US Department of Justice Antitrust Case Brief - 01203-203897

8/14/2019 US Department of Justice Antitrust Case Brief - 01203-203897

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No. 04-5387

IN THE UNI TED STATES COURT OF APP EALS

FOR THE SIXTH CIRCUIT

J ACKSON, TENNE SSEE HOSP ITAL COMPANY, LLC

Plaintiff-Appellant,

v.

WEST TEN NE SSEE HE ALTHCARE, INC.; J ACKSON-MADISON

COUNTY GENE RAL H OSPITAL DISTRICT; BLUE CROSS BLUE

SHIE LD OF TENNESSE E, INC.

Defendants-Appellees.

ON APP EAL FROM THE UN ITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TENNE SSEE

BRIEF FOR THE UNI TED STATES AND THE FE DERAL TRADE

COMMISSION AS AMICI CURIAE URGING REVERSAL IN

SUPP ORT OF APP ELLANT

(CORRECTED)

J OHN F . DALY

Depu ty General Coun sel forLitigation

J OHN DE LACOURT

Chief Ant itrust Coun sel, Office of

Policy Plann ing

Feder al Tra de Comm ission

Wash ington, DC 20580

R. HEWITT P ATE

Assistan t A ttorney General

MAKAN DELRAHIM

Depu ty Assistan t Attorney

General

CATHERINE G. OSULLIVAN

DAVID SEIDMANAttorneys

U.S. Depar tm ent of J ust ice

601 D Str eet N W

Wash ington , DC 20530-0001

(202) 514-4510


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TABLE OF CONTEN TS

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

STATEMENT OF INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

QUESTION PRESENTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

I . The Sta te Act ion Doct r ine Protect s Subordina te Sta te

En tities from Liability under Federal Antitru st Laws Only

When Th ey Act P ur sua nt to Sta te P olicy to Displace

Compet ition by an Altern at ive Means of Advancing th e

Public In terest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

II . The Dist r ict Court Err ed in Holding Conduct Exempt from

th e Sherm an Act in t he Absence of a St at e Policy to Displace

Compet it ion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

A. Authorizing Public Ent i t ies to Act as Their Private

Competit ors Ma y Act Does Not Imply a Sta te P olicy to

Displace Compet it ion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

B. The Sta tutory Language Regarding Compet it ive

Consequ ences Does Not Tra nsform th e Stat ut e to Exempt

the Dist r ict from the Ant it rust Laws . . . . . . . . . . . . . . . . . 24

III. The District Court s Err oneous Stat e Action Analysis Has

Poten t ia lly Ser ious Consequences . . . . . . . . . . . . . . . . . . . . . . . . 26

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30


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ii

TABLE OF AUTHORITIES

Page(s)

CASES

California R etail L iquor Dealers Association v. M idcal

Alum inum , Inc. , 445 U.S. 97 (1980) . . . . . . . . . . . . . . . . . . . . . 8, 9, 12

City of Colum bia v. Om ni Outd oor Ad vertising, Inc., 499

U.S. 365 (1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 11, 12, 18, 27

City of Cookeville v. Hum phrey , 126 S.W.3d 897 (Tenn .

2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25, 26

City of Lafayette v. Louisian a Power & Ligh t Co., 435 U.S.

389 (1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 10, 29

Coastal N euro-Psych iatric Associates v. Onslow Mem orial

Hospital, 795 F .2d 340 (4th Cir . 1986) . . . . . . . . . . . . . . . . . . . . . . . 21

Com m un ity Com m un ications Co. v. City of Boulder, 455

U.S. 40 (1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Com m uter Tran sport S ystem s, Inc. v. Hillsborough Coun ty

Aviation Au thority , 801 F .2d 1286 (11th Cir . 1986) . . . . . . . . . . . . . 9

Consolidated T elevision Cable S ervice, In c. v. City of

Frankfort, 857 F .2d 354 (6t h Cir . 1988) . . . . . . . . . . . . . . 6, 14, 15, 19

FT C v. Hospita l Board of Directors of Lee Coun ty , 38 F.3d

1184 (11th Cir . 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21, 22

FT C v. T icor T itle In surance Co., 504 U.S. 621 (1992) . . . . . . . . . . . . . 28


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iii

Freedom Holdin gs Inc. v. S pitzer, 363 F.3d 149 (2d Cir.

2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23, 24

Huron Valley Hospital, Inc. v. City of Pontiac , 792 F.2d

563 (6th Cir . 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Hybu d Equ ipm ent Corp. v. City of Ak ron , 742 F.2d 949

(6th Cir . 1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Lancaster Comm unit y Hospital v. An telope Valley

Hospital District, 940 F .2d 397 (9th Cir . 1991) . . . . . . . . . . . . . . . . 20

Martin v. Mem orial Hospital , 86 F .3d 1391 (5t h Cir . 1996) . . . . . . . . . 9

Michigan Paytel J oint Ventu re v. City of Detroit, 287 F.3d

527 (6th Cir . 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim

Parker v. Brown , 317 U.S. 341 (1943) . . . . . . . . . . . . . . . . . . . . . . passim

R iverview I nvestm ents, Inc. v. Ottawa Comm un ity

Improvement Corp., 769 F .2d 324 (6th Cir . 1985) . . . . . . 6, 13, 14, 19

S tan ek v. Greco, 323 F .3d 476 (6th Cir . 2003) . . . . . . . . . . . . . . . . . . . . . 4

S urgical Care Center of H am m ond , L.C. v. Hospital

S ervice District N o. 1 ofT angipah oa Parish , 171 F.3d

231 (5th Cir . 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 20, 21

T own of Hallie v. City of Eau Cla ire, 471 U.S. 34 (1985) . . . . . . . passim

STATUTES AND RULES

Fed. R. Civ. P . 12(b)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Fed. R. App. P . 29(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3


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iv

Ky. Rev. Sta t . Ann. 216.335 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Mich. Comp. Laws Ann. 331.1301 . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Sherm an Act

1, 15 U.S.C. 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2, 15 U.S.C. 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Tenn . Code Ann .

