UHS’s claims. First, UHS has not established antitrust
injury, a threshold requirement for a plaintiff in any
antitrust claim. Record Document 20-1 at 11. Second, UHS
has not sufficiently alleged an agreement or conspiracy
between LSU Health Shreveport and Willis-Knighton,
2. University Hospital Conway was located in Monroe,
Louisiana.
36a
Appendix B
for purposes of Section 1 of the Sherman Act. Id. at 14.
Third, UHS has not alleged the requisite anticompetitive
conduct, that is exclusionary conduct, to sustain its claim
under Section 2 of the Sherman Act. Id. at 17. Fourth, the
First Amendment shields Willis-Knighton’s actions from
antitrust liability under the Noerr-Pennington Doctrine. 3
Id. at 21. And fifth, Willis-Knighton is shielded from
liability by the State Action Doctrine. Id. at 28. Following
extensive briefing by the parties, the matter is now ripe
for review.
Law and Analysis
I.
Federal Rule of Civil Procedure 12(b)(6) Standard
Federal Rule of Civil Procedure 8 requires a short and
plain statement of the claim showing the pleader is entitled
to relief. A complaint is not required to contain detailed
factual allegations, however, “a plaintiff’s obligation to
provide the grounds of his entitle[ment] to relief requires
more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L.
Ed. 2d 929 (2007) (internal marks and citations omitted).
“To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim
to relief that is plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2008)
(internal marks omitted). “A claim has facial plausibility
3. E. R.R. Presidents Conf. v. Noerr Motor Freight, 365 U.S.
127, 81 S. Ct. 523, 5 L. Ed. 2d 464 (1961); United Mine Workers of Am.
v. Pennington, 381 U.S. 657, 85 S. Ct. 1585, 14 L. Ed. 2d 626 (1965).
37a
Appendix B
when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Id. Plausibility does
not equate to possibility or probability; it lies somewhere
in between. See id. This plausibility requirement “asks
for more than a sheer possibility that a defendant has
acted unlawfully.” Id. However, the complaint cannot be
simply “unadorned, the-defendant-unlawfully-harmedme accusation[s].” Id. Plausibility simply calls for enough
factual allegations to raise a reasonable expectation that
discovery will reveal evidence to support the elements of
the claim. See Twombly, 550 U.S. at 555-56.
As the Fifth Circuit has explained, in order to survive
a 12(b)(6) motion, “the complaint must contain either direct
allegations on every material point necessary to sustain
a recovery or contain allegations from which an inference
fairly may be drawn that evidence on these material points
will be introduced at trial.” Rios v. City of Del Rio, Tex.,
444 F.3d 417, 420-21 (5th Cir. 2006) (internal marks and
citation omitted). Moreover,
a statement of facts that merely creates a
suspicion that the pleader might have a right
of action is insufficient. Dismissal is proper if
the complaint lacks an allegation regarding a
required element necessary to obtain relief.
The court is not required to conjure up unpled
allegations or construe elaborately arcane
scripts to save a complaint. Further, conclusory
allegations or legal conclusions masquerading
as factual conclusions will not suffice to prevent
a motion to dismiss.
38a
Appendix B
Id. at 421 (internal marks and citations omitted).
Although courts generally are not permitted to review
materials outside of the pleadings when determining
whether a plaintiff has stated a claim for which relief
may be granted, there are limited exceptions to this rule.
Specifically, a court may consider documents attached
to a Rule 12(b)(6) motion to be part of the pleadings
if the plaintiff refers to those documents and they are
central to the claim. See Collins v. Morgan Stanley Dean
Witter, 224 F.3d 496, 498-99 (5th Cir. 2000); Causey v.
Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th
Cir. 2004). Additionally, pleadings filed in state or other
federal district courts are matters of public record and
the Court may take judicial notice of those documents
in connection with a Rule 12(b)(6) motion to dismiss. See
Cinel v. Connick, 15 F.3d 1338, 1343 (5th Cir. 1994).
II. Antitrust Injury
Willis-Knighton argues that UHS has not sufficiently
alleged antitrust injury. Antitrust injury is necessary
for a plaintiff to pursue either a Section 1 or Section 2
claim under the Sherman Act. Jebaco, Inc. v. Harrah’s
Operating Co., 587 F.3d 314, 319 (5th Cir. 2009). Antitrust
injury is a component of antitrust standing. Antitrust
standing, in turn, is a judicially-created set of threshold
requirements that a private plaintiff must show before
a court can entertain its antitrust claims. See Assoc.
