Petition for Writ of Certiorari — Nanavati v. Burdette Tomlin Memorial Hospital

7

Supreme Court, U.S,

8s -1068 4» FILED

DEC 24 1988

y HOSEPH F. SPANIOL, JR,

CLERK

No.

Supreme Court

of the Gnited States

OCTOBER TERM, 1988

SUKETU H. NANAVATI, M.D.,

Petitioner,

BURDETTE TOMLIN MEMORIAL HOSPITAL and

EXECUTIVE COMMITTEE OF THE MEDICAL STAFF

OF THE BURDETTE TOMLIN MEMORIAL HOSPITAL,

Respondents.

ON WRIT OF CERTIORARI |

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

PETITION FOR WRIT OF CERTIORARI

DAVID H. WEINSTEIN*

WILLIAM B. LYTTON

DOUGLAS A. ABRAHAMS

KOHN, SAVETT, KLEIN & GRAF, P.C

1101 Market Street, Suite 2400

Philadelphia, PA 19107

(215) 238-1700

Attorneys for Petitioner Suketu H. Nanavati, M.D.

*Counsel of Record

QUESTIONS PRESENTED FOR REVIEW!

1. Does the decision below, affirming judgment notwith-

standing the verdict on Petitioner's antitrust claim against

Respondent Hospital under Sherman Act Section 1, 15 U.S.C.

§ 1, conflict directly with American Society of Mechanical

Engineers v. Hydrolevel Corp., 456 U.S. 556 (1982), where the

jury found that the Respondent Hospital participated in a

contract, combination, or conspiracy in violation of Section 1

and where there was abundant evidence that the Hospital,

through its employee nurses and through physicians operat-

ing its emergency room under contract with and for the

Hospital, had joined with other physicians in the community

in agreeing not to refer patients to Petitioner?

2. Does the decision below upholding judgment n.0o.v.

conflict with Continental Ore Co. v. Union Carbide Corp., 370

U.S. 690 (1962), where the jury found that the Hospital had

entered into a contract, combination, or conspiracy in vio-

lation of Sherman Act Section 1 and where the Hospital had

entered into an exclusive contract with a non-cardiologist for

the professional interpretation of highly specialized car-

diological tests when Petitioner was known to be the only

board certified cardiologist on the Hospital’s medical staff who

was fully qualified by training and experience to interpret

such tests?

3. Is Petitioner, an antitrust plaintiff, who successfully

proved both the existence of a Sherman Act Section 1 com-

bination and injury to his business or property caused in fact

by the actions of the combination, entitled as a matter of law

under Section 4(a) of the Clayton Act, 15 U.S.C. § 15(a), to an

award of at least nominal damages and, therefore, a reason-

able attorney's fee and expenses incurred in vindicating the

antitrust laws?

1. The parties below were Petitioner Suketu H. Nanavati, M.D.

(“Nanavati”) and Respondents Burdette Tomlin Memorial Hospital (“Bur-

dette Tomlin,” “BTMH,” or “the Hospital”), the Executive Committee of the

Medical Staff of Burdette Tomlin Memorial Hospital (“the Committee”), and

Robert J. Sorensen, M.D. (“Sorensen”). Together with this Petition,

Nanavati is filing with the Clerk a notice pursuant to Rule 19.6 of the Court,

of his belief that Sorensen has no interest in the outcome of the Petition.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW ........... "i

I I OO sg co cee e i ecscacsccvesnsass iii

a 8 Vv

a ix

Sas a eaee Gee BEEED CAPE ... 2... cee eens Xx

CONSTITUTIONAL AND STATUTORY

Peery reeusites SINVUILVELD ..... 1... ccc eee eee l

fe ee i 3

REASONS FOR GRANTING THE WRIT............. 7

1. The Ruling below Conflicts with the Court's De-

cision in American Society of Mechanical En-

gineers v. Hydrolevei Corp., Because the Un-

lawful Actions of the Hospital’s Agents are to be

Imputed to their Principal.................... 7

2. The Judgment N.O.V. Upheld below Conflicts

with Continental Ore Co. v. Union Carbide Corp.

and Presents an Issue of Extreme National Im-

portance, Since the Jury Found a Sherman Act

Section One Violation, and there was a Patently

Unreasonable Exclusive Contract with Potential

Adverse Effects on Health Care Quality. ....... 11

3. Entitlement, as a Matter of Law, to an Award of at

Least Nominal Damages and Attorney's Fees and

Costs is an Important Issue of National Antitrust

Policy where the Plaintiff has Proved a Violation

of the Sherman Act and Causation of Injury. ... 16

NE SASS aa 21

ili

TABLE OF AUTHORITIES

Cases: Page

American Society of Mechanical Engineers v. Hydrolevel

Corp., 456 U.S. 556 (1962)............. i, 7,8, 10,15

American Tobacco Co. v. United States, 147 F.2d 93 (6th

Cir. 1944), affd, 328 U.S. 781 (1946) ............ 1]

Appalachian Coals, Inc. v. United States, 288 U.S. 344

CORN) sce a dan a0eeecacdn esse eel 20

Army & Air Force Exchange Service v. Sheehan, 456 U.S.

Ce CAME oo eden aSuuka swaeasseliceeeeee 10

Auwood v. Harry Brandt Booking Office, Inc., 850 F.2d

ne CRE GE Fe kis ocis ces dessa 16

Baughman v. Cooper-Jarrett, Inc., 530 F.2d 529 (3d Cir.),

cert. dewted, 470 U.S. 825 (IG7B) «0.05 cece ese 19

Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251 (1946). 17

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 US.