7-57-501(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

7-57-502(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 24

7-57-603 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

MISCELLANEOUS

Adam Sm ith,An Inqu iry into the Na ture and Causes of

the Wealth of N ations (Moder n Libr ar y E d., 1937) . . . . . . . . . . 17, 18

Office of Policy Plannin g, Feder al Tr ade Comm ission ,

R eport of th e S tate Action T ask Force (September

2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 12, 13


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IN THE UNI TED STATES COURT OF APP EALS

FOR THE SIXTH CIRCUIT

No. 04-5387

J ACKSON, TENNE SSEE HOSP ITAL COMPANY, LLC

Plaintiff-Appellant,

v.

WEST TEN NE SSEE HE ALTHCARE, INC.; J ACKSON-MADISONCOUNTY GENE RAL H OSPITAL DISTRICT; BLUE CROSS BLUE

SHIE LD OF TENNESSE E, INC.

Defendants-Appellees.

ON APP EAL FROM THE UN ITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TENNE SSEE

BRIEF FOR THE UNI TED STATES AND THE FE DERAL TRADE

COMMISSION AS AMICI CURIAE URGING REVERSAL IN

SUPP ORT OF APP ELLANT

STATEMENT OF INTERES T

The Un ited States a nd t he F ederal Trade Comm ission (FTC) ar e

pr incipally responsible for enforcing t he federa l an titr ust laws. They

sha re a long-stan ding concern for proper a pplicat ion of the st at e action


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1This concern is reflected in r ecent agen cy briefs, includin g two

join t ly filed am icus br iefs in S urgical Care Center of Ham m ond , L.C. v.

Hospital S ervice District N o. 1 of T angipahoa Parish , 171 F.3d 231 (5th

Cir. 1999) (en banc), available at and ; th e FTCs am icus brief curr ent ly before th is Court in

Brentw ood Academ y v. T enn essee S econdary S chool A th letic Assn , Nos.

03-5245, 03-5278, available at http:/ / ww w.ftc.gov/ os/ 2003/ 11/

brentwoodbrief03114.pdf>; th e am icus brief of th e Un ited Sta tes in

support of reh ear ing in Colum bia S teel Casting Co. v. Portland General

Electric Co. , 103 F.3d 1446 (9th Cir. 1996) (gran ting r ehear ing, vacating

pr ior opinion , an d issu ing new opin ion), amended, 111 F.3d 1427 (9th

Cir. 1997), available at , see also Brief Amicus Cur iae of th e Un ited Sta tes of

Amer ica in Response t o Petition for Rehear ing of Port land Genera l

Electr ic Compan y an d Br ief Amicus Cur iae of Edison Electr ic In stitu te,

available at (filed

at request of th e cour t). At t he Su prem e Cour t level, th e United St at es

has filed am icus br iefs in Parker v. Brown , 317 U.S. 341 (1943); T own of

Hallie v. City of Eau Claire , 471 U.S. 34 (1985); California R etail Liqu or

Dealers Assn v. Mid cal Alum inu m , Inc., 445 U.S. 97 (1980) (br ief a lso

signed by FTC Genera l Coun sel); an d oth er cases. In a ddition, FTC

sta ff recent ly conducted a n in-depth review of the s ta te a ction doctr ine,

concludin g th at [s]ome lower court s . . . ha ve app lied t he doctr ine . . .

with litt le or no evidence that th e stat e intended t o restr ain

competit ion an d r ecomm end ing clar ificat ion a nd r e-affirm at ion of th e

original pur poses of th e stat e action doctr ine to help ensu re th at robust

competit ion con tin ues to protect consumer s. Office of Policy Plan nin g,

Feder al Trade Comm ission, R eport of the S tate Action T ask Force 1

(September 2003), available at (FTC S taff Repor t).

2

doctrine.1 The dist rict cour ts err oneous in ter pr eta tion of th e scope of

sta te action exemption from t he an titru st laws for su bordina te sta te


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3

ent ities th rea ten s both public an d privat e enforcement of th ose laws.

Accordingly, th e United St at es and th e FTC ha ve a st rong inter est in

th e proper det erm inat ion of th is appeal. We file pur sua nt to the first

sen ten ce of Fed . R. App. P . 29(a).

QUESTION P RESENTED

Wheth er t he a lleged a nt icompet itive conduct of a Tennessee private

act hospital aut hority is exempt from t he federal ant itrust laws as sta te

action pu rsu an t to a sta te policy to displace compet ition by regulat ion or

monopoly public ser vice.

STATEMENT

1. J ackson, Tenn essee Hospital Compan y (J THC), which owns

an d opera tes Regiona l Hospital in J ackson, Tennessee, sued a

Tenn essee hospita l dist rict (th e Distr ict) an d an affiliat ed corpora tion,

West Tennessee Hea lth care, Inc. (collect ively, WTH), wh ich a lso own

an d/or opera te a h ospital, J ackson-Madison Coun ty Genera l Hospita l.

The complain t cha rged, am ong oth er th ings, an titr ust violations u nder

Sections 1 an d 2 of th e Sherm an Act, 15 U.S.C. 1, 2. (R.1, J HTCs

Complain t 97, 106, 114, 123.) The claim ed violat ions were ba sed on


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2Becau se J THCs complain t wa s dismissed pu rsu an t t o Fed. R. Civ.

P. 12(b)(6), we tr eat its a llegations as tr ue. S tan ek v. Greco, 323 F.3d

476, 477 (6th Cir. 2003).

4

var ious alleged an ticompet itive acts, including cont ra cts with m an aged

car e orga nizations an d physicians p rohibiting th em from doing business

with Regiona l Hospita l. (R. 57, Opin ion (Op.), p.5.)2

2. The district court found t he challenged conduct to be exempt

from th e federal an titru st laws u nder th e stat e action doctr ine ofParker

v. Brown , 317 U.S. 341 (1943), and t her efore d ismissed pur sua nt to Rule

12(b)(6) of the Federal Ru les of Civil Pr ocedu re. Viewing the Distr ict as

a political su bdivision of the St at e of Tenn essee (R. 57, Op., p.7 n.7) and

relying on th is Cour ts decision in Michigan Paytel J oint V en ture v. City

of Detroit, 287 F.3d 527 (6th Cir. 2002), the distr ict cour t tr eat ed as

deter mina tive wheth er t he an ticompet itive effects ar e th e logical a nd

foreseeable result of th e broad a ut hority to own, opera te an d ma na ge

hospitals and oth er hea lth car e facilities tha t [two Tennessee sta tu tes]

conferred u pon privat e act hospital au th orities such a s th e Distr ict. (R.