Gen. Contractors of Cal., Inc. v. Cal. State Council of
Carpenters (“AGC”), 459 U.S. 519, 535, 103 S. Ct. 897, 74
L. Ed. 2d 723 & n.31 (1983). The three antitrust standing
39a
Appendix B
requirements are “1) injury-in-fact, [i.e.,] an injury to the
plaintiff proximately caused by the defendants’ conduct;
2) antitrust injury; and 3) proper plaintiff status, which
assures that other parties are not better situated to bring
suit.” Sanger Ins. Agency v. HUB Int’l, Ltd., 802 F.3d 732,
737 (5th Cir. 2015) (citing Jebaco, 587 F.3d at 318). These
requirements, which supplement Article III standing
requirements, ensure that successful antitrust claims only
redress the types of harm that antitrust law was designed
to prevent, rather than create a fortuitous windfall for all
parties proximate to the defendant, regardless of whether
they were injured by anticompetitive conduct. See AGC,
459 U.S. at 535.
The second component of antitrust standing, antitrust
injury, requires that a plaintiff’s injury is “of the type
the antitrust laws were intended to prevent and . . .
flows from that which makes defendants’ acts unlawful.”
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S.
477, 489, 97 S. Ct. 690, 50 L. Ed. 2d 701 (1977). This means
that in an antitrust suit, but-for causation is insufficient.
Instead, a plaintiff must be able to trace its injury to
the anticompetitive effects of the defendant’s antitrust
violation. See id. Thus, an inquiry into antitrust injury
always asks whether there is a causal connection between
the alleged injury of the plaintiff and the anticipated
anticompetitive effect of the specific practice that allegedly
violates antitrust law. See Port Dock & Stone Corp. v.
Oldcastle Ne., Inc., 507 F.3d 117, 122 (2d Cir. 2007) (“We
can ascertain antitrust injury only by identifying the
anticipated anticompetitive effect of the specific practice
at issue and comparing it to the actual injury the plaintiff
alleges.”).
40a
Appendix B
UHS contends that Willis-Knighton’s unlawful
conspiracy targeted UHS’s business in order to stymie
competition and increase its monopoly power in the
relevant market. Taking UHS’s allegations as true, as
a result of Willis-Knighton’s anticompetitive scheme,
UHS was not prevented from working with LSU Health
Shreveport on pre-established initiatives and programs,
but rather it was restrained from improving and becoming
more competitive in other areas and on other healthcare
measures. Stated another way, Willis-Knighton’s
anticompetitive intention was to restrict UHS’s ability to
compete with it, which could have resulted in diminishing
Willis-Knighton’s predominance in the local healthcare
market. Consequently, UHS alleges, Willis-Knighton
restrained competition by hindering UHS’s ability to work
with its physicians on measures which ultimately would
have decreased costs, improved quality of care, or ensured
and/or increased access to care. 4 So viewed, UHS’s
4. Many of the areas in which UHS claims LSU Health
Shreveport refused to cooperate are insufficient for purposes of
establishing antitrust injury. For example, the litany of ways in
which the two entities could have shared costs, coordinated on a drug
formulary, or established an outpatient imaging center, allegedly
would have decreased costs or increased profitability. For these, there
is no suggestion that they would have harmed, or in the converse,
helped patients or the consumer market. The Court will not consider
those allegations for purposes of assessing whether UHS has alleged
an antitrust injury, as the antitrust laws protect competition, not
the competitor. Brooke Grp. Ltd. v. Brown & Williamson Tobacco
Corp., 509 U.S. 209, 225, 113 S. Ct. 2578, 125 L. Ed. 2d 168 (1993).
The Court is concerned with harm to UHS only insofar as that harm
resulted in a concomitant effect upon consumer costs, the quality of
care, access to care, and patient choice. With that in mind, the Court
41a
Appendix B
competitive disadvantage “fall[s] within the conceptual
bounds of antitrust injury, whatever the ultimate merits
of its case.” Doctor’s Hosp. v. Southeast Medical Alliance,
123 F.3d 301, 305 (5th Cir. 1997) (finding antitrust injury,
for purposes of standing, was aptly demonstrated by
plaintiff, a direct competitor of the alleged monopolist
who colluded with a third party to remove plaintiff from
the relevant market and weaken its competitive state).
Therefore, the Court finds that UHS has sufficiently
alleged antitrust injury for standing purposes.
III.
