United States District Court, W.D. Washington, Tacoma
ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY
JUDGMENT AND GRANTING IN PART AND DENYING IN PART
PLAINTIFF'S MOTION TO STRIKE PLEADINGS
BENJAMIN H. SETTLE UNITED STATES DISTRICT JUDGE.
matter comes before the Court on the State of
Washington's (the “State”) motion for partial
summary judgment (Dkts. 48, 49) and its motion to strike
certain affirmative defenses from Defendants' pleadings
(Dkt. 105). The Court has considered the pleadings filed in
support of and in opposition to the motions and the remainder
of the file and hereby (1) denies the State's motion for
partial summary judgment and (2) grants in part and denies in
part the State's motion to strike pleadings.
early September 2016, Defendants Franciscan Health System,
Franciscan Medical Group (collectively
“Franciscan”), and The Doctors Clinic
(“TDC”) entered into a series of agreements. The
State claims that Defendants are separate economic entities
that entered into an agreement to jointly negotiate the
prices for the services they provide to the public. The State
asserts that these agreements establish a horizontal price
fixing agreement that is per se illegal or otherwise
constitutes an unreasonable restraint on trade in violation
of 15 U.S.C. § 1.
Motion for Partial Summary Judgment
State has moved for partial summary judgment on a single
element of its claim under 15 U.S.C. § 1. Summary
judgment is proper only if the pleadings, the discovery and
disclosure materials on file, and any affidavits show that
there is no genuine issue as to any material fact and that
the movant is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(c). The moving party is entitled to judgment
as a matter of law when the nonmoving party fails to make a
sufficient showing on an essential element of a claim in the
case on which the nonmoving party has the burden of proof.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
There is no genuine issue of fact for trial where the record,
taken as a whole, could not lead a rational trier of fact to
find for the nonmoving party. Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)
(nonmoving party must present specific, significant probative
evidence, not simply “some metaphysical doubt”).
See also Fed. R. Civ. P. 56(e). Conversely, a
genuine dispute over a material fact exists if there is
sufficient evidence supporting the claimed factual dispute,
requiring a judge or jury to resolve the differing versions
of the truth. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 253 (1986); T.W. Elec. Serv., Inc. v. Pac.
Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.
determination of the existence of a material fact is often a
close question. The Court must consider the substantive
evidentiary burden that the nonmoving party must meet at
trial-e.g., a preponderance of the evidence in most civil
cases. Anderson, 477 U.S. at 254; T.W. Elec.
Serv., Inc., 809 F.2d at 630. The Court must resolve any
factual issues of controversy in favor of the nonmoving party
only when the facts specifically attested by that party
contradict facts specifically attested by the moving party.
The nonmoving party may not merely state that it will
discredit the moving party's evidence at trial, in the
hopes that evidence can be developed at trial to support the
claim. T.W. Elec. Serv., Inc., 809 F.2d at 630
(relying on Anderson, 477 U.S. at 255). Conclusory,
nonspecific statements in affidavits are not sufficient, and
missing facts will not be presumed. Lujan v. Nat'l
Wildlife Fed'n, 497 U.S. 871, 888-89 (1990).
issue presently before the Court on summary judgment is
whether the State is entitled to a finding as a matter of law
that Franciscan and TDC are capable of engaging in a
“concerted action” to negotiate reimbursement
rates as to qualify as a contract, combination, or conspiracy
subject to 15 U.S.C. § 1, or whether they might
constitute a single economic unit shielded from scrutiny
under § 1. The Court concludes that there remain genuine
issues of material fact in this case-whether TDC and
Franciscan are separate decision-makers whose conduct is
subject to analysis under 15 U.S.C. § 1 is an issue that
must be decided at trial.
1 of the Sherman Act, 15 U.S.C. § 1, prohibits
“[e]very contract, combination . . . or conspiracy, in
restraint of trade or commerce among the several
States.” Allied Orthopedic Appliances Inc. v. Tyco
Health Care Grp. LP, 592 F.3d 991, 996 (9th Cir. 2010).
In order to state a claim, plaintiff must allege that the
defendant (1) engaged in a contract, combination, or
conspiracy (2) that unreasonably restrained trade under
either a per se or rule of reason analysis (3) in a
particular market. American Ad Management, Inc.
v. GTE Corp., 92 F.3d 781, 784 (9th Cir. 1996).
The meaning of the term “contract, combination . . . or
conspiracy” is informed by the “‘basic
distinction'” in the Sherman Act
“‘between concerted and independent
action'” that distinguishes § 1 of the Sherman
Act from § 2. Copperweld Corp. v. Indep. Tube
Corp., 467 U.S. 752, 767 (1984) (quoting Monsanto
Co. v. Spray-Rite Service Corp., 465 U.S. 752, 761
(1984)). Section 1 applies only to concerted action that
Am. Needle, Inc. v. Nat'l Football League, 560
U.S. 183, 190 (2010). Therefore, in assessing the first
element of a valid 15 U.S.C. § 1 claim, “[t]he key
is whether the alleged ‘contract, combination . . ., or
conspiracy' is concerted action-that is, whether it joins
together separate decisionmakers.” Id. at 195.
“Section 1, like the tango, requires multiplicity: A
company cannot conspire with itself.” Freeman v.
San Diego Ass'n of Realtors, 322 F.3d 1133, 1147
(9th Cir. 2003) (citing Copperweld Corp. v. Independence
Tube Corp., 467 U.S. 752, 769 (1984)). Accordingly,
“[i]f two erstwhile competitors combine to become a
single economic entity-by merger or acquisition, for example-
the act of combination may violate the antitrust laws, but
their subsequent relations are generally immune from section
1.” Id. This requirement of multiplicity for
the purposes of finding a §1 contract, combination or
conspiracy is sometimes referred to as the
“single-entity rule.” See Freeman, 322
F.3d at 1147.
corporate entities are sufficiently independent requires an
examination of the particular facts of each case.”
Williams v. I.B. Fischer Nevada, 999 F.2d 445, 447
(9th Cir. 1993). The Ninth Circuit has recognized several
scenarios in which the single-entity rule precludes liability
under 15 U.S.C. § 1:
It applies to a company and its officers, employees and
wholly owned subsidiaries. It also applies to subsidiaries
controlled by a common parent, firms owned by the same
person, and a firm owned by a subset of the owners of
another. It applies to principal-agent relationships and to
partnerships or other joint arrangements in which persons who
would otherwise be competitors pool their capital and share
the risks of loss as well as the opportunities for profit.
The theme in these cases is economic unity. Where
there is substantial common ownership, a fiduciary obligation
to act for another entity's ...