57, Op., p.11.) Concludin g th at such effects were t he logical a nd

foreseeable result of th e broad sta tu tory au th ority to opera te, it foun d


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5

WTH immun e from an titru st liability under t he sta te action imm un ity

doctr ine an d dismissed th e an titru st claims a gainst th em. (Id., p.12.)

The cour t n oted t ha t one of the sta tu tes in qu estion provides th at th e

broad powers it confers a re t o be exercised rega rd less of the competit ive

consequ ences t hereof. Tenn . Code Ann. 7-57-502(c) (R. 57, Op., p .11),

but it did not explain th e role th is phra se played in its an alysis.

SU MMARY OF ARGUMENT

Relying on pr inciples of federalism an d st at e sovereignt y, th e

Supr eme Cour t h as long held tha t t he Sher ma n Act does not apply to

an ticompet itive rest ra ints imposed by the Sta tes as a n a ct of

govern men t. City of Colum bia v. Om ni Outd oor Adver., Inc., 499 U.S.

365, 370 (1991) (quoting Parker v. Brown , 317 U .S. 341, 352 (1943)).

Subordina te sta te ent ities, such as mu nicipalities and h ospita l distr icts,

however, ar e not sovereign, a nd th ey may claim sta te a ction

exempt ion from th e Sher ma n Act only if th ey can demonst ra te th at

th eir a nt icompet itive activities were aut horized by th e Stat e pur sua nt

to sta te policy to displace compet ition wit h r egulat ion or m onopoly

pu blic ser vice. T own of Hallie v. City of Eau Cla ire, 471 U.S. 34, 38-39


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6

(1985) (quoting City of Lafayette v. Louisian a Power & Ligh t Co., 435

U.S. 389, 413 (1978)). This Court ha s consisten tly recognized an d

app lied th is fun dam ent al pr inciple in its st at e action decisions. S ee

Michigan Paytel J oint Ventu re v. City of Detroit, 287 F .3d 527 (6th Cir.

2002); Consolida ted T elevision Cable S erv., Inc. v. City of Frankfort, 857

F.2d 354 (6th Cir. 1988);R iverview In vs., In c. v. Ottawa Cm ty.

Improvement Corp., 769 F.2d 324 (6th Cir. 1985).

The d istr ict cour t in th is cas e, however, failed to follow th is

governing law, impr operly conclud ing th at th e District was exempt from

th e ant itru st laws becau se the stat e had given it broad au th ority,

compa ra ble to tha t of private firms, to operat e an d m an age health car e

facilities. It r easoned that an ticompetit ive effects logically an d

foreseeably flow from t hat broad a ut hor ity. (R. 57, Op., pp.10-11.) But

un rea sona ble rest ra int of tr ade a nd monopolization do not logically and

foreseeably flow from au th ority t o opera te a s pr ivat e firms opera te. Nor

does an ything else in th e relevant stat ut es suggest a sta te policy to

displace competit ion by r egulat ion or monopoly pu blic service.

The dist rict cour ts r easoning r obs of mea ning t he S up rem e Cour ts


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3Nor do we addr ess issues specific to th e non-governm ent al

defendan t in t his case.

7

repeated a dmonitions th at an indispensible component of the sta te

action doctr ine is a st at e policy to displace competit ion by a sovereign

act of governm ent . The cour ts r easoning would a llow su bord inat e st at e

ent ities part icipating in comm ercial ma rk ets t o nu llify the

pr ocompet itive na tiona l policy embodied in th e Sher ma n Act in th e

absen ce of any st at e policy determ inat ion th at an ticompet itive conduct

serves th e public inter est. Indeed, the distr ict cour ts r easoning

displaces federa l ant itru st law even if, as in t his case, the st at e ha s

acted to promote compet ition r at her th an displace it.

The a bsence of st a te a ction exem ption does not, of course, esta blish

ant i t rust liability. Whet her th e Distr icts condu ct violated t he a nt itru st

laws is a d istinct quest ion, on which th e governm ent expresses no view.

3

But in t he a bsence of a st at e policy to displace compet ition, th e

District's condu ct is not sh ielded from a nt itru st scru tiny.


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4Sta tes, however, do not h ave un limited freedom t o implement such

policies. S ee, e.g., California R etail L iquor Dealers Assn v. Mid cal

8

ARGUMENT

I. The S ta te Ac ti on D oc tri ne Pr ote c ts Subo rd i nate State

Entities from Liabili ty un der Fe deral Antitrust Law s

Only Whe n They Act Pursu ant to State Policy toDisplace Competition by an Alternative Mean s of

Advancing the Pu bl ic Interest

The district cour t fun dam ent ally misapplied the stat e action

doctr ine. In Parker v. Brown , 317 U.S. 341 (1943), th e Sup reme Cour t

determined t ha t stat ut es do not limit t he sovereign st at es au tonomous

au th ority over t heir own officers , agent s, and policies in t he absen ce of

clear congr essiona l int ent to do so, and it foun d no such int ent in t he

langu age or legislat ive history of th e Sherm an Act. Id. at 351.

Accordingly, it held t ha t when a sta te in adopting a nd enforcing [a]

pr ogram ma de no cont ra ct or agreemen t a nd en ter ed int o no consp iracy

in r estr aint of tra de or to esta blish monopoly but , as sovereign, imposed

th e restr aint as a n a ct of governm ent [,] . . . the Sh erm an Act did not

un derta ke to prohibit th e restra int. Id. at 352.