Section 1 of the Sherman Act
Title 15, United States Code, Section 1 prohibits any
contract, combination, or conspiracy that unreasonably
restrains trade. Over a century of Supreme Court
interpretation of Section 1 has distilled its expansive
definition into a number of well-recognized causes of
action, such as vertical and horizontal price fixing, tying
agreements, and exclusive dealing agreements. Holmes
and Mangiaracina, Antitrust Law Handbook § 2.2. Here,
UHS’s complaint does not coherently describe one of the
more familiar antitrust allegations, however, its opposition
to the motion to dismiss clarifies that it has alleged an
unlawful vertical integration.
deems sufficient the allegations regarding the narrow insurance
network, co-management of certain departments, improvements
upon physician productivity, recruitment of or privileges to new
physicians, staffing of clinics, Dr. Nanda’s termination, and improved
clinical documentation.
42a
Appendix B
There are three elements of a Section 1 claim: (1) a
conspiracy; (2) that restrained trade; (3) in the relevant
market. Golden Bridge Tech., Inc. v. Motorola, Inc., 547
F.3d 266, 271 (5th Cir. 2008). “Antitrust claims do not
necessitate a higher pleading standard and a plaintiff
need only plead enough facts to state a claim to relief
that is plausible on its face.” Marucci Sports, L.L.C. v.
Nat’l Collegiate Athletic Ass’n, 751 F.3d 368, 373 (5th Cir.
2014) (internal marks omitted). Only the sufficiency of the
first element—conspiracy—was challenged by WillisKnighton’s motion to dismiss. 5
5. Although they are not at issue in this opinion, the Fifth
Circuit has set forth the analysis for the other elements:
Once a plaintiff establishes that a conspiracy occurred,
whether it violates § 1 is determined by the application
of either the per se rule or the rule of reason. The
per se rule is appropriate only after courts have had
considerable experience with the type of restraint at
issue and only if courts can predict with confidence that
it would be invalidated in all or almost all instances
under the rule of reason. Moreover, the per se rule
should only be applied when conduct is so pernicious
and devoid of redeeming virtue that it is condemned
without inquiry into the effect on the market in the
particular case at hand.
Under a rule of reason analysis, the factfinder considers
all of the circumstances to determine whether a
restrictive practice imposes an unreasonable restraint
on competition. The court’s considerations should
include the restrictive practice’s history, nature,
and effect and whether the businesses involved have
market power. Market power has been defined as
the ability to raise prices above those that would be
43a
Appendix B
A.
Conspiracy
Willis-Knighton submits that UHS has failed to
sufficiently plead a conspiracy between it and LSU
Health Shreveport under Section 1 of the Sherman Act.
In response, UHS argues that it has adequately alleged
that Willis-Knighton threatened LSU Health Shreveport
into unlawfully restraining UHS’s ability to compete
by making Willis-Knighton’s monetary contributions
contingent upon LSU Health Shreveport’s accession to
its demands. The Court disagrees.
“Section 1 of the Sherman Act does not proscribe
independent conduct.” Viazis v. Am. Ass’n of Orthodontists,
314 F.3d 758, 761 (5th Cir. 2002) (citing Monsanto Co. v.
Spray-Rite Serv. Corp., 465 U.S. 752, 761, 104 S. Ct.
1464, 79 L. Ed. 2d 775 (1984)). Thus, a Section 1 violation
requires concerted action. To be sure, “[t]he crucial
question is whether the challenged anticompetitive
conduct stems from independent decision or from an
agreement, tacit or express.” Twombly, 550 U.S. at 553
(internal marks omitted).
charged in a competitive market. The rule of reason
analysis also requires that the plaintiff show that
the defendants’ activities injured competition. The
rule of reason is designed to help courts differentiate
between restraints with anticompetitive effect that are
harmful to the consumer and restraints stimulating
competition that are in the consumer’s best interest.
Regardless of which rule applies, the court’s inquiry
should ultimately focus upon forming a judgment about
the competitive significance of the restraint.
Marucci Sports, 751 F.3d at 374 (cleaned up).
44a
Appendix B
To satisfy this inquiry in the present case, UHS must
show that Willis-Knighton “engaged in concerted action,
defined as having a ‘conscious commitment to a common
scheme designed to achieve an unlawful objective.’”
Golden Bridge Tech., 547 F.3d at 271 (quoting Monsanto,
465 U.S. at 764). Under Twombly, to successfully plead a
Section 1 claim, the complaint must assert sufficient facts
to suggest an agreement was made; that is, enough factual
matter “to raise a reasonable expectation that discovery
will reveal evidence of illegal agreement.” Twombly, 550
U.S. at 556. Parallel business behavior, i.e., parallelism,
does not constitute a conspiracy, nor does a “conclusory
allegation of agreement at some unidentified point . . .
supply facts adequate to show illegality.” Id. at 556-57. A
plaintiff’s allegations must plausibly suggest the unlawful
agreement, not simply be consistent with an agreement.
Id. at 557. Without context showing “a meeting of the
minds,” the defendant’s conduct remains “in neutral
territory.” Id.