QT? CAME k odthh wv badet cides 20

Byram Concretanks, Inc. v. Warren Concrete Prod. Co. of

NE, S74 Fe Ore CaO GE TOF) kc ca kee ncstonas 18

Carey v. Piphus, 435 U.S. 247 (1978) .............. 19, 20

Continental Ore Co. v. Union Carbide Corp., 370 U.S. 690

(FE ia bo eeeucns on eeneeeeeel es i. $4, 33,38,

General Leaseways v. Nat'l Truck Leasing Ass’n, 830 F.2d

Che re Ga PE otk ook erect eee 18

Henderson v. Kibbe, 431 U.S. 145 (1977) ............. 10

Home Placement Service v. Providence Journal Co., 819

Foe 6a CI CH SSE? nso keen eee 19

Interstate Circuit, Inc. v. United States, 306 U.S. 208

CHD ak sobs eee eae eee ee 13

J. Truett Payne Co. v. Chrysler Motors Corp., 451 U.S. 557

CORES ga kkc once ent Acad ohh RARE Me 17

Jefferson Parish Hospital District No. 2 v. Hyde, 466 U.S.

ie | eM R rar mute iene CRN RT 15

TABLE OF AUTHORITIES—(Continued )

Cases: Page

Knutson v. Daily Review, Inc., 468 F. Supp. 226 (N.D.

Cal. 1979), aff'd, 664 F.2d 1120 (9th Cir. 1981) ... 17

Lugar v. Edmonson Oil Co., 457 U.S. 922 (1982) ...... 10

Memphis Community School Dist. v. Stacnura, 477 U.S.

BAO (CIDOB). onc cc ccisccsrccsccceeusaruee pears 20

Nanavati v. Burdette Tomlin Memorial Hospital, 857 F.2d

96 (3d Cir. 1988)............. ix, 4, 10, 12, 14, 16, 18

Nanavati v. Burdette Tomlin Memorial Hospital, 645 F.

Supp. 1217 (D. N.J. 1986) ..... 0... cece eeees ix, 3, 14

Nanavati v. Burdette Tomlin Memorial Hospital, 107 NJ.

240, 536 A.2d GOT CGS) . 005s ends cdvcveenanees 6, 13

Patrick v. Burget, 486 U.S. —, 100 L.Ed.2d 83, 108 S.Ct.

DOGS COBB) ans 5c 6s vnc cu ctnccacasucvaacanes 12,14

Patrick v. Burget, 800 F.2d 1498 (9th Cir. 1986), rev'd 486

U.S. —, 100 L.Ed.2d 83, 108 S.Ct. 1658 (1988)... 11

Pfizer, Inc. v. Government of India, 434 U.S. 308 (1978) 15, 20

Reiter v. Sonotone Corp., 442 U.S. 330 (1979) ......... 15, 20

Rosebrough Monument Co. v. Memorial Park Cemetery

Ass’n., 666 F.2d 1130 (8th Cir. 1981), cert. denied,

457 U.S. 1111 (1982) .....................04. 17, 18

Story Parchment Co. v. Paterson Parchment Paper Co.,

BOS U.S. SO AGG) 5 ssc csecescepecitsdecuuss 17

United States v. Doe, 465 U.S. 605 (1984) ............ 10

U.S. Football League v. National Football League, 842

F.2d 1335 (2nd Cir. 1988) .................... 17,18

Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S.

OMRON ove oc ie os nes dbseesageatsesussas 17

Other Authorities:

Clayton Act, Section 4(a), 15 U.S.C. § 15(a).. i, 1, 2, 17, 18

vi

TABLE OF AUTHORITIES—(Continued )

Other Authorities: Page

Clayton Act, Section 16, 15 U.S.C.§ 26 .............. 19

Sherman Act, Section 1, 15 U.S.C.§1....... i, a 4, eae

Bs eI Fv 6s kek nec enone nee Xx

We Pe NE os Foc es vaccrcen devest oe. 19

Seventh Amendment to the United States Constitution .. 3

Supreme Court Rule 19.6 .......................... i

21 Cong. Rec. 2456 (1890) ......................... 20

Vii

OPINIONS BELOW

The opinion below of the United States Court of Appeals

for the Third Circuit is reported as Nanavati v. Burdette

Tomlin Memorial Hospital, 857 F.2d 96 (3d Cir. 1988). The

opinion of the trial court granting the defendants’ motion for

judgment notwithstanding the verdict as to the antitrust

claims and denying Petitioner Nanavati’s motion for judgment

notwithstanding the verdict on state law defamation claims

against him is reported as Nanavati v. Burdette Tonilin Memo-

rial Hospital, 645 F. Supp. 1217 (D. N.j. 1986). These opin-

ions, which are reproduced in the Appendix hereto, are cited

in this Petition as “857 F.2d at ” or “645 F. Supp. at ty

as the case may be. (Citation to the Appendix is in the form

“A- ,” while citation to the Joint Appendix in the United

States Court of Appeals for the Third Circuit is in the form

“ a”)

ix

JURISDICTION OF THE COURT

The judgment of the United States Court of Appeals for

the Third Circuit was entered on October 4, 1988. Petitions

for rehearing were denied by that court on September 26,

1988. Jurisdiction of the Court to review said judgment by

writ of certiorari is invoked under and cenferred by 28 U.S.C.

§ 1254(1).

No.

Supreme Court

of the Gnited States

OCTOBER TERM, 1988

SUKETU H. NANAVATI, M.D.,

Petitioner,

BURDETTE TOMLIN MEMORIAL HOSPITAL and

EXECUTIVE COMMITTEE OF THE MEDICAL STAFF

OF THE BURDETTE TOMLIN MEMORIAL HOSPITAL,

Respondents.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

PETITION FOR WRIT OF CERTIORARI

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

This Petition involves Petitioner Nanavati’s antitrust

claims under Section 4(a) of the Clayton Act, 15 U.S.C.

§ 15(a), arising from violations of Section 1 of the Sherman

Act, 15 U.S.C. § 1. Sherman Act Section 1 provides:

Every contract, combination in the form of trust or other-

wise, or conspiracy, in restraint of trade or commerce

among the several States, or with foreign nations, is

hereby declared to be illegal. Every person who shall

make any contract or engage in any combination or con-

spiracy hereby declared to be illegal shall be deemed

guilty of a felony, and, on conviction thereof, shall be

punished by fine not exceeding one million dollars if a

corporation, or, if any other person, one hundred thou-

sand dollars, or by imprisonment not exceeding three

years, or by both said punishments, in the discretion of

the court.