While stat es may, within cert ain limits, adopt an d implemen t

policies th at depar t from t he policies of th e Sherm an Act, 4 subordinate


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Alum inum , Inc. , 445 U .S. 97 (1980) (Midcal) (affirm ing order not to

enforce st at e law becau se of conflict with policies of the Sh erm an Act).

5The consequ ence of stat e action tr eat men t is comm only said t o be an

exempt ion or an imm un ity. As th is Court ha s cor rectly noted,

however, th e exempt ion is not a n ent itlemen t of the s am e ma gnitu de

as qu alified immu nity or a bsolute immu nity, but ra th er is more a kin to

a defense to the origina l claim. Huron Va lley Hosp., In c. v. City of

Pontiac, 792 F.2d 563, 567 (6th Cir. 1986); contra, Martin v. Memorial

Hosp., 86 F.3d 1391, 1396-97 (5th Cir. 1996); Com m uter T ransp. S ys., Inc. v.

Hillsborough Coun ty Aviation A uth . , 801 F.2d 1286, 1289 (11th Cir.

1986). S ee alsoSurgical Care Center of Hammond, 171 F.3d at 234

(cha ra cter izing Parkerimmu nity as a str ict sta nda rd for locat ing th e

reach of th e Sher ma n Act).

9

sta te ent ities, such a s hospital distr icts a nd m un icipalities, ar e not

beyond th e reach of the an titru st laws by virt ue of th eir stat us becau se

th ey are n ot t hem selves sovereign. T own of Hallie v. City of Eau Claire,

471 U.S. 34, 38 (1985). The condu ct of such s ubordina te en tit ies

qua lifies for st at e action t rea tm ent 5 only if it is un derta ken pu rsu an t to

a sta te policy to displace compet ition in favor of an alter na tive mean s of

pr omoting th e public inter est. Even explicit sta te a ut horization of

condu ct const itut ing a Sh erm an Act violation does not sh ield t ha t

condu ct from t he Sh erma n Act un less th at au th orizat ion clear ly

evidences a sta te policy to displace compet ition as th e pr imar y mea ns of

directing the economy to th e common ben efit. CompareHallie, 471 U.S.


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10

at 39 (th e Sta te m ay n ot va lidat e a m un icipalitys a nt icompet itive

conduct simply by declar ing it to be lawful) with id. at 38-39 (mu nicipal

activities are exempt only if au th orized by th e Sta te pur sua nt to sta te

policy to displace competit ion with regulat ion or monopoly public

ser vice) (quotin g City of Lafayette v. Louisian a Power & Ligh t Co., 435

U.S. 389, 413 (1978)). Accordingly, in Hallie, th e Cour t emph asized tha t

th e subordinat e stat e entity mu st pr ove not only its au th ority to act, but

also th at a s ta te policy to displace competit ion exist s.Id.

The st at e need not follow an y par ticular form ula in expr essing its

inten t to displace compet ition; indeed, it n eed not even refer expressly

to an ticompetit ive effects if it is clear from t he n at ur e of th e policy th e

sta te ha s ar ticulated t ha t it cont emplates such a n outcome. S eeHallie,

371 U.S. at 43-44. The mu nicipal conduct a t issue in Hallie was a

refusal t o supply sewage tr eat men t facilities outside t he citys borders

except t o th ose who agreed to become a nnexed to th e city.Id. at 41, 44-

45 n.8. The sta te st at ut e did not r efer t o compet ition, but it au th orized

th e city to refuse t o pr ovide sewage tr eat men t t o adjacent

un incorpora ted ar eas un less th ey agr eed to an nexat ion, with obvious


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11

effects on sewa ge collection an d tr an sport at ion services competing with

th e citys. After reviewing th e st at ut ory st ru ctu re in some det ail, id . a t

41, th e Court found it clear th at an ticompet itive effects logically would

result from t his broad a ut hority to regulate.Id. at 42 (emph asis added).

Thu s, the Court concluded, th e sta tu tes obvious ly cont emplat e th at a

city ma y engage in a nt icompet itive conduct. Such conduct is a

foreseeable resu lt of empowering th e City to refuse t o serve una nn exed

areas.Id.

Similar ly, in City of Colum bia v. Om ni Outd oor Ad vertising, In c.,

499 U.S. 365 (1991), the cha llenged m un icipal ord inan ce rest ricting t he

size, spa cing, and locat ion of new billboar ds was exempt becau se th e

sta te had clear ly ar ticulat ed a policy to rely on zoning rat her th an

compet itive m ar ket forces to r egulate billboar ds. Id. at 373. Alth ough

th e sta te legislat ur e ha d not specifically sta ted t ha t it expected

mu nicipalities t o use th eir zoning powers t o limit compet ition, t he Cour t

found suppr ession of compet ition to be t he foreseeable r esu lt of wha t

th e sta tu te a ut horized becau se [t]he very pur pose of zoning regulat ion

is to displace un fettered business freedom in a ma nn er t ha t regularly


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6Although foreseeability is a useful tool in inquiring about sta te

policy to displace competit ion[, i]t is not an end in itself. FTC St affReport 11. The end is a conclusion a bout th at s ta te policy, an d an y

inference about policy from t he foreseeability of condu ct mu st be a

rea sona ble one. S eeid . at 34-35.

7Monopoly pu blic service a nd classic public u tility-style regu lat ion

ar e not th e only perm issible depar tu res from th e compet itive model.

Omni offers zoning as anoth er species of regu lat ion . 499 U.S. at 373-74

8Generally, a pa rt y asserting a st at e action defense th at is not a

sovereign st at e ent ity mu st demonstra te not only that it acted pur sua nt

to a st at e policy to displace compet ition by an app ropriat e alter na tive,

but also th at its conduct was actively supervised by the sta te.Midcal,

445 U.S. at 105. S ee generally FTC Staff Report 12-24, 36-40. Ther e

ar e, however, exceptions to th e active supervision requ iremen t. S ee

12

has t he effect of pr event ing norm al acts of competit ion .Id.6

The critical quest ion is wheth er t he st at e ha s decided to displace

competit ion (or t o au th or ize subord ina te en tit ies to choose to do so) as

an act of governm ent to which federa lism pr inciples dema nd deference.

