In an unpublished opinion, designated as "not precedential," the Third Circuit recently affirmed the District Court’s dismissal pursuant to the Federal Rule of Civil Procedure 12(b)(6) of antitrust claims that were predicated on a doctor’s asserted economic retaliation against a nurse after she rebuffed his sexual advances. Stark v. Ear Nose & Throat Specialists of Northwestern Penn., No. 05-2345, 2006 WL 1371571 (3rd Cir. May 19, 2006). The plaintiffs were Beata and Norman Stark ("Stark"), and Beata Clinical Research Services ("BCRS"), who provided administrative and contractual support services to drug manufacturers and drug research firms. Id. at *1, *4. Defendants, Dr. Anon, his company, Ear Nose & Throat Specialists of Northwestern Penn. ("ENT"), and Robert Budacki, who was one of ENT’s employees, engaged in drug and medical research in the field of ear, nose and throat. Id. The relationship between the defendants and Plaintiffs was essentially one of contractor and subcontractor. Id. at *2.
Plaintiffs alleged that, "[i]n retaliation for [Beata] Stark rebuffing Anon,] ‘Plaintiff [was told she] would no longer have access to the ENT facilities without a monitor,’ and one of Anon’s colleagues said ‘he was changing the locks at ENT.’" Id. at *1. The complaint also alleged that "Anon launched at least one research study in competition with [BCRS]" and that "Beginning in March 2003, Anon and/or ENT and/or Budacki and/or others undertook to injure [Stark] by combining and/or conspiring to restrain interstate commerce in the NW Region [of Pennsylvania] and/or by combining and/or conspiring and/or attempt to monopolize the drug research market in the NW region." Id. (emphases and modifications in original). In addition to the antitrust claims, Plaintiffs also alleged a number of state law claims, none of which was the subject of the appeal to the Third Circuit. Id.
On the Section 1 claim, the court affirmed the District Court because the complaint alleged only unilateral conduct, rather than the required concerted action, holding: "unilateral activity by a defendant, no matter the motivation, cannot give rise to a Section 1 violation." Id. at *3. Here, the Court noted, the alleged retaliatory conduct, i.e., Anon’s launching of "at least one competitive research study in competition with BCRS," was "an allegation of increased competition initiated by unilateral activity on the part of ENT, its owner, Dr. Anon, and its employee, Mr. Budacki." Id. (emphasis in original). As such, it violate[d] neither the letter or [sic] policy of the antitrust laws." Id. The court also rejected the argument that the case came within an exception to the normal rule that "officers or employees of the same firm do not provide the plurality of actors imperative for a Section 1 conspiracy" because there was no evidence that either Dr. Anon or Mr. Budacki "was acting outside ENT’s interests." Id. The only allegations to support Plaintiffs’ argument were that Dr. Anon had "a desire to harm BCRS in particular and a desire to increase ENT’s marketshare in drug research contracts," and that Budacki assisted Dr. Anon in those goals. Id. The court held that that these allegations were insufficient because, in a Section 1 case, "conduct as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy." Id.
On the Section 2 claim, the court affirmed the dismissal on grounds that Plaintiffs failed to satisfy antitrust standing. The court noted, "Antitrust standing is, of course, more than the ‘injury in fact’ and the ‘case or controversy’ required by Article III of the Constitution. Rather, the doctrine reflects additional prudential concerns." Id. at *4. First and foremost, the court noted, Plaintiffs and Defendants operated in different markets. Plaintiffs offered administrative and contract support services to drug and drug research companies whereas Defendants engaged in actual drug and medical research. Id. Indeed, Plaintiffs could not operate in the same market because they were not medical doctors, and Beata Stark was only a registered nurse. Id. Therefore, Plaintiffs failed to show any nexus between Anon’s asserted monopolization of the market for ear, nose and throat medical research and the market for contract services, "the only market in which Stark and BCRS may participate." Id. Next, the court held, the crux of Starks’ complaint is that Anon engaged in economic retaliation after Beata Stark rebuffed his sexual advances. Id. at *5. However, Plaintiffs acted as a contractor "to multiple drug firms" and contracted with "multiple physicians’ offices," not just ENT. Id. (emphasis in original). The court noted that "[l]acking are the classic indicia of injury for which the antitrust laws were designed, such as increased prices for consumers or a reduction of consumer options." Id. at *5. For these reasons, the court held, the injury alleged in the complaint was also speculative. Furthermore, if an alleged monopolization did occur, there were more direct victims, i.e., the doctors who participated in the same market as the defendants. Id. Finally, the Court held, there existed a potential for duplicative recovery "should Stark and BCRS recover on both their Section 2 claim and their state law claims" because the complaint "aver[ed] that all of Stark’s and BCRS’ causes of action arise from the same nucleus of underlying facts-Anon’s retaliation after Stark discouraged his sexual advances." Id.
Authored by:
Mona Solouki
415-774-3210
msolouki@sheppardmullin.com