Saint Alphonsus Medical Center - Nampa et al v St Luke's Health System Ltd

Filing 230

MEMORANDUM DECISION AND ORDER. NOW THEREFORE IT IS HEREBY ORDERED, that the motion for partial summary judgment 144 is GRANTED IN PART AND DENIED IN PART. It is granted to the extent it seeks to dismiss the claim for damages by the private plaint iffs St. Al's Health System Inc., St. Al's Regional Medical Center Inc., St. Al's Medical Center Nampa, Inc., and Treasure Valley Hospital Limited Partnership contained in the Amended Complaint (docket no. 63) at 153(C). It is denied in all other respects. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (st)

UNITED STATES DISTRICT COURT
IN THE DISTRICT OF IDAHO
SAINT ALPHONSUS MEDICAL CENTER NAMPA, INC., TREASURE VALLEY
HOSPITAL LIMITED PARTNERSHIP,
Case No. 1:12-CV-00560-BLW (Lead
SAINT ALPHONSUS HEALTH SYSTEM,
Case)
INC., AND SAINT ALPHONSUS
REGIONAL MEDICAL CENTER, INC.
MEMORANDUM DECISION AND
ORDER
Plaintiffs,
v.
ST. LUKE’S HEALTH SYSTEM, LTD.
Defendant.
FEDERAL TRADE COMMISSION; STATE
OF IDAHO

Case No. 1:13-CV-00116-BLW

Plaintiffs,
v.
ST. LUKE’S HEALTH SYSTEM, LTD.;
SALTZER MEDICAL GROUP, P.A.
Defendants.

INTRODUCTION
The Court has before it St. Luke’s motion for partial summary judgment. The
Court heard oral argument on August 26, 2013, and took the motion under advisement.
For the reasons expressed below, the Court will grant the motion in part and deny it in
part.

ANALYSIS
St. Luke’s motion seeks summary judgment on the claim for damages made by the
private plaintiffs, consisting of St. Al’s Health System Inc., St. Al’s Regional Medical
Center Inc., St. Al’s Medical Center – Nampa, Inc., and Treasure Valley Hospital
Limited Partnership. The private plaintiffs responded that they were dropping their claim
for damages. The Court will accordingly grant St. Luke’s motion in part, dismissing the
claim for damages made by the private plaintiffs contained in the Amended Complaint.
See Amended Complaint (Dkt. No. 63) at ¶ 153(C).
St. Luke’s motion also seeks summary judgment on “any claim by the private
plaintiffs that is premised on an increase in prices.” See Reply Brief (Dkt. No. 153) at p.
10. The private plaintiffs respond that they are not complaining about “the harm to them
from increased prices.” See Response Brief (Dkt. No. 151) at p. 5. Instead, they are
complaining “about the harm to them from exclusionary behavior.” Id. at pp. 5-6. They
argue that increased prices are “manifestations of market power” and that the “presence
of [increased prices] is evidence of the power to engage in [exclusionary behavior].” Id.
at p. 7. The private plaintiffs point to evidence of St. Luke’s past acquisitions that led to
price increases, and the testimony of their expert economist Deborah Haas-Wilson that
these price increases are evidence of exclusionary conduct. St. Luke’s replies that
evidence of a price rise following a past acquisition is irrelevant without a showing that
the price rose to a supracompetitive level in geographic and product markets that were
identical to the markets at issue here.

The back-and-forth of these arguments transformed St. Luke’s motion for partial
summary judgment into a motion in limine seeking to exclude evidence of price
increases. The issue is whether evidence of past – or potential future – price increases
could be relevant in any context.
To pursue their claim under § 1 of the Sherman Act, the private plaintiffs must
show, among other things, that St. Luke’s will have sufficient market power to control
prices or exclude competition. See Paladin Associates, Inc. v. Montana Power Co., 328
F.3d 1145, 1158 (9th Cir. 2003) (affirming dismissal of claim under § 1 of the Sherman
Act where plaintiffs produced no evidence that defendant had “the power to control
prices or exclude competition”). St. Luke’s ability to “control prices” has direct
relevance to its market power, a crucial element of St. Al’s claim under § 1 of the
Sherman Act.
St. Luke’s argues that evidence of a past acquisition that led to higher prices is
irrelevant in the absence of foundational proof that St. Luke’s was able to maintain prices
at a supracompetitive level in geographic and product markets identical to the markets at
issue here. See 2B Phillip E. Areeda, et al., Antitrust Law § 501, at p. 111 (3d ed.2007)
(defining monopoly power to include the ability to control prices “for a significant period
without erosion by new entry or expansion”). Assuming that to be true, the Court cannot,
at this stage of the proceedings, hold that the private plaintiffs will be unable to lay that
foundation – the Court must wait for trial to determine if the proper foundation can be
laid.

The Court need not, and does not, resolve here whether St. Luke’s assertion of the
foundational requirements for the admission of prior acquisition evidence is a correct
statement of the law. Nevertheless, at the very least, St. Al’s must lay a foundation that
the geographic and product markets involved in the prior acquisition are sufficiently
similar to the markets at issue here to make evidence of the prior acquisition relevant to
these proceedings. Moreover, the admissibility of this foundational proof depends in part
on whether it threatens to become a “trial within a trial” that causes undue delay. See
United States v. Espinoza–Baza, 647 F.3d 1182, 1190 (9th Cir.2011) (holding that under
some circumstances, Rule 403 authorizes the exclusion of evidence that would cause an
“undue delay” in the proceedings). Ultimately, however, the Court will not rule on the
issue until it has seen the evidence at trial.
ORDER
In accordance with the Memorandum Decision set forth above,
NOW THEREFORE IT IS HEREBY ORDERED, that the motion for partial
summary judgment (docket no. 144) is GRANTED IN PART AND DENIED IN PART.
It is granted to the extent it seeks to dismiss the claim for damages by the private
plaintiffs – St. Al’s Health System Inc., St. Al’s Regional Medical Center Inc., St. Al’s
Medical Center – Nampa, Inc., and Treasure Valley Hospital Limited Partnership –
contained in the Amended Complaint (docket no. 63) at ¶ 153(C). It is denied in all other
respects.

DATED: September 24, 2013

_________________________
B. Lynn Winmill
Chief Judge
United States District Court