To pr ovide sufficient evidence of such a decision, t he sta te law mu st at

least clear ly ar ticulat e a pu blic policy that intr insically depar ts from th e

Sherm an Acts competit ive model.7 In th e absen ce of such a sta te policy,

th e conduct of a n onsovereign subordinat e ent ity, even condu ct t ha t

plainly falls with in its au th ority un der st at e law, does not const itut e

sta te action for pu rposes of th e Sher ma n Act.8


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Hallie, 471 U .S. at 46-47 (recognizing except ion for mun icipalities). In

th is case, the par ties did not dispu te below th e Distr icts sta tu s as a

political subdivision of th e st at e. (R. 57, Op., p.7 n .7.) Alth ough st at us

as a political subdivision u nder sta te law does not n ecessar ily determ ine

whet her active supervision is requir ed, see FTC S ta ff Report 16-19, we

assu me for pur poses of th is brief th at active super vision is n ot r equiredhere.

9The Court also noted th at such a conclusion of sta te a ction could

alt ern at ively der ive from a ction of th e sta te in it s sovereign capa city,

Riverview , 769 F.2d at 329, a ba sis for exempt ion n ot a t issu e her e.

13

This Cour ts decisions cons isten tly apply th ese pr inciples. In

R iverview Inv estm ents, Inc. v. Ottawa Com m un ity Im provem ent Corp. ,

769 F.2d 324 (6th Cir. 1985), the Court recognized th at a m unicipa litys

an ticompetit ive beha vior is exempt st at e action only if th at conduct

pr omote[s] a clear ly ar ticulat ed an d affirm at ively expressed st at e

policy . . . to displa ce compet ition with regulat ion or m onopoly9 and

th e legislat u re con tem plat ed t he kind of action complained of, id . a t

329 (citat ions omitt ed). Applying th at test to an allegedly

an ticompet itive denial of an app licat ion for indu str ial revenue bonds

th e defendan t h ad been aut horized to gran t, the Cour t foun d stat e

action becau se decisions increasing or res tr ictin g compet ition , though

not explicitly stat ed or r ecognized in th e Ohio stat ut e, are a logical a nd


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10Whether th e Riverview defenda nt was exempt, however, tu rn ed on

whet her it is a pr ivat e, nonm un icipal par ty, and, if so, wheth er it is

actively super vised. 769 F.2d a t 330.

14

necessar y out come of th e aut hority to gran t indu str ial revenu e bonds

for t he pu rpose of pr otecting jobs.Id. Tha t conclusion is clear ly cor rect.

Un less the defendan t wer e requir ed to appr ove all bond applicat ions, it

would inevitably deny some. In adopt ing a policy tha t pr ovides bonds for

some applican ts wh ile denying th em to oth ers, the stat e necessar ily

adopt ed a policy of affectin g compet ition in th is ma nn er; it displaced

pur e ma rk et-based finan cing by an adm inistered scheme to promote

goals th at th e mar ket m ight oth erwise ina dequately promote.10

In Consolidated Television Cable Service, Inc. v. City of Frankfort,

857 F.2d 354 (6th Cir. 1988), the Cour t drew u ponRiverview in h olding

th at actions by a m un icipality t ha t favored one cable television provider

over an oth er were exempt from Sher ma n Act liability as sta te a ction.

The Cour t foun d th at Kent ucky law clear ly au th orizes mun icipal

regulat ion of CATV ser vices, id . at 358; requ ires pu blic utilities

(including cable television pr oviders) to obta in franchises t ha t

mu nicipalities ar e au th orized to issue; an d au th orizes mun icipalities to


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15

own a nd opera te t heir own facilities for p roviding public u tility-type

services.Id. at 360-61. The Cour t foun d t ha t displacement of

competit ion in th e pr ovision of CATV service . . . is a foreseeable r esu lt

of gra nt ing th e city power t o fra nchise public ut ilities or own an d

operat e a mu nicipal plan t, id . at 361. In oth er words, the sta te

effectively au th orized displa cemen t of compet ition by mu nicipal

regulat ion a nd ser vice provision, th us t riggering the st at e action

doctrine.

Sta tu tory au th orizat ion for t he conduct compla ined of ma y ha ve

been less clear in Michigan Paytel J oint Ventu re v. City of Detroit, 287

F.3d 527 (6th Cir . 2002), but once the Court concluded t hat th e citys

condu ct was au th orized, it pr operly add ressed t he foreseeability of

an ticompet itive effects from t ha t au th orization an d u pheld t he citys

sta te a ction defense. Plaint iff Michigan Pa ytel and defenda nt Amer itech

were compet ing bidders to provide th e Detr oit P olice Depar tm ent with

an in-cell telephone system for its pr isons. Ameritech won th e cont ra ct,

an d Pa ytel sued, alleging th at Amer itech a nd Detr oit ha d acted to

ma inta in Ameritechs dominan ce in th e pay telephone service ma rk et in


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16

th e Detroit metr opolita n ar ea.Id. at 534. The Cour t held tha t th e

relevant mu nicipal conduct, th e awa rding of an exclusive cont act for th e

pr ovision of telephone service in pr isons, was au th orized by stat ut e an d

th e stat e const itution. Id. at 535-36. The an ticompetit ive effect

complained of Amer itech got t he pr ison bu siness, while its sm aller

r ival Michigan P ayt el did not was a logical and foreseeable result ,

id . at 536, of tha t au th orization: Un der th e bidding pr ocess, there

would be only one successful bidder. Thus, on ly one bidder would h ave

th e right to insta ll an d ser vice th e pay t elephones.Id. (quoting th e

district court). The authorized selection process substituted for

cont inu ing compet ition in t elephone service pr ovision within th e

prisons.

II. The Dis tri c t Court Erred in Holding Conduct Exempt

from the She rman Act in the Absen ce of a State Policy

to Displace Compe tition

Although th e distr ict cour t quoted both th is Cour ts r ecent

Michigan Paytel formu lat ion of th e sta te a ction doctr ine (R. 57, Op.,

pp.8-10) an d Hallies, (R. 58, Op., pp.7-8), it n ever found tha t , or even

considered wh eth er, Tenn essee ha d a policy to displace competit ion by


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11The pr edicta bility of an ticompetit ive condu ct is legenda ry: People

of the sam e tr ade seldom meet t ogeth er, even for merr iment a nd

17

some a ltern at ive mea ns of cha nn eling th e beha vior of economic actors to

serve the pu blic interest in h ealth car e.