Clayton Act Section 4(a) states:

(a) Except as provided in subsection (b), any person who

shall be injured in his business or property by reason of

anything forbidden in the antitrust laws may sue therefor

in any district court of the United States in the district in

which the defendant resides or is found or has an agent,

without respect to the amount in controversy, and shall

recover threefold the damages by him sustained, and the

cost of suit, including a reasonable attorney's fee. The

court may award under this section, pursuant to a motion

by such person promptly made, simple interest on actual

damages for the period beginning on the date of service of

such person’s pleading setting forth a claim under the

antitrust laws and ending on the date of judgment, or for

any shorter period therein, if the court finds that the

award of such interest for such period is just in the

circumstances. In determining whether an award of in-

terest under this section for any period is just in the

circumstances, the court shall consider only—

(1) whether such person or the opposing party, or

either party's representative, made motions or asserted

claims or defenses so lacking in merit as to show that

such party or representative acted intentionally for delay,

or otherwise acted in bad faith;

(2) whether, in the course of the action involved,

such person or the opposing party, or either party's repre-

sentative, violated any applicable rule, statute, or court

order providing for sanctions for dilatory behavior or oth-

erwise providing for expeditious proceedings, and

(3) whether such person or the opposing party, or

either party’s representative, engaged in conduct pri-

marily for the purpose of delaying the litigation or in-

creasing the cost thereof.

In addition, because the decision below affirmed the

grant of judgment notwithstanding the verdict after the jury

found an antitrust violation and awarded Petitioner $350,000

in single antitrust damages, the Seventh Amendment to the

United States Constitution is implicated. It provides:

In Suits at common law, where the value in controversy

shall exceed twenty dollars, the right of trial by jury shall

be preserved, and no fact tried by jury, shall be otherwise

re-examined in any Court of the United States, than

according to the rules of the common law.

STATEMENT OF THE CASE

This Petition follows a jury verdict in favor of Petitioner

Nanavati on his antitrust claims against Burdette Tomlin and

the Executive Committee of its Medical Staff. In answer to

special verdict questions, the jury found that the Hospital and

Committee participated in a contract, combination, or con-

spiracy which was an unreasonable restraint of trade. 645 F.

Supp. at 1237-39. The jury awarded Nanavati single damages

in the amount of $350,000. Id., at 1239. Judgment in the

trebled amount of $1,050,000 was entered on July 23, 1986.

On October 2, 1986, the trial court, the United States

District Court for the District of New Jersey, granted the

motion of the Hospital and Committee for judgment notwith-

standing the verdict. 645 F. Supp. 1217ff. The United States

Court of Appeals for the Third Circuit affirmed. 857 F.2d

96ff.2 The facts out of which this litigation arose are briefly as

follows.

Dr. Nanavati is a physician who is board-certified as an

internist and as a cardiologist. In order to be eligible for board

certification in the subspecialty of cardiology, a physician

must first be board certified in the specialty of internal medi-

cine. 4082a. The physician must also be trained in a post-

residency fellowship specifically in cardiology for a period of

two years.

Since 1979, Nanavati has engaged in the private practice

of medicine in Cape May County, New Jersey (the “County”)

and receives compensation on a fee-for-service basis. Bur-

dette Tomlin is the only hospital in the County.? Nanavati was

admitted to the Staff of BTMH in the spring of 1979. He was

the first board-certified cardiologist on the Staff.

Sorensen has been, at all relevant times, a physician on

the BTMH Staff, Chief of Cardiology, a member of the BTMH

Board of Governors, and a Vice President of BTMH. 4055a.

During the period in issue, he became Chief of Medicine as

well. Sorensen has also been, at all relevant times, a physician

in private practice in the County who provides medical care to

patients on a fee-for-service basis. He has held himself out to

the medical profession and public in the County as a car-

diologist, although he has not been certified as such by the

appropriate medical subspecialty board and is not even eligi-

ble by training to become board certified. 5104a.

The Staff of BTMH is composed of all physicians who are

entitled to practice medicine at BTMH. The Staff is governed

by a set of Bylaws which determines the Staff's structure and

certain relationships between the Staff and its members and

2. The Third Circuit also reversed a judgment against Petitioner

Nanavati and in favor of Sorensen and the Hospital on their claims for

slander and tortious interference with business relations under New Jersey

law. None of those claims is presented here.

3. Cape May County is geographically isolated. It is bounded by water

on three sides: by the Atlantic Ocean to the east and south and by Delaware

Bay to the west.

among those members. 3005a. The Staff's Executive Commit-

tee is the governing body of the Staff, and the members of the

Committee are elected by the Staff membership. 3050a-

3052a.

The Board of Governors is the governing body of BTMH.

It approves the Staff Bylaws. 3067a.

Over his first few years at Burdette Tomlin, Nanavati

developed a growing cardiology practice. But he also became

aware of instances of improper professional readings and

interpretations by Sorensen of electrocardiograms (“EKG’s”)

on his, Nanavati’s patients.4 In these instances, Nanavati

would bring the matter to the Committee’s attention.

Nanavati’ letter dated January 22, 1981, is an example of an

attempt to bring to the Hospital’s attention Nanavati’s con-

cerns about Sorensen’s failures on occasions to read EKG’s

correctly. 2297-1a. The letter, expressing concern for the pos-

sibility of needless loss of life, was sent only to those with a

need to know and an ability to take corrective action. These

included certain Staff officers, the Hospital's top administra-

tor, and the chairman of its board of governors, as well as

Sorensen. Id.

The Staff rejected Nanavati’s charges allegedly in re-

liance upon the opinion of an outside expert. Instead, the

Chairman of the Committee, Dr. Alameno, testified that at a

gathering at his home on August 2, 1982, the Committee

decided—without any charges having been brought against

Nanavati—that he would be removed from the Staff. 5128a.

Alameno also admitted that, even before this meeting, the

decision to oust Nanavati had been approved separately by the

Staffs attorney and by the Hospital’s attorney, Mr. Valore.

5125a.