As a preliminary matter, per the instructions of
Iqbal and Twombly, this Court must disregard the
complaint’s conclusory and formulaic assertions, as those
are not entitled to a presumption of truth. The remaining
allegations must then be examined to determine whether
they plausibly suggest entitlement to relief. As the district
court explained in Dowdy & Dowdy Partnership v.
Arbitron, Inc.,:
A “bare allegation of conspiracy” and “a
conclusory allegation of agreement at some
unidentified point” are insufficient to plead
45a
Appendix B
illegal antitrust activity. Not only does the
naked allegation of a conspiracy, without
additional facts, not state a plausible antitrust
claim, such conclusory allegations are not
entitled to be accepted as true for the purposes
of this motion.
Dowdy & Dowdy P’ship v. Arbitron Inc., No. 2:09CV253
KS-MTP, 2010 U.S. Dist. LEXIS 108798, 2010 WL
3942755, at *3 (S.D. Miss. Oct. 6, 2010) (internal citations
omitted).
Here, although the complaint repeatedly uses the term
“threat,” what actually constitutes a threat seems to be
a more complicated question than UHS has recognized.
Within the context of the case and in light of the way in
which the complaint was drafted, the Court finds the use of
the term “threat” is a legal conclusion masquerading as a
fact. Other problematic areas within the complaint include
UHS’s allegation that Willis-Knighton threatened to pull
its existing financial support if LSU Health Shreveport
refused to participate in Willis-Knighton’s “scheme” to
harm UHS. Record Document 1 at 14. Disregarding the
use of the term threat, the allegation is still in peril, as
it relies broadly on the existence of a scheme, when one
is never sufficiently alleged. UHS also generally alleges
that Willis-Knighton made “promises to provide [and]
threats to withhold funds based on LSU’s acquiescence
in its demands . . . .” Id. at 22. Again, however, the socalled “demands” are never described in terms that are
nonconclusory or nonspeculative. These allegations will
not be given the presumption of truth.
46a
Appendix B
The Court has examined UHS’s actual factual
allegations to determine whether they plausibly state
a claim under Section 1 of the Sherman Act. Despite
spanning seventy-six pages, the complaint is lacking in
detail. “A complaint can be long-winded, even prolix,
without pleading with particularity. Indeed, such a
garrulous style is not an uncommon mask for an absence
of detail.” Southland Sec. Corp. v. INSpire Ins. Sols.,
Inc., 365 F.3d 353, 362 (5th Cir. 2004) (quoting Williams
v. WMX Techs., Inc., 112 F.3d 175, 178 (5th Cir. 1997)).
UHS’s claims of antitrust conspiracy rest on four bases:
(1) Elrod’s involvement: (a) his 2012 statement
to the Willis-Knighton Board that it would
continue to fund LSU Health Shreveport so
long as the two entities remained partners, not
competitors; (b) his 2013 comment at a WillisKnighton Board meeting that Willis-Knighton
would continue to support the medical school
so long as LSU Health Shreveport’s business
model was not in direct competition with WillisKnighton and Willis-Knighton could have some
oversight; and (c) his 2017 deposition testimony
in which he agreed that the medical school
would have a difficult time surviving without
Willis-Knighton;
(2) Yick’s involvement: (a) Willis-Knighton’s
2016 PowerPoint presentation to Yick that
represented it was willing to increase its
funding of programs and services to LSU
Health Shreveport if there was “increased
47a
Appendix B
cooperation from leadership and the faculty”;
(b) Yick’s 2016 email stating that LSU Health
Shreveport still needed to raise $50 million
in mission support, that Willis-Knighton “is
our mother lode,” and his opinion that LSU
Health Shreveport’s energy needed to be
spent on rebuilding rather than collaborating
with UHS; (c) his report that Willis-Knighton
had “conceptually agreed to provide working
capital” to the medical school; and (d) his
statement that letters of intent into which LSU
had entered with other hospitals, aside from
Willis-Knighton, were “initially just for cover”;
(3) Willis-Knighton’s referral shortage; and
(4) LSU Health Shreveport’s refusals to
cooperate with UHS, including Dr. Ghali’s
statement that he did not enter into a narrow
insurance network with Blue Cross because it
would have angered Elrod.