The cour t foun d th at sta tu tes int ended to remedy a compet itive

disadvan ta ge of some public hospit als r esu lting from cert ain legal

const rain ts u pon th eir opera tions, Tenn . Code Ann. 7-57-501(b),

quoted in R. 57, Op., p.2 n.1; see also R. 57, Op., p.1, implicitly gave

th ose hospitals a license den ied to th eir privat e compet itors t o

rest ra in tr ade a nd m onopolize without r egard t o th e prohibitions of th e

Sher ma n Act. It rea soned t ha t an ticompet itive effects ar e th e logical

an d foreseeable result of th e broad au th ority to own, opera te an d

ma na ge hospitals an d oth er hea lth care facilities th at Tennessee

st a tu tes confer on hospita l dist ricts. (R. 57, Op., p.11.) The cour t t hus

concluded that th e Sherm an Act does not apply to these defenda nt s

becau se it is foreseeable tha t a public business entity, arm ed with th e

au th ority to ta ke actions private business ent ities routinely ta ke, might

act a nt icompet itively, just as some p rivat e business ent ities do from

time to time.11


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diversion, but th e conversa tion en ds in a consp iracy against th e public,

or in some contr ivance to ra ise prices. Ada m Sm ith , An I nqu iry into the

N ature and Causes of the Wealth of N ations 128 (Moder n Libra ry ed.,

1937).

18

That conclusion sta nds th e Parkerdoctr ine and Hallie on t heir

hea ds. If mer ely au th orizing a public business entity t o act mea ns

exempting it from th e federal an titru st laws, the St at e is indeed

giv[ing] immu nity t o those who violate t he Sher ma n Act by au th orizing

th em t o violate it, or by declaring th at th eir action is lawful. Parker,

317 U.S. at 351. Tha t is precisely wha t Parker, id ., and Hallie, 471 U.S.

at 39, reject. Tha t conclusion is also con tr ar y to th is Cour ts admonit ion,

in Michigan Paytel , tha t [g]ra nt s of genera l or n eut ra l au th ority do not

supply the clear ar ticulat ion needed t o invoke th e sta te a ction

doctrine. S ee 287 F.3d at 534.

A. Author iz ing Public Ent i ti e s to Act as The ir Private

Compe titors May Act Doe s Not Imply a State Po licy to

Displace Competition

The Distr ict Cour t misapp lied t he foreseeability t est. As n oted

above, see pp.10-12 supra , th e Su pr eme Cour t focuses on foreseeability

in cons idering whet her t he na tu re of th e aut horized condu ct such as

regulat ion (Omni) or monopoly pu blic ser vice (Hallie) demonstra tes


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12Alth ough clear ly not a ll th e alleged condu ct is exempt , close pa rsing

of the a pplicable stat ues a nd of the complaint perha ps m ight reveal th at

some of th at condu ct, an d th e alleged ant icompet itive consequence of it,

is a logical an d necessar y result of th e stat ut ory au th orizat ion. But t he

19

th at th e stat e legislat ur e must ha ve cont emplated th at competition

would be displaced, i.e., that th e au th orized conduct would ha ve

foreseeably an ticompetit ive effects . As th is Court ha s explained, th e

question is wh eth er decisions increa sing or r est r ictin g compet ition . . .

ar e a logical a nd necessar y out come of th e au th ority gra nt ed th e

relevant actor. Consol. T elevision , 857 F.2d at 360, quotingRiverview ,

769 F.2d at 329; see alsoMichigan Paytel , 287 F.3d a t 536 (logica l an d

foreseeable resu lt).

The r an ge of conduct a lleged in th e complain t her e was not a logical

or n ecessar y result of th e broad gra nt of au th ority to act a s privat e

business m ay act. The sta te of Tenn essee aut horized only fun ctions t ha t

economic actors in freely compet itive mar ket s rout inely car ry out

without u nr easonable restr aint of tr ade, monopolization, or indeed an y

anticompetitive consequences. That authorization implies no policy to

depar t from t he Sh erm an Acts compet itive model in t he m ar kets in

which th e District compet es.12 To th e cont ra ry, the district cour t its elf


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distr ict cour t per form ed no such pa rsing, an d in an y event exempt ion of

some port ion of the a lleged conduct would not ser ve to exempt th e

District a cross th e boar d.

13The gra nt of broad au th ority to opera te like a pr ivat e hospita l is

an alogous to th e broad home ru le aut hority gra nt ed Colora do

mu nicipalities tha t th e Supr eme Cour t foun d n ot to exempt mu nicipal

regulat ion of cable television compet ition from th e an tit rus t laws . As

th e Cour t sa id, accepting th at p roposition th at t he genera l gran t of

power to enact ord inan ces necessar ily implies stat e au th orization to

ena ct specific an ticompetit ive ord ina nces . . . would wholly eviscera te

th e concept s of clear ar ticulat ion a nd affirm at ive expression th at our

precedents require. Cm ty. Com m un ications Co. v. City of Boulder, 455

U.S. 40, 56 (1982).

20

noted th e stat ut ory pur pose of ma king public hospital au th orities better

able to effectively compete with pr ivat e hospita l au th orities by

rem oving legal cons tr aint s on th em a nd giving t hem th e sam e

opera ting a nd orga nizational powers en joyed by privat e hospita l

au th orities. (R. 57, Op., pp.2-3.) Such a pu rpose suggests a policy to

embr ace more fully, not displace, th e compet itive model.

The t wo cour ts of appea ls to have considered s imilar sta te gra nt s of

au th ority t o public hospitals an d hospita l aut horities properly concluded

th at th ey do not pr oduce gener al sta te action exempt ion.13 In Surgical

Care Center of Ham m ond v. Hospital S ervice District N o. 1 of

T angipahoa Parish , 171 F.3d 231 (5th Cir. 1999) (en ba nc), the Fifth


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County suggests t ha t t he m ere au th orizat ion t o do business results insta te action exempt ion.

