United States et al v. W.A. Foote Memorial Hospital et al

Filing 114

ORDER Regarding Ongoing Jurisdiction. Signed by District Judge Judith E. Levy. (SBur)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
United States of America and
State of Michigan,
Case No. 15-cv-12311
Plaintiffs,
Judith E. Levy
United States District Judge

v.
W.A. Foote Memorial Hospital,
d/b/a Allegiance Health,

Mag. Judge David R. Grand

Defendant.
________________________________/
OPINION REGARDING ONGOING JURISDICTION
On June 25, 2015, the United States of America and the State of
Michigan brought a civil antitrust action to enjoin allegedly unlawful
agreements by defendants Hillsdale Community Health Center
(“Hillsdale”), W.A. Foote Memorial Hospital, d/b/a Allegiance Health
(“Allegiance”), Community Health Center of Branch County (“Branch”),
and ProMedica Health System, Inc. (“ProMedica”). (Dkt. 1.) Plaintiffs
allege that the agreements are “naked restraints of trade that are per se
unlawful under Section 1 of the Sherman Act, 15 U.S.C. § 1, and Section
2 of the Michigan Antitrust Reform Act, MCL 445.772.” (Id. at 3.)

On October 21, 2015, the Court entered an order dismissing
defendants Hillsdale, Branch, and ProMedica after those parties
(“Settling Defendants”) entered into a settlement agreement (“2015
Agreement”).

(Dkt. 37.)

The 2015 Agreement required the Settling

Defendants to “agree to undertake certain actions and refrain from
certain conduct for the purpose of remedying the anticompetitive effects
alleged in the Complaint.” (Dkt. 36 at 2.) In particular, the Settling
Defendants were required to end any and all agreements with other
providers that “prohibit[] or limit[] marketing” or “allocate[] any
geographic market or territory between or among the Settling
Defendant[s] and any other provider[s].” (Id. at 7.) Defendant Allegiance
did not enter into the 2015 Agreement, and remains the only defendant
in this case.
I.

Background

In their complaint, plaintiffs request a declaratory judgment that
“defendants’

agreements

limiting

competition

constitute

illegal

restraints of interstate trade” (Dkt. 1 at 13), and prospective relief
including an injunction precluding “defendants and their members,
officers, agents, and employees from continuing or renewing in any
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manner the conduct alleged herein or from engaging in any other
conduct, agreement, or other arrangement having the same effect as the
alleged violations” (Id. at 13–14). They also seek a requirement for
defendants “to institute a comprehensive antitrust compliance program
to ensure that defendants do not establish any similar agreements and
that defendants’ members, officers, agents, and employees are fully
informed of the application of the antitrust laws to hospital restrictions
on competition.” (Id. at 14.)
The complaint underlying the requested relief derives from
allegations of an anti-competitive agreement between Allegiance and
former co-defendant Hillsdale. Because the 2015 Settlement required
Hillsdale to end any agreement to limit marketing, including any
agreement with Allegiance, the Court was concerned that there may no
longer be an ongoing controversy at issue in the case. On July 20, 2017,
the Court ordered the parties to submit supplemental briefing on the
question of whether there is a live case or controversy before the Court.
(Dkt. 107.)
In their supplemental brief, plaintiffs argue that (1) the fact that
Hillsdale has ended its agreement with Allegiance does not deprive the
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Court of jurisdiction, as it may still grant effective relief; and (2)
extending the reach of the mootness doctrine to cases like this one would
have negative policy consequences, including encouraging defendants to
hold out from settling. (Dkt. 108 at 6.)
Defendant argues that “to the extent that the alleged unlawful
conduct . . . ever occurred (which Allegiance denies), it has long since
ceased, and is unlikely to occur in the future.” (Dkt. 109 at 1.) Defendant
further argues that “[e]ven if the Court chooses to retain jurisdiction over
the case at this time, the prospective relief requested by plaintiffs is
unnecessary and unwarranted.” (Id. at 10.)
The Court heard oral argument on the question on October 15,
2017. For the reasons set forth below, the Court concludes that it retains
jurisdiction in this case.
II. Legal Standard
Federal judicial power is restricted by the Constitution to actual
cases or controversies. Spokeo, Inc. v. Robbins, 136 S.Ct. 1540, 1547
(2016). The mootness doctrine arises from this Article III requirement
because an action that is moot cannot be considered a live case or
controversy. “[A] case is moot when the issues presented are no longer
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‘live’ or the parties lack a legally cognizable interest in the outcome.” Los
Angeles County v. Davis, 440 U.S. 625, 631 (1979) (quoting Powell v.
McCormack, 395 U.S. 486, 496 (1969)).