When charges were ultimately lodged against Nanavati

for the purpose of ousting him, he was repeatedly denied

4. The Hospital reader provides the official professional interpretation

of the EKG’s done in BTMH. The patient pays for this “service” in addition

to what the actually attending physician charges for his or her own reading

of the same EKG.

important rights under the Staffs Bylaws. As a result,

Nanavati was summarily expelled from the Staff in Novem-

ber, 1982. He turned to the New Jersey courts and obtained

injunctive relief reinstating him. After numerous orders and

purported Hospital “hearings,” the New Jersey Superior

Court, Chancery Division made its injunction permanent.

The state court ruled that Nanavati’s various “hearings”

at BTMH were a nullity because his case was pre-determined

and the proceedings were tainted with that prejudgment.

This ruling was upheld by the Appellate Division of the Supe-

rior Court of New Jersey, 248la, and then by the Supreme

Court of New Jersey.° Nanavati v. Burdette Tomlin Memorial

Hospital, 107 N.J. 240, 526 A.2d 697 (1987). The trial court

below accorded that decision collateral estoppel effect, and so

informed the jury. 215a; 5000a.

After the attempt summarily to oust Nanavati from the

Staff, Nanavati began to suffer the effects of a boycott. Refer-

rals of patients from the Emergency Room (“ER”) dried up,

and other physicians for the most part stopped sending him

patients for either consultations or referrals.© 6007a; 6008a.

Even shortly before trial, ER personnel were not notifying

Nanavati when his own patients would come in and ask for

him. 5097a-5103a.

When state court intervention derailed the attempts to

remove Nanavati, the Hospital in early 1983 sought out Dr.

Henry Komansky, a pulmonologist, for the purpose of having

5. While the Appellate Division and the Supreme Court affirmed the

Chancery Division's findings, they vacated the portion of the injunction

which precluded a new, untainted set of hearings at the Hospital. Finally,

however, the Hospital abandoned all charges. A consensual permanent in-

junction was entered on November 15, 1988. See Appendix at A-107.

6. A consultation occurs when an attending physician seeks and ob-

tains for his or her patient the specialty advice or care of another physician,

while the physician seeking the consultation continues as the principal

doctor for the patient's care. A referral occurs when a doctor sends her or his

patient to another specialist for complete care and treatment of a specific

condition within the specialist's field of expertise. After the referral, the

patient may or may not return to the original physician for care in other

matters.

his group provide exclusively certain cardiological specialty

services. 4264a. These included particularly the interpreta-

tion of echocardiogram tests, highly sophisticated ultra-sound

techniques for watching the inside of the patient's heart while

it beats. At that time, although Nanavati was qualified to

provide such specialized interpretive services, Komansky was

not, and Sorensen did not. 4058a; 6002a; 6009a.

The effect of this contract was that, when Nanavati

wanted echocardiograms performed on his hospitalized pa-

tients, they were charged for an official Hospital interpreta-

tion which their chosen doctor was not allowed to perform.

Also, in 1983, as part of its repeatedly unlawful proceed-

ings in trying to exclude Nanavati from the Staff and other-

wise to discredit him in the eyes of fellow physicians and the

public, the Hospital’s Board of Governors Hearing Committee

formulated a lengthy report. Whereas Nanavati’s criticisms of

Sorensen had been lodged internally, BTMH published this

report. It was furnished to the members of the press for

inspection at the Hospital (4295a), and a copy of it was made

available in the local public library (5095a). To assure even

broader dissemination of the hearing committee’s report and

recommendation that Nanavati be removed from the Staff,

and in furtherance of its plan to discredit Nanavati publicly,

Burdette Tomlin actually held a press conference on the sub-

ject. 4295a.

REASONS FOR GRANTING THE WRIT

1. The Ruling below Conflicts with the Court’s De-

cision in American Society of Mechanical En-

gineers v. Hydroievel Corp., Because the Un-

lawful Actions of the Hospital’s Agents are to be

Imputed to their Principal.

The jury in this case found unequivocally that the Hospi-

tal and Committee were parties to a contract, combination, or

conspiracy in violation of Section One of the Sherman Act.

The jury found that there was a group boycott and awarded

Petitioner Nanavati $350,000 in single damages as a result.

Nevertheless and despite the deference the Seventh Amend-

ment commands should be accorded a jury’s verdict, the

district court granted judgment n.o.v. in favor of the Hospital

and Committee. The Third Circuit affirmed.

In American Society of Mechanical Engineers v. Hydro-

level Corp., 456 U.S. 556 (1982), the Court held that a non-

profit organization could be held “civil[ly| liab{le]” under the

antitrust laws for acts of its agents performed with apparent

authority. Id. at 559. This imputed liability is appropriate, the

Court explained, because the corporation's agents “are able to

affect the lives of large numbers of people” as well as “the

competitive fortunes of businesses” in the area. Id. at 577.

They achieve this ability in no small part because, as in this

case, the corporation “cloaks its [agents] with the authority of

its reputation.” Id., at 571. Thus, “when the great influence of

[the corporation]|’s reputation is placed at their disposal, the

less altruistic of [the corporation|’s agents have an opportunity

to harm” individual competitors. Id.

The Third Circuit, in discussing Nanavati’s group boycott

claim, never analyzed the relevant evidence under the Me-

chanical Engineers standard, which is sufficient to uphold the

Hospital's liability. For example, the evidence showed that

Hospital nurses in the Emergency Room failed to notify

Nanavati even when his own patients arrived there and re-

quested his services. 5098a-5103a. The evidence showed

that, on at least one such occasion, Nanavati was actually

physically in the Hospital at that time. Id. On another occa-

sion, one of Nanavati’s patients was told by emergency room

nurses employed py the Hospital that Nanavati could not

admit the patient because Nanavati was behind in his paper-

work,’ yet the president of the Hospital was later forced to

admit, after checking the Hospital records, that no such “rec-

ords” suspension had been imposed on Nanavati at that time.

A-109.

7. When a physician is behind in his or her obligation to complete the

charts of patients who have been in the hospital, the physician's privilege to

admit additional patients may be suspended until the backlog is cleared.