15A fur th er distinction from Michigan Paytel is that here th e Distr ict

is compet ing with pr ivat e firms in t he s upp ly of services, wherea s

Detr oit was mer ely procur ing services for its own u se. Although th is

22

Michigan Paytel , on which th e distr ict cour t relied, does not support

th e distr ict cour ts holding. As n oted above, see pp.15-16 supra , this

Cour t t here foun d th at th e stat e au th orized th e city to procur e services

by putt ing an exclusive cont ra ct out for bids. And it fur th er foun d th at a

logical a nd foreseeable resu lt of th e use of th is techn ique was t ha t one

bidder would get a ll th e business wh ile th e oth ers would get n one

(pr ecisely wha t t he plaint iff complained of), elimin at ing fu r th er

compet ition to supply the service to th e mu nicipality du ring t he life of

th e cont ra ct.

Nothing compa ra ble appear s her e. The distr ict cour t foun d only

th at an ticompetit ive effects a re t he logical an d foreseeable resu lt of th e

broad a ut hority to own, operat e and ma na ge hospita ls and other health

car e facilities (R. 57, Op., p.11), that th e sta tu tes p rovide. But pla inly

hospitals can be owned, opera ted, and m an aged with out th e full ran ge

of an ticompetit ive condu ct a lleged her e.15


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Cour t h as expressed reservations r egar ding a mar ket pa rt icipant

exception to th e sta te a ction doctr ine,Hybud Equ ipm ent Corp. v. City ofAkron , 742 F.2d 949, 956 (6th Cir. 1984) (Whet her a city is ent itled to

the Parkerexemption depends not u pon th e proprieta ry cha ra cter of the

citys actions) (dicta ), par ticipa tion a s a m ar ket compet itor r aises

quest ions not other wise raised by oth er form s of governm ent activity.

S ee generally FTC St aff Report at 44-49, 57 (recomm ending th at sta te

action t rea tm ent for m un icipalities acting in a pr oprieta ry capa city as

ma rk et par ticipan t an d compet itor sh ould depend on find ings not only

of clear ar ticulat ion , but also of active super vision). S ee also Hallie, 471

U.S. at 39 (requiring sta te policy to displace compet ition by an alter na temea ns of cha nn eling ma rk etplace beha vior).

16The Second Circuit explain s th at un less th ere is a plau sible nexus

between t he st at es goals a nd th e condu ct a llegedly exempt ed from t he

reach of th e ant itrust laws, Parkers limita tions on th e rea ch of th e sta te

23

Indeed, there is sim ply no plausible nexus, Freedom Holdin gs Inc.

v. S pitzer, 363 F.3d 149, 156 (2d Cir . 2004) (denying pan el rehear ing),

between t he Tennessee legislatu res goal, embodied in st at ut e, of

ma king public hospit al au th or ities bett er a ble to effectively compete

with pr ivat e hospita l aut horities by giving them th e sam e opera ting

an d organ izat iona l powers en joyed by private h ospita l au th orities (R.

57, Op., pp.2-3), and gra n ting to public hospit als licens e to engage in

condu ct th at would expose their pu rely privat e compet itors to the

san ctions of federa l an titr us t law should they engage in th at very

conduct.16 The sta tes clear ly ar ticulat ed pur pose thus r eveals th e


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action doctr ine, 317 U.S. at 351 (a sta te does not give immu nity t o

th ose who violate t he Sh erm an Act by a ut horizing t hem to violate it, or

by declar ing that th eir action is lawful), cou ld be evaded. Freedom

Holdings , 363 F.3d a t 156.

17Freedom Holdings explains th at a sta tes explana tion of its rea son

for displacing competition will aid a cour t in deter mining wheth er t he

sta te h as sa tisfied th e requirements for Parkerimmu nity an d views

[a]iding judicial inqu iry in t his wa y as an an cillar y purpose of theclear ar ticulation requirement . Id.

18Moreover, su ch an at tem pt to validat e a [hospital distr icts]

an ticompetit ive condu ct s imply by declar ing it t o be lawful,Hallie, 471

U.S. at 39, would not pr ovide an titr us t exempt ion. S ee p. 10, supra .

24

inappropriat eness of app lying the st at e action doctr ine here. 17

B . The S ta tu tor y La ng uag e R e ga rd i ng Co m pe ti ti ve

Conseque nces Does Not Transform th e Statute to

Exemp t the District from the Antitrust Law s

The distr ict cour t r eferr ed to, but did not expressly rely on,

sta tu tory lan guage providing t ha t th e powers gran ted t o ent ities like

th e Distr ict m ay be exercised rega rd less of th e compet itive

consequences t her eof. Tenn . Code Ann . 7-57-603 (incorpora tin g Tenn .

Code Ann. 7-57-502(c)), see R. 57, Op., pp.10-11. To const ru e th at

language as au th orizing t he r elevan t entities to exercise th eir au th ority

to operat e and ma na ge hospita ls in disregard of th e stan dar ds of th e

Sherm an Act would, however, be unwa rr an ted.18


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19An opinion of the Tennessee Su prem e Cour t does n ot decide a

quest ion of an titr ust coverage under federa l law, but it is instr uctive on

th e question of th e stat e legislatu res inten t in ena cting th e stat ut es at

issue.Hallie, 471 U.S. at 45 n.8.

25

The Tennessee Suprem e Cour t ha s const ru ed th e regardless

ph ra se to ha ve mu ch n ar rower significan ce.19 In City of Cookeville v.