Courts “have a ‘continuing

obligation’ to enquire [sic] whether there is a present controversy as to
which effective relief can be granted.” Coal. for Gov’t Procurement v. Fed.
Prison Indus., 365 F.3d 435, 458 (6th Cir. 2004) (quoting Southwest
Williamson County Cmty. Assoc. v. Slater, 243 F.3d 270, 276 (6th Cir.
2001)).
Federal courts have broad authority to order equitable relief in
antitrust cases. Int’l Salt Co. v. United States, 332 U.S. 392, 400-01
(1947) (District Courts “are invested with large discretion to model their
judgments to fit the exigencies of the particular case.”). The goal of an
equitable antitrust suit is neither to simply punish past behavior nor to
merely end specific illegal practices. Id. at 401. The goal is to “effectively
pry open to competition a market that has been closed by defendants’
illegal restraints.” Id.
Courts have a wide range of means at their disposal to further this
goal. Fed. Trade Comm’n v. Nat’l Lead Co., 352 U.S. 419, 430 (1957)
(Courts are “obliged not only to suppress the unlawful practice but to take
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such reasonable action as is calculated to preclude the revival of the
illegal practices.”) Finally, “the mootness doctrine inquires into a court’s
authority to order a remedy, not the likelihood or appropriateness of that
remedy under particular circumstances.

In re Androgel Antitrust

Litigation, 2017 WL 2404941 at *4 (11th Cir. 2017).
III. Analysis
Plaintiffs argue first that (a) Allegiance’s conduct is ongoing, but (b)
even if it were not, cessation of unlawful conduct prior to final judgment
does not moot a case. (Dkt. 108 at 6.) Plaintiffs concede that the 2015
Settlement resulted in Hillsdale agreeing to “cease any conduct pursuant
to the particular agreement with Allegiance alleged in the Complaint.”
Id. They argue, however, that Allegiance has not altered its behavior as
it relates to marketing in Hillsdale County. Id. Finally, plaintiffs assert
that “even if Allegiance were to claim to have voluntarily ceased its
anticompetitive conduct, this would not moot the case.” (Id.)
In the present case, plaintiffs’ complaint relates to the illegality of
various agreements between hospitals to limit their marketing across
geographic boundaries. After the 2015 Settlement, however, there is no
longer an existing agreement between defendant Allegiance and any
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other previous co-defendant to limit marketing activities in specific
geographic regions. Without an underlying anti-competitive agreement,
ongoing unilateral actions (i.e., unilateral marketing decisions) by
Allegiance are not statutory violations.
Plaintiffs argue that (a) Allegiance Health’s extensive history of
executing its marketing plans based on agreements with local
competitors, (b) its refusal to admit that any of its previous marketing
activity was illegal anticompetitive behavior, and (c) its affirmations that
it intends to continue with certain limited marketing strategies is
sufficient to give the Court authority to issue injunctive relief “in order
to cure the ill effects of the illegal conduct.” (Dkt. 108 at 6–7.) However,
in the case plaintiffs cite, this proposition applies only “upon a finding of
a conspiracy in restraint of trade.” United States v. U.S. Gypsum Co.,
340 U.S. 76, 88 (1950). The fact that the Court would have the authority
upon a finding of conspiracy to order prospective relief aimed at curing
the negative effects of earlier illegal behavior does not answer the
question of whether the Court has jurisdiction to make the finding of
conspiracy in the first place.