This temporary measure is frequently referred to as a “records suspension”

Other evidence, which the court of appeals failed to view

in the light most favorable to Nanavati, showed widespread

agreement among other doctors practicing at the Hospital

(who were not Hospital agents) that “the Indian doctors are

overrunning us and we have to stop it” (4071a) and that “we

have to fight” foreign doctors coming into the area by

“bring|ing| in an American cardiologist” after getting rid of

Nanavati.6 4335a-36a. Moreover, certain staff physicians

agreed to limit referrals by Indian doctors of patients from the

Hospital’s emergency room to the intensive care unit. 4073a.

And one ER physician, who was a member of the medical

staff under a contract to operate the ER for the Hospital,

testified that he was told by another doctor, after referring a

patient to Nanavati, that he should keep these referrals “in the

family” He understood this meant not to refer patients to

Nanavati. A-110. Another ER physician testified that, as a

result of instructions from the director of the ER, he de-

creased the number of patients he referred to Nanavati.

A-112. Moreover, he testified that

there were nurses that felt the same way I did, that the

care by Dr. Nanavati was such that should be given to the

patients; and if the nurses were caught suggesting that

he was a better doctor, just as I was, that they were in

jeopardy of losing their job.

A-115. As a result of these conditions, this ER physician

ultimately decided to leave Burdette Tomlin. As he put it,

“When I had to stop suggesting who I felt was the best

cardiologist, then I felt ... that the quality was down, was

poor.” A-114.

Clearly, taken as a whole, this is sufficient evidence to

impute to the Hospital the conduct of its agents. The jury was

entitled to conclude that the drop in referrals to Nanavati was

the result of concerted conduct by physicians in the commu-

nity, and nurses and doctors in the Hospital's emergency

8. In fact, Nanavati was a naturalized United States citizen born in

India.

10

room. Particularly is this so in light of the efforts by Burdette

Tomlin to discredit Nanavati in the eyes of the County's medi-

cal community and the public generally.

The Third Circuit failed to apply the agency doctrine of

Mechanical Engineers to the conduct of the emergency room

personnel. The court acknowledged that individual staff doc-

tors (who were not agents of the Hospital) interacted in the

ER. 857 F.2d 118. But the court failed to recognize that,

because other physicians and nurses employed by the Hospi-

tal were part of the conspiracy with those independent physi-

cians, the conspiratorial conduct of the Hospital's agents is

imputed to the Hospital.

Where the decision of a court of appeals fails to apply,

misconstrues, or misconceives the law announced by this

Court in its opinions, the Court will grant the writ of certiorari

in order to review the court of appeals decision. See, e.g.,

United States v. Doe, 465 U.S. 605, 610 (1984); Lugar v.

Edmonson Oil Co., 457 U.S. 922, 926 (1982); Army & Air

Force Exchange Service v. Sheehan, 456 U.S. 728, 733 (1982);

Henderson v. Kibbe, 431 U.S. 145, 152 (1977).

This case also presents an issue of national importance in

the increasingly competitive health care environment. Will

the Court reinstate a jurv’s verdict for an individual physician

harmed by a boycott in which the only hospital in the county

actively participated? As the Court has explained in Mechan-

ical Engineers, “if ... |the Hospital] is civilly liable for the

antitrust violations of its agents acting with apparent author-

ity, it is much more likely that similar antitrust violations will

not occur in the future.” 456 U.S. at 572. On the other hand, if

the writ is not granted in this case, an appellate decision in

conflict with Mechanical Engineers will encourage conduct

which is not only anticompetitive but also contrary to the best

interests of patients throughout the country. Left standing,

the decision below will encourage hospitals to permit their

emplovees and agents to threaten and coerce physicians,

nurses, and patients into not recommending or obtaining the

1]

best treatment available.’ It will also discourage health care

professionals from reporting substandard—and, perhaps, life

threatening—medical practices. Particularly in health care,

then, our national commitment to competition unfettered by

unreasonable restraints has particular importance, because it

can assure the availability to the public of the highest level of

patient care.

2. The Judgment N.O.V. Upheld below Conflicts

with Continental Ore Co. v. Union Carbide Corp.

and Presents an Issue of Extreme National Im-

portance, Since the Jury Found a Sherman Act

Section One Violation, and there was a Patently

Unreasonable Exclusive Contract with Potential

Adverse Effects on Health Care Quality.

In Continental Ore Co. v. Union Carbide Corp., 370 U.S.

690, 699 (1962), the Court expressly held that antitrust plain-

tiffs “should be given the full benefit of their proof without

tightly compartmentalizing the various factual components

and wiping the slate clean after scrutiny of each.” Justice

White wrote for the Court, id., quoting American Tobacco Co.

v. United States, 147 F.2d 93, 106 (6th Cir. 1944), affd, 328

U.S. 781 (1946): .

... [T]he character and effect of a conspiracy are not to be

judged by dismembering it and viewing its separate

parts, but only by looking at it as a whole. United States v.

Patten, 226 U.S. 525, 544 ...; and in a case like the one

before us, the duty of the jury was to look at the whole

picture and not merely at the individual figures in it.

There, the Court reversed the judgment of the court of ap-

peals which had affirmed a jury verdict against the antitrust

plaintiff.

In evaluating the record in this case, the Third Circuit

9. Cf., Patrick v. Burget, 800 F.2d 1498, 1509 (9th Cir. 1986), rev'd, 486

U.S. —, 100 L.Ed. 2d 83, 108 S.Ct. 1658 (1988) (The conduct of the physi-

cian competitors was “shabby, unprincipled and unprofessional.” ).

12

failed to apply the approach clearly enunciated in Continental

Ore and violated the principle of taking the evidence as a

whole—and in the light most favorable to the antitrust plain-

tiff who prevailed at trial.!° Worse yet, the court mischarac-

terized the claims in the record. By holding that there was no

evidence!! from which the jury could have inferred that the

Hospital was part of a contract, combination, or conspiracy,

the court of appeals failed to consider the evidence of: (1) a

group boycott by physicians at the Hospital, (2) the Hospital's

participation in this boycott by, inter alia, entering into a

patently unreasonable exclusive contract, and (3) the ex-

clusive contract as an unreasonable contract itself.