As these bases are interdependent, the Court’s
analysis must view them jointly to determine whether UHS
has alleged a plausible Section 1 claim.6 The Court finds
6. While the Court has not tightly compartmentalized each set
of allegations, analyzed them independently, and wiped the slate
clean after each examination, it does note that the Fifth Circuit
has expressed doubt as to whether instances of alleged conduct,
which individually are not anticompetitive, can be aggregated to be
considered cumulatively anticompetitive. Retractable Techs., Inc.
v. Becton Dickinson & Co., 842 F.3d 883, 892 (5th Cir. 2016) (citing
48a
Appendix B
that all of UHS’s factual allegations suffer from the same
deficit: UHS has not pleaded sufficient facts to suggest
a prior agreement existed between Willis-Knighton and
LSU Health Shreveport to unreasonably restrain trade
of medical services. “[R]esisting competition is routine
market conduct.” Twombly, 550 U.S. at 566. As the
Supreme Court has explained, when examining a Section
1 claim, “[c]ircumstances must reveal ‘a unity of purpose
or a common design and understanding, or a meeting of
minds in an unlawful arrangement.’” Monsanto, 465 U.S.
at 764 (quoting Am. Tobacco Co. v. United States, 328 U.S.
781, 810, 66 S. Ct. 1125, 90 L. Ed. 1575 (1946)). Thus, the
Court must determine whether there is concerted action,
and if so, whether that concerted action was the result of
a meeting of the minds to agree to restrain competition.
See Marucci Sports, 751 F.3d at 375 (instructing that the
“pivotal question is whether the concerted action was
a result of an agreement . . . to unreasonably restrain
trade.”).
Here, the complaint does not allege facts demonstrating
an intention on the part of LSU Health Shreveport to
engage in a conspiracy. See id. at 378-79 (complaint
with approval City of Groton v. Conn. Light & Power, 662 F.2d 921,
928 (2d Cir. 1981) (holding alleged instances of misconduct, none of
which is anticompetitive, cannot be cumulatively anticompetitive.)).
The Retractable Technologies opinion explained that there has been
no case since its 1980 decision in Associated Radio Service Co. v.
Page Airways, Inc., 624 F.2d 1342, 1356 (5th Cir. 1980), in which “a
congeries of business torts was found so egregious as to constitute
actionable predatory or exclusionary conduct.” Id. Nonetheless, in the
instant case, the Court’s antitrust analysis has been as coterminous
as UHS’s complaint and the law allow.
49a
Appendix B
dismissed because plaintiff failed to set forth facts showing
a meeting of the minds or any actual agreement among
the conspirators). As to the statements made by Elrod to
the Willis-Knighton Board in 2012 and 2013, these two
statements were made three and four years prior to the
alleged antitrust activity in this case. Further, Elrod’s
comments were made to his own Board, not to LSU Health
Shreveport. UHS has not alleged that the statements
were ever communicated to LSU Health Shreveport or
that LSU Health Shreveport ever learned of them. There
is no suggestion that these statements were repeated at a
time more contemporaneous with the alleged conspiracy.
These statements do not plausibly suggest a conspiracy.
Nonetheless, using the 2016 PowerPoint presentation
to Yick, UHS makes inferential leaps to connect Elrod’s
historical statements to Yick’s more contemporaneous
comments, thereby deducing a conspiratorial link exists.
However, Yick’s statements, even when viewed against the
backdrop colorfully painted by UHS, still do not plausibly
suggest a conspiracy to restrain competition.
UHS argues LSU Health Shreveport was desperate
for money and that, in exchange for the money it so badly
needed, Willis-Knighton required LSU Health Shreveport
to accede to its unlawful, anticompetitive whims by halting
UHS’s competitive momentum. UHS, however, cannot
survive Rule 12(b)(6) scrutiny simply by supplanting its
subjective beliefs for facts. There is a paucity of facts to
entitle UHS to the inferences upon which its claims are
premised. The complaint is silent as to (1) when, where,
or how the conspiracy was formed; (2) whether Willis-
50a
Appendix B
Knighton communicated with LSU Health Shreveport
about the conspiracy; (3) whether LSU Health Shreveport
communicated with Willis-Knighton about the conspiracy;
and (4) whether they shared a common intent or meeting
of the minds to restrain trade.
UHS points out that it is not required to set forth
a “specific time, place, or person” for its conspiracy
allegations. See In re Pool Prod. Distrib. Mkt. Antitrust
Litig., 988 F. Supp. 2d 696, 715 (E.D. La. 2013). It is,
however, required to “allege the general contours of when
an agreement was made, supporting those allegations with
a context that tends to make said agreement plausible.”