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Plaintiffs’ stronger argument is that “th[e] Court may still grant
effective relief.” (Dkt. 108 at 10.) “A case becomes moot only when it is
impossible for a court to grant any effectual relief whatever to the
prevailing party.” Decker v. Nw. Envtl. Def. Ctr, 568 U.S. 597 (2013)
(quoting Knox v. Serv. Emps. Int’l, 567 U.S. 298, 307 (2012)). “As long as
the parties have a concrete interest, however small, in the outcome of the
litigation, the case is not moot.” Knox, 567 U.S. at 307-08 (quoting Ellis
v. Railway Clerks, 466 U.S. 435, 442 (1984)).
In this case, as is common in antitrust cases, plaintiffs have made
clear that their interest in the case is broader than the “particular
agreement between Allegiance and [Hillsdale].”

(Dkt. 108 at 10.)

Plaintiffs’ interest is ensuring a competitive market for health services
in and around Hillsdale County.

Plaintiffs identified four hospitals

allegedly involved in anticompetitive agreements to limit marketing and
outreach in a particular geographic region. Three of those hospitals
voluntarily entered into a settlement agreement that imposes (a) broad
limitations on future opportunities to enter into such agreements and (b)
the appointment of an independent compliance monitor.

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As plaintiffs argue, “the consent decree entered against [Hillsdale]
does not provide critical components of the relief that Plaintiffs seek
against Allegiance…[and] this Court has the power to grant an injunction
that provides effective relief beyond what is already covered by the
consent decree.” (Id. at 11.) If the Court finds an antitrust violation, it
could (a) enter an injunction prohibiting Allegiance Health from entering
into or maintaining any agreement to limit marketing in particular
geographic areas, or (b) enter an order requiring the appointment of an
independent antitrust compliance officer, or (c) authorize the U.S.
Department of Justice to conduct intermittent compliance inspections.
The fact that there remains “meaningful relief” for the court to fashion
indicates that the court retains jurisdiction to decide whether or not it
would be appropriate to do so.
As defendant highlights in its supplemental brief, “[a] case might
become moot if subsequent events made it absolutely clear that the
allegedly wrongful behavior could not reasonably be expected to recur.”
United States v. Concentrated Phosphate Exp. Ass’n, Inc., 393 U.S. 199,
203–04 (1968) (emphasis added). In this case, defendant argues (1) that
the allegedly unlawful conduct has ceased, and (2) there is no reasonable
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expectation that an unlawful agreement will occur in the future. (Dkt.
109 at 2 and 5.)
“While a suit to enjoin future illegal action may be moot if it is
certain that such violations cannot recur, it is likewise well-established
that discontinuance of past illegal practices does not necessarily render
moot a controversy over an injunction against similar future actions.”
Rubbermaid, Inc. v. F.T.C., 575 F.2d 1169, 1172 (6th Cir. 1978). “The
crucial question, of course, is to what degree one can be certain that the
same or related practices will not recur.” Id. (emphasis added).
With respect to defendant’s argument that the allegedly unlawful
conduct has ceased, given the 2015 Agreement, defendant does not have
and cannot enter into an anti-competitive agreement with Hillsdale or
any of the other Settling Defendants. However, this is not sufficient to
convince the Court that Allegiance is certain not to enter into any related
agreements in the future.
Given this lack of certainty, the mootness doctrine is not applicable
to this case at this time. The Court retains jurisdiction, and leaves

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plaintiffs to their proofs at trial.
IT IS SO ORDERED.

Dated: December 20, 2017
Ann Arbor, Michigan

s/Judith E. Levy
JUDITH E. LEVY
United States District Judge

CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served
upon counsel of record and any unrepresented parties via the Court’s
ECF System to their respective email or First Class U.S. mail addresses
disclosed on the Notice of Electronic Filing on December 20, 2017.
s/Shawna Burns
SHAWNA BURNS
Case Manager

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