The evidence of Hospital involvement in a contract, com-

bination, or conspiracy is manifest in the record. First of all,

the evidence showed that the Hospital sought out Komansky,

a pulmonary physician, with whom it contracted for the ex-

clusive provision of in-hospital stress tests and echocardio-

grams. Yet Komansky was not qualified to provide professional

interpretation of the echocardiograms, which are highly so-

phisticated cardiological tests that Nanavati was the only phy-

sician at the Hospital qualified and willing to interpret. More-

over, Komansky charged $200 for interpretation of

echocardiograms, although Nanavati had offered to perform

his more qualified service for $100. 4266a; 3132a. Thus, the

jurv knew that the Hospital was providing inferior service at

an inflated monopoly price. Therefore, when the jury found

there was a contract, combination, or conspiracy in restraint

of trade. the jury could have concluded in this record that the

Hospital-Komansky exclusive contract was just such a con-

tract.

Further, as a matter of collateral estoppel arising from the

10. Patrick v. Burget, 486 U.S. —, —n. 3, 100 L.Ed.2d 83, 90 n. 3, 108

S.Ct. 1658. 1661 n. 3 (1988).

11. Without explanation, 857 F.2d at 110 n. 14, the court below af-

firmed the exclusion of proffered evidence that an emergency room physi-

cian was told bv the director of the Hospital's ER that the doctor was refer-

ring too manv patients to Nanavati and that the ER director had discussed

this with Sorensen

13

prior state court litigation,!* it was stipulated by the parties

(and the jury was so instructed) that the decision of the

Hospital’s Board of Governors

to terminate Dr. Nanavati’s staff privileges was not the

result of a deliberative process. There never was an at-

tempt to reach an intelligent and reasonable judgment in

good faith upon all the facts presented. Instead, the ac-

tion of the Board in revoking Dr. Nanavati’s privileges was

a nullity from the beginning to the end. It was based on a

prior disposition or a pre-judgment to remove Dr.

Nanavati from the Medical Staff. His termination was a

foregone conclusion once the charges were brought

against him. As such, the Board of Governors abandoned

its responsibility as a fiduciary.

5000a-O0la. From this stipulation alone, the jury could have

inferred that the Hospital had, in entering into the exclusive

Komansky contract, acted intentionally to foreclose Nanavati

from the opportunity to provide highly skilled medical inter-

pretations of the echocardiogram tests performed at the Hos-

pital. Thus, in its quest to injure Nanavati, the Hospital was

willing to abandon its fiduciary duty to its patients to secure

the best possible medical care for them.!%

In addition, the jury could have determined from the

conclusively found bad faith of the Hospital that it acted in

furtherance of unlawful conduct of others. After all, conspir-

atorial conduct is rarely proved by direct evidence. See Inter-

state Circuit, Inc. v. United States, 306 U.S. 208, 223-28

(1939). Since there was no legitimate explanation for the

Hospital's conduct, the jury obviously could conclude—par-

ticularly in light of the admonition in Continental Ore that an

12. The state court findings in this regard were upheld by the Su-

preme Court of New Jersey. Nanavati v. Burdette Tomlin Memorial Hospital,

107 N.J. 240, 526 A.2d 697 (1987).

13. While Nanavati was clearly an injured target of the Hospital's ex-

clusive contract, the provision of quality health care to the consuming pub-

lic—the Hospital's patients—was also sacrificed by the Hospital through

the unreasonable contract.

14

antitrust plaintiffs evidence not be compartmentalized—that

the Hospital was attempting to join in and enhance the effects

of the physicians’ boycott by a total exclusion of Nanavati from

the only hospital facilities in the isolated County. The Court

has recent experience with such attempts by hospitals and

physicians. See Patrick v. Burget, 486 U.S. —, 100 L.Ed.2d

83, 108 S.Ct. 1658 (1988).

The Third Circuit nevertheless reached the opposite con-

clusion by misstating that “Nanavati does not maintain that

the Hospital took official action in furtherance of the boycott.”

857 F.2d at 119-120. Moreover, the court stated, id., at 120 n.

° 3:

_ ea.

Nanavati also maintains that an exclusive contract with

Dr. Henry Komansky for the provision of stress and echo-

cardiogram tests is sufficient to implicate the Hospital in

a conspiracy to exclude him, but Nanavati does not indi-

cate how the Komansky contract would demonstrate the

Hospital's involvement in either of the two anticom-

petitive acts sought to be proved at trial—the staff priv-

ileges revocation or the boycott of referrals.

These statements are contradicted by the record, as the

preceding discussion establishes. Further, Nanavati did argue

that the exclusive Komansky contract initiated by the Hospital

could be viewed by the jury, not only as evidence of the

Hospital's involvement in the boycott of Nanavati but also as a

separate contract in restraint of trade. Contrary to the appel-

late decision below, the district court itself understood

Nanavati to be asserting that the Komansky contract was a

contract in unreasonable restraint of trade and addressed it as

such. 645 F. Supp. at 1233. Indeed, the district court acknowl-

edged (id., italics supplied) that

Nanavati relies heavily, in support of his argument that

liability under the antitrust laws can properly be imposed

against the Hospital in this case, on the fact that the

Hospital contracted with a pulmonary specialist, Dr.

15

Henry J. Komansky, for the exclusive official reading and

interpretation of stress tests and echocardiograms.

The Court has frequently recognized that “a principal

purpose of the antitrust private cause of action ... is, of

course, to deter anticompetitive practices.” American Society

of Mechanical Engineers v. Hydrolevel Corp., 456 U.S. 556,

572 (1982). See also Pfizer, Inc. v. Government of India, 434

U.S. 308, 314 (1978); Reiter v. Sonotone Corp., 442 U.S. 330,

342-344 (1979). In light of that central purpose, it is impor-

tant for the Couri to grant this Petition in order to uphold a

jury verdict of antitrust violation arising out of an exclusive

services contract in the circumstances here.

Particularly is this so in light of the holding in Jefferson

Parish Hospital District No. 2 v. Hyde, 466 U.S. 2 (1984).