Id. Like the district court in Pool Products, the Court
here is unable to infer the “general contours of when the
alleged agreement was made or even what, precisely, the
agreement was.” Id. at 719. That is, the Court cannot
discern what the agreement was or when it was confected;
there is no description of how or under what terms the
agreement was reached, nor is there a mention of the
extent of the agreement. See id. at 721 (noting that
“[s]uch vague conspiracy claims rarely pass muster
under Rule 8 and Twombly”) (collecting cases). UHS also
argues that it does not need to establish that LSU Health
Shreveport communicated with Willis-Knighton on each of
its decisions, as LSU Health Shreveport was aware of the
overall threat. While it is true that an express agreement
on every detail is not required, it is equally true that the
law demands more than what is alleged here. There still
must be an agreement to a scheme and an agreement to
work together to further a common goal. UHS’s complaint
has failed to satisfy that standard.
51a
Appendix B
As to the alleged starvation of referrals used by
Willis-Knighton to threaten non compliant physicians,
UHS claims this “threat” was contained within Elrod’s
book, which was generally available to those in the
relevant healthcare market who wanted to read it.7 The
allegation itself lacks context and contour. Even if the
book was generally available in the marketplace, UHS
alleges no fact from which to infer that LSU Health
Shreveport, as an entity, knew of Elrod’s statements,
knew of the practice generally, felt threatened by it, and
felt threatened enough to engage in a conspiracy. Without
additional factual context, this allegation is too specious
to withstand scrutiny.
As to Elrod’s 2017 deposition testimony, his statement
does not demonstrate any conspiracy or agreement
between Willis-Knighton and LSU Health Shreveport.
It is a factual statement, not wholly untrue, provided in
a vacuum without any surrounding context. Even when
viewed in light of UHS’s other allegations, it fails to
demonstrate any meeting of the minds or agreement to
coerce LSU Health Shreveport into refusing cooperation
with UHS.
7. The Court notes that in the 2015 case, it concluded that WillisKnighton’s control of physician referrals was not anticompetitive
under Section 2 of the Sherman Act because it did not lack competition
on the merits. BRFHH Shreveport, LLC v. Willis Knighton Med.
Ctr., 176 F. Supp. 3d 606, 625-26 (W.D. La. 2016). That is, the practice
had a rational business purpose (treatment of more patients) and
Willis-Knighton could not have accomplished the acts without the
consent and participation of consumers. Id. at 625.
52a
Appendix B
Finally, UHS argues that LSU Health Shreveport’s
refusals to cooperate are each discrete overt acts taken
in furtherance of the conspiracy. UHS contends that Dr.
Ghali’s statement—that entering into a narrow insurance
network with Blue Cross would have angered Elrod—is
evidence of an overt act taken in furtherance of the
conspiracy. An overt act is an act taken in furtherance of
a conspiracy only so long as there is, in fact, a conspiracy
in existence; otherwise, the act is just an act. Again, UHS
has used a broad brush to paint all unfavorable decisions
as ones caused by a conspiracy against it. To the contrary,
broad brushes and generalized theories of long-standing
coercion cannot withstand Rule 12(b)(6) scrutiny.
UHS insists the only reason LSU Health Shreveport
would decline its opportunities is if it was coerced by
Willis-Knighton because, according to UHS, the decisions
were against LSU Health Shreveport’s best interests.
UHS’s case can be summed up thusly there must have been
an unlawful agreement to conspire against and harm UHS
because UHS cannot otherwise understand why LSU
Health Shreveport would not have jumped at the chance
to implement all of UHS’s good ideas. Yet, LSU Health
Shreveport was entitled to decline business endeavors
that would jeopardize its relationship with a donor without
running afoul of antitrust laws. Indeed, “one might refrain
from taking an otherwise profitable step because someone
else has the power to make it unacceptably costly . . . such
inaction serves the decisionmaker’s long-run interest,
taking the third party’s power into account.” In re Pool
Prod. Distrib. Mkt. Antitrust Litig., 988 F. Supp. 2d at
718 (quoting 6 Phillip Areeda & Herbert Hovencamp,
53a
Appendix B
Antitrust Law ¶ 1415c (3d ed. 2010)). These allegations,
without more, fall short of establishing a conspiracy
between Willis-Knighton and LSU Health Shreveport, in
which both entities agreed to work together to restrain
UHS’s ability to compete in the marketplace.
The gravamen of UHS’s case is that Willis-Knighton
threatened LSU Health Shreveport, LSU Health
Shreveport felt threatened and thus agreed to WillisKnighton’s demands, and LSU Health Shreveport
refused to cooperate with UHS. Unfortunately, UHS has
committed a logical fallacy by (1) observing past behavior
by Willis-Knighton, (2) observing a current unfavorable
situation with LSU Health Shreveport, and (3) deducing
that LSU Health Shreveport’s behavior must have been
caused by Willis-Knighton. Put in the familiar A + B =
C equation, with “A” being Willis-Knighton’s “ruthless”
competition and “C” being LSU Health Shreveport’s
rejection of additional joint endeavors, UHS’s complaint
is missing “B”—that is, the other element that plausibly
supports the inference that Willis-Knighton caused LSU
Health Shreveport’s behavior. Under Monsanto, there
must be a meeting of the minds. The Supreme Court has
defined that as something more than mere acquiescence.