There the Court rejected a claim that an exclusive anesthe-

siology contract constituted an unlawful tying of that service

to the service for surgery at the hospital. The Court was

careful to note, however, that the contract could have been

unlawful in other circumstances. In footnote 51 to its opinion,

the Court observed (id. at 30; italics supplied):

Like any exclusive-requirements contract, this contract

could be unlawful if it foreclosed so much of the market

from penetration by Roux’s competitors as to unreasona-

bly restrain competition in the affected market, the mar-

ket for anesthesiological services.

This Petition presents, therefore, not only a failure by the

court below to adhere to the dictates of Continental Ore, but as

well the important question of federal law whether, in the

facts of this case, the exclusive contract and other conduct of

the Hospital were, as the jury determined, a violation of

Sherman Act Section 1. The legality of the exclusive contract

here is an important public matter of national significance,

which goes well beyond. the interests of the parties in this

case. As explained, the Hospital sacrificed quality health care

16

to isolate a qualified physician from patients. Health care

services throughout the nation are threatened if that kind of

conduct is not reviewed and held unlawful.

3. Entitlement, as a Matter of Law, to an Award of

at Least Nominal Damages and Attorney’s Fees

and Costs is an Important Issue of National

Antitrust Policy where the Plaintiff has Proved a

Violation of the Sherman Act and Causation of

Injury.

As previously noted, the record in this matter is replete

with evidence that numerous entities (including the Hospital

and individual physicians) acted with the Executive Commit-

tee to harm Nanavati in violation of Section 1. The jury, upon

consideration of this evidence found, inter alia, that the Exec-

utive Committee was a combination in unreasonable restraint

on interstate commerce, thereby injuring Nanavati in his

business or property. 857 F.2d at 115-16. Based upon these

findings the jury awarded Nanavati single damages of

$350,000.

In affirming the district court's entry of judgment n.o.v.

on petitioner's antitrust claims, the court of appeals concluded

that there was an unlawful combination, but Nanavati had

failed to prove any damages flowing from the five day revoca-

tion of his staff privileges by the Executive Committee. Id., at

121-22. The court based this conclusion upon its findings of

no “quantified” evidence of economic loss suffered by

Nanavati during this period and no evidence of long term

damages resulting from the revocation. Id., at 122. In so

ruling, the court either ignored or misapprehended the fac-

tual record which established that Nanavati sustained signifi-

cant damages, including lost revenue and the expenditure of

legal fees, as a result of the improper revocation. See A-111,

A-116, A-117. The jurv’s findings on this issue were clear and

unambiguous and, consistent with Nanavati’s rights under

the Seventh Amendment, entitled to proper deference. See

Auwood v. Harry Brandt Booking Office, Inc., 850 F.2d 884,

890-91 (2nd Cir. 1988).

17

By failing to give due consideration to the evidence of

damages sustained by petitioner and proper deference to the ©

jury's findings based upon this evidence, the court below

erred in its determination to affirm the district court's entry of

judgment n.o.v. on Nanavati’s antitrust claim.

Moreover, in reaching its conclusion the court apparently

failed to consider the well-established distinction between an

antitrust plaintiffs burden of proving the fact that he suffered

injury, and the amount of damage sustained. See Zenith Ra-

dio Corp. v. Hazeltine Research, Inc., 395 U.S. 100 (1969);

Story Parchment Co. v. Paterson Parchment Paper Co., 282

U.S. 555 (1931). “[Plaintiffs] burden of proving the fact of

damage under § 4 of the Clayton Act is satisfied by its proof of

some damage flowing from the unlawful conspiracy; inquiry

beyond this minimum point goes only to the amount and not

the fact of damage.” Zenith Radio, 395 U.S. at 114 n.9 (italics

in original). Given the difficulty of ascertaining what a “plain-

tiffs situation would have been in the absence of the defen-

dant’s antitrust violation,” J. Truett Payne Co. v. Chrysier

Motors Corp., 451 U.S. 557, 566 (1981), this Court has held

that exact proof of the amount of damages is not required. Id.

Rather, an antitrust plaintiff must only provide evidence suffi-

cient to support a “just and reasonable estimate” of damages.

Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 264 (1946).

Accordingly, petitioner submits that even if his damages

were not sufficiently “quantified,” in view of the jury's deter-

mination that he was injured by defendants’ violation of the

antitrust laws, he is entitled—at a minimum—to an award of

nominal damages.

Awards of nominal damages in antitrust actions have

been routinely approved by federal courts. See e.g., U.S. Foot-

ball League v. National Football League, 842 F.2d 1335, 1377

(2nd Cir. 1988); Rosebrough Monument Co. v. Memorial Park

Cemetery Ass’n., 666 F.2d 1130, 1147 (8th Cir. 1981), cert.

denied, 457 U.S. 1111 (1982); Knutson v. Daily Review, Inc.,

468 F. Supp. 226 (N.D. Cal. 1979), aff'd, 664 F.2d 1120 (9th

Cir. 1981). Ordinarily, a finding of the fact of damage caused

by a violation of the antitrust laws “necessitates an assess-

18

ment of some amount of damages.” General Leaseways v. Nat’l

Truck Leasing Ass’n, 830 F.2d 716, 729 (7th Cir. 1987). Where

a plaintiff proves that he has been injured but fails to satisfy

his burden of proving the amount of damage sustained

(which is apparently the basis of the court's decision below),

nominal damages should be awarded. See U.S. Football

League v. National Football League, 842 F.2d at 1377 (award of

nominal damages appropriate after fact of damage was found

but jury was unable to distinguish amount of losses caused by

defendant's misconduct from amount caused by other fac-

tors); Rosebrough Monument, 666 F.2d at 1146-47 (finding as

to fact of damage caused by tying arrangement reversed and

case remanded to district court with directions to award plain-

tiff nominal damages in amount of $3). Cf. General Lease-

ways, 830 F.2d at 729 (affirmative defense of equal fault could

preclude any monetary recovery despite proof of injury).

The issue of Nanavati’s entitlement to an award of nomi-

nai damages is one of great import. Even though the court

below agreed that he proved an antitrust combination ex-

isted'4 and even though he presented unequivocal evidence of

harm resulting to him,!> at the present time, no independent

statutory basis for an award of attorney's fees exists, contrary

to the dictates of Congress. Section 4 of the Clayton Act

provides that a person injured as a result of conduct forbidden

by the antitrust laws “shall recover threefold the damages by

him sustained, and the cost of suit, including a reasonable

attorneys fee.” 15 U.S.C. § 15. Because recovery of treble

damages is a prerequisite to an award of attorney's fees under

Section 4, Byram Concretanks, Inc. v. Warren Concrete Prod.

14. The Third Circuit found “that the Executive Committee is ... a

combination, at least with regard to the revocation of Nanavati’s staff priv-

ileges.” 857 F.2d at 118.

15. The evidence showed that Nanavati, as a result of the combination,

was precluded from reading electrocardiograms on at least one day, where

he normally read 25-30 EKG’s per day and earned $5 apiece for such read-

ings (A-109), and that he limited the impact of the combination only

through the expensive resort to the state court which entered an injunction

now made permanent. A-107, A-111, A-116.

NS. Sa_a_a——eIImma

19

Co. of N.J., 374 F.2d 649, 651 (3d Cir. 1967), Nanavati is

precluded from receiving attorney's fees pursuant to this pro-

vision. Additionally, since injunctive relief in this action pres-

ently appears to be moot,'® there is similarly no basis for an

award of attorney's fees under Section 16 of the Clayton Act,

15 U.S.C. § 26.

While the recovery of only nominal damages may be

considered as a factor in determining the amount of attorney's

fees to be awarded, Home Placement Service v. Providence

Journal Co., 819 F.2d 1199, 1210 (1st Cir. 1987), once treble

damages are recovered by an antitrust plaintiff, the award of

reasonable attorney's fees is mandatory. See Baughman v.

Cooper-Jarrett, Inc., 530 F.2d 529, 531 n.2 (3d Cir.), cert.

denied, 429 U.S. 825 (1976).

The precise issue of an antitrust plaintiffs entitlement to

recovery of nominal damages, and hence of attorney's fees,

has not been addressed or decided by this Court. However, in

other contexts the Court has indicated that an award of at

least a nominal sum is appropriate. For example, in Carey v.

Piphus, 435 U.S. 247, 266 (1978), an action seeking damages

under Section 1983 of the Civil Rights Acts, 42 U.S.C. 1983,

the Court held that a denial of procedural due process should

be actionable for nominal damages without proof of actual

injury. In reaching this conclusion, the Court considered: the

nature of this right, noting that it is “absolute”; the “impor-

tance to organized society” that it be observed; and the pur-

pose of Section 1983, the statutory provision under which

plaintiffs sought to vindicate this right. With respect to the

latter consideration, the Court, after initially finding that

“the basic purpose” of § 1983 damages is “to compensate

persons for injuries that are caused by the deprivation of

constitutional -rights;” id., at 254, nevertheless went on to

recognize:

16. Because an order permanently enjoining Nanavati’s dismissal was

finally entered in the prior state court proceedings, A-107, and because of

the limited nature of the antitrust violation found by the court below, it

seems impractical for him to seek injunctive relief in the present action.

20

In order to further the purpose of § 1983, the rules

governing compensation for injuries caused by the depri-

vation of constitutional rights should be tailored to the

interests protected by the particular right in question—

just as the common-law rules of damages themselves

were defined by the interests protected in the various

branches of tort law.

Id., at 258-59. See also Memphis Community School Dist. v.

Stachura, 477 U.S. 299 (1986).

Applying this analysis to the antitrust context leads inex-

orably to the conclusion that an award of nominal damages

should be permitted where a plaintiff has proved the fact but

not the amount of damage sustained; moreover, such an

award should support the recovery of attorney's fees.

The Court has acknowledged that the Sherman Act, al-

though obviously not afforded explicit constitutional protec-

tion, is a “charter of freedom” which “has a generality and

adaptability comparable to that found in constitutional provi-

sions.” Appalachian Coals, Inc. v. United States, 288 U.S. 344,

359-60 (1933). Congress intended that the antitrust laws be

given broad, remedial effect. See Pfizer, Inc. v. Government of

India, 434 U.S. 308, 312-13 (1978). In establishing a private

right of action against antitrust violations, Congress sought to

deter anticompetitive practices. Id., at 314. To this end it

permitted the recovery of treble damages in actions brought

under Section 4. “Congress created the treble-damages rem-

edy ... precisely for the purpose of encouraging private chal-

lenges to antitrust violations. These private suits provide a

significant supplement to the limited resources available to

the Department of Justice for enforcing the antitrust laws and

deterring violations.” Reiter v. Sonotone Corp., 442 U.S. 330,

344 (1979) (italics in original). Moreover, the Court has noted

that treble damages “make the remedy meaningful by coun-

terbalancing ‘the difficulty of maintaining a private suit’”

under the antitrust laws. Brunswick Corp. v. Pueblo Bowl-O-

Mat, Inc., 429 U.S. 477, 486 n. 10 (1977), quoting 21 Cong.

Rec. 2456 (1890) (remarks of Sen. Sherman).

2]

Given the fundamental nature of the rights granted by

the antitrust laws, the difficultv and expense inherent in the

prosecution of actions seeking redress for antitrust violations,

and the pivotal role that awards of reasonable attorney's fees

play in enabling parties to vindicate these important rights, a

clear pronouncement on this issue—by this Court—is sorely

needed.

CONCLUSION

For these reasons, this Petition for Writ of Certiorari

should be granted.

Respectfully submitted,

DAVID H. WEINSTEIN*

WILLIAM B LYTTON

DOUGLAS A. ABRAHAMS

KOHN, SAVETT, KLEIN & GRAF, P.C.

1101 Market Street, Suite 2400

Philadelphia, PA 19107

(215) 238-1700

Attorneys for Petitioner

Suketu H. Nanavati, M.D.

*Counsel of Record