“A manufacturer of course generally has a right to deal,
or refuse to deal, with whomever it likes, as long as it
does so independently.” Monsanto, 465 U.S. at 761. The
manufacturer can announce its decision in advance and
“refuse to deal with those who fail to comply.” Id. The
downstream entity “is free to acquiesce” in the demand
“in order to avoid termination.” Id. A conspiracy requires
“more than a showing that the distributor conformed . . . .
54a
Appendix B
It means as well that evidence must be presented both
that the distributor communicated its acquiescence or
agreement, and that this was sought by the manufacturer.”
Monsanto, 465 U.S. at 764 n.9.
UHS is required to sufficiently plead an agreement, a
meeting of the minds. “Absent any agreement, there is no
Section 1 claim, because an anticompetitive agreement is
the sine qua non of a Section 1 violation.” In re Pool Prod.
Distrib. Mkt. Antitrust Litig., 988 F. Supp. 2d at 708.
Here, what led to LSU Health Shreveport’s decision not to
engage in additional joint endeavors is sheer speculation.
There are insufficient allegations to plausibly suggest
that Willis-Knighton actually threatened LSU Health
Shreveport and, there is even less to suggest that LSU
Health Shreveport entered into an unlawful conspiracy
with Willis-Knighton to comply with its demands.
In sum, notably absent from UHS’s complaint is the
critical linkage between Willis-Knighton and LSU Health
Shreveport, in terms of communications, timing, intent,
and conduct. Like Twombly, UHS’s complaint is rife
with “legal conclusions resting on the prior allegations.”
Twombly, 550 U.S. at 564. UHS argues that it is entitled to
reasonable inferences, which ostensibly should result in a
plausible showing of a conspiracy to restrain competition.
However, a plaintiff must first allege a fact from which
the inferential leap can be made. An inference cannot
exist without the underlying premise. In the law, these
premises must take the form of nonspeculative allegations
of fact. Without those, no reasonable inferences may
be drawn at all. See Marucci Sports, 751 F.3d at 375
55a
Appendix B
(explaining that when the complaint “presents various
conclusory allegations that support one of many inferential
possibilities,” it falls short of Twombly’s pleading
standards.). The Court finds that UHS has failed to
sufficiently plead a claim under Section 1 of the Sherman
Act, and therefore this claim shall be dismissed with
prejudice.
IV. Section 2 of the Sherman Act
Section 2 of the Sher ma n Act prohibits the
monopolization or attempted monopolization of any trade
or commerce. 8 15 U.S.C. § 2. In contrast to Section 1,
Section 2 of the Sherman Act “covers both concerted and
independent action, but only if that action monopolizes
or threatens actual monopolization, a category that is
narrower than restraint of trade.” Am. Needle, Inc. v.
Nat’l Football League, 560 U.S. 183, 190, 130 S. Ct. 2201,
176 L. Ed. 2d 947 (2010) (internal citations and quotations
omitted). A defendant is liable for monopolization under
Section 2 when it (1) possesses monopoly power 9 and
8. UHS has alleged both monopolization and attempted
monopolization in violation of Section 2. These claims are
indistinguishable for the purposes of evaluating Willis-Knighton’s
dismissal arguments. Because anticompetitive conduct is an element
of both, Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456, 113
S. Ct. 884, 122 L. Ed. 2d 247 (1993), the viability of either claim is
dependent upon UHS’s ability to sufficiently plead anticompetitive
conduct.
9. To establish Section 2 violations asserting monopolization, a
plaintiff must define the relevant market. Doctor’s Hosp., 123 F.3d
at 311. The Court assumes for present purposes that the healthcare
56a
Appendix B
(2) achieves or maintains its monopoly power through
anticompetitive conduct. See 15 U.S.C. § 2; Verizon
Commc’ns, Inc. v. Law Offs. of Curtis V. Trinko, 540
U.S. 398, 407-08, 124 S. Ct. 872, 157 L. Ed. 2d 823 (2004);
Stearns Airport Equip. Co. v. FMC Corp., 170 F.3d 518,
522 (5th Cir. 1999) (the monopolist must have “acquired or
maintained that power wilfully, as distinguished from the
power having arisen and continued by growth produced by
the development of a superior product, business acumen,
or historic accident.”) (citing United States v. Grinnell
Corp., 384 U.S. 563, 570-71, 86 S. Ct. 1698, 16 L. Ed. 2d
778 (1966)).
A.
Anticompetitive Conduct
As to the first element, Willis-Knighton’s pleadings
do not address, and thus do not challenge, whether it
possesses monopoly power. As such, this Court will
assume arguendo that UHS has successfully alleged facts
demonstrating that Willis-Knighton possesses monopoly
power.
Willis-Knighton instead focuses on the second element,
arguing that UHS’s complaint has failed to sufficiently
plead anticompetitive conduct. The necessity of proving
anticompetitive conduct, in addition to monopoly power,
reflects federal courts’ judgment that in the short term, the
monopolist’s ability to charge above-market prices invites
more, rather than less, competition. Trinko, 540 U.S. at
market in the Shreveport-Bossier City area is a relevant antitrust
market.
57a
Appendix B
407 (“The opportunity to charge monopoly prices . . .
induces risk taking that produces innovation and economic
growth.”). Thus, while the definition of anticompetitive
conduct10 has many accepted permutations, the essence
of the conduct that it makes actionable is the achievement
or maintenance of monopoly power by means other than
competition on the merits. See Stearns Airport Equip., 170
F.3d at 522 (citing Aspen Skiing Co. v. Aspen Highlands
Skiing Corp., 472 U.S. 585, 605, 105 S. Ct. 2847, 86 L. Ed.
2d 467 (1985) (“If a firm has been attempting to exclude
rivals on some basis other than efficiency, it is fair to
characterize its behavior as [anticompetitive].”)); see also
United States v. Microsoft Corp., 253 F.3d 34, 58-59, 346
U.S. App. D.C. 330 (D.C. Cir. 2001) (to be condemned as
anticompetitive under Section 2, the conduct “must harm
the competitive process and thereby harm consumers.”).
In the Fifth Circuit, proving anticompetitive conduct also
“[g]enerally” requires “some sign that the monopolist
engaged in behavior that—examined without reference
to its effects on competitors—is economically irrational.”
Stearns Airport Equip. Co., 170 F.3d at 523. Hence, UHS
must allege exclusionary conduct to survive the instant
motion. Under Twombly, UHS’s complaint must plead
facts that, when viewed together, make anticompetitive
conduct plausible. See Twombly, 550 U.S. at 555; Assoc.
Radio Serv. Co., 624 F.2d at 1356.
10. Courts also label anticompetitive conduct exclusionary
conduct, predatory conduct, and improper conduct. See Taylor Pub.
Co. v. Jostens, Inc., 216 F.3d 465, 475 n.2 (5th Cir. 2000) (“We use the
terms ‘predatory’ and ‘exclusionary’ interchangeably . . . .”).
58a
Appendix B
The key factor in the inquiry is “the proffered
business justification for the act. If the conduct has no
rational business purpose other than its adverse effects
on competitors, an inference that it is exclusionary
is supported.” Clean Water Opportunities, Inc. v.
Willamette Valley Co., 759 F. App’x 244, 248 (5th Cir.
2019) (quoting Stearns Airport Equip. Co., 170 F.3d at
522). Nonetheless, as the Fifth Circuit has cautioned, “not
all unfair conduct—even by a monopolist and a fortiori
by one who is not—fits within the prohibition of § 2.
Conduct must not only be inconsistent with competition
on the merits, it must also have the potential for making a
significant contribution to monopoly power.” Taylor Pub.
Co., 216 F.3d at 475-76 (quoting 3A Areeda & Hovencamp
¶806d, at 331). The rationality of the defendant’s business
decision is a significant, yet not dispositive, factor in
ascertaining whether conduct is exclusionary. Clean Water
Opportunities, 759 F. App’x 248. Under Stearns, courts
are also to consider whether the exclusionary conduct
required the active approval of the consumer or whether
there was the potential existence of bribery or threats
that tainted an otherwise independent business decision.
See Stearns Airport Equip., 170 F.3d at 524-27.
In the instant case, UHS’s effor ts to allege
anticompetitive conduct under Section 2 fall short for the
same reason its Section 1 claim failed. In short, its claim
hinges on speculation and subjective beliefs, not facts and
the reasonable inferences to be drawn therefrom. Setting
aside UHS’s bare allegations, legal conclusions, and
speculation, the lack of actual facts in the complaint makes
it nearly impossible to define what Willis-Knighton even
59a
Appendix B
did that is deemed exclusionary. Several years before the
antitrust violations allegedly occurred, Willis-Knighton
told its Board members that it would not fund a competitor.
Three to four years later, Yick stated that Willis-Knighton
conceptually agreed to provide the hospital with funding.
Prior
This text is long and has been trimmed here. Open the source document for the complete record.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.