Humphrey , 126 S.W.3d 897 (Tenn. 2004), th e court observed th a t before

th e 1995 Hospital Aut hority Act expan ded th e sta tu tory aut hority of

public hospitals to rem ove legal const ra ints un der t hen existing law,

private hospitals could exclude licensed physicians and surgeons from

use of th e hospita l for wh at ma na gement deemed su fficient cau se, while

pu blic hospit als cou ld not. Id. at 902. Thu s, privat e, but not pu blic,

hospit als cou ld con tr act with one group of doctors to pr ovide a

par ticular service in th e hospita l, while excluding other doctors from

pr oviding that service they could, tha t is, con tr act exclusively. The

cour t r ead t he st at ut e, with its regar dless ph ra se, to overru le th is

const ra int on pu blic hospitals: [t]he appar ent inten t of th e Legislat ur e

was t ha t pu blic hospitals be au th orized, like pr ivat e hospita ls, to

cont ra ct exclusively with par ticular providers, even if it is to th e

d isadvan tage of other physicians .Id. (emph asis a dded). The


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20The r each of federa l an titr ust law was, of cour se, not before t he

Tennessee Supr eme Cour t. We note, however, tha t t he exclusive

cont ra cts discussed in Cookeville resemble qu ite closely th e exclusive

cont ra ct a t issue in Michigan Paytel . In both cas es, a logical a nd

foreseeable resu lt of exercise of th e au th ority gra nt ed is that some

actua l or potentia l service pr oviders ar e excluded.

21Considering only hospita ls, we note t ha t Michigan gra nt s

mu nicipal h ealth facilities corpora tions extensive powers to opera te

hospitals, including t he power t o ent er in to cont ra cts, Mich. Comp.

Laws Ann . 331.1301, .1303, .1304, and Kent ucky gra nt s h ospital

distr icts extensive powers, including th e power t o ent er int o cont ra cts,

Ky. Rev. Sta t. Ann . 216.335.

26

regardless phr ase th us wa s mean t t o limit a ny groun ds th e

disadvan ta ged physicians might ha ve to object to an exclusive cont ra ct,

at least where such cont ra ct wa s ent ered into in th e norma l cour se of

business. This limited pur pose ha rdly suggests general an titru st

exemption.20

III. The District Courts Errone ous S tate Action Analysis

Has Poten tia lly Serious Consequen ces

The dist rict cour ts incor rect t est of th e sta te a ction doctr ine, if

adopted by th is Cour t, would have serious a nd widesprea d21

consequences. It m eans t ha t a ny time a sta te au th orizes its su bordinat e

ent ities to compet e on m ore or less equa l term s with pr ivat e firms in th e

competitive ma rketplace, th at au th orizat ion also gra nt s t hese ent ities a


32/37

27

special license to restr ain t ra de un rea sona bly an d monopolize an d

th ereby to limit t he very competition t he au th orization wa s inten ded to

foster . Th is would divorce th e sta te a ction doctr ine from its roots in

pr inciples of federalism a nd st at e sovereignt y. S eeOmni, 499 U.S. at

370; Parker, 317 U.S. at 352. It would a llow n onsovereign, subordina te

ent ities independen tly to decide without an y sta te policy to displace

compet ition not to obey th e federa l an titr ust laws when pa rt icipating

in competitive ma rk ets. Such a resu lt ha s nothing to do with deferr ing

to sta te sovereignt y.

Indeed, th is mista ken version of th e stat e action doctr ine ha s th e

poten tial t o under cut sta te policy as well as federa l law. S eeHallie, 471

U.S. at 47 (noting th at th e requirement t ha t a mu nicipality act

pur sua nt to stat e policy provides protection a gainst th e dan ger t ha t t he

mu nicipally owned en ter pr ise will seek to fur th er pur ely par ochial

public int erest s a t th e expense of more overr iding sta te goals).

Aut oma tically exempt ing subordinat e entities from th e Sherm an Act

when t he sta te ha s sough t to promote compet ition by aut horizing th eir

par ticipation on a n equa l basis in compet itive mar kets int erferes with

th e sta tes a bility to implement its policies. As t he S upr eme Court


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28

observed in rejecting a broad a pplicat ion of the st at e a ction doctr ine in

FT C v. T icor T itle In surance Co., 504 U.S. 621, 635 (1992), [i]f the

Sta tes mu st a ct in t he sh adow of sta te-action imm un ity whenever th ey

ent er t he rea lm of economic regulat ion, t hen our doctr ine will impede

th eir fr eedom of action, not advan ce it.

At t he sam e time, th e ruling underm ines the principle th at in

ena cting th e Sherm an Act, Congr ess man dat ed compet ition a s the

polestar by which all must be guided in ordering t heir bu siness affairs .

Lafayette, 435 U.S. at 406. The Su pr eme Cour t in Lafayette and

subsequent decisions h as m ade it clear th at th is fun dam enta l nat iona l

policy applies to non-sovereign government participants in competitive

ma rk ets. It is true th at t he Cour t ha s held tha t mu nicipalities, un like

pr ivat e defenda nt s, need not be actively super vised by the st at e in

car rying out a sta te policy to displace compet ition. Bu t th at holding

rested on t he a ssum ption t ha t t he sta te action doctr ine would be

available to th e mu nicipality only when it a cted pu rsu an t t o a clear ly

ar ticulat ed st at e policy. When combined with th e pr otections afforded

by th e political pr ocess, a su fficient ly clear ar ticulat ion of st at e policy

adequ at ely pr otects the public inter est. Hallie, 471 U.S. at 46-47. By


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29

cont ra st, gra nt ing a n onsovereign ent ity a license t o violate t he federa l

an titru st laws when th e state ha s merely au th orized part icipation in a

compet itive ma rk et would impair th e goals Congress sought to achieve

by those laws . . . without fur th ering t he policy un derlying t he Parker

exemption.Lafayette, 435 U.S. at 415.


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30

CONCLUSION

The distr ict cour ts order dismissing the case on th e groun d th at th e

condu ct alleged is exempt from t he federal an titru st laws u nder th e

sta te action doctr ine should be reversed, an d th e cau se should be

rem an ded for furt her p roceedings.

Respectfully su bmitt ed.

J OHN F . DALY

Depu ty General Coun sel for

Litigation

J OHN DE LACOURT

Chief Ant itrust Counsel, Office of

Policy Plann ing

Feder al Tra de Comm ission

Wash ington, DC 20580

R. HEWITT P ATE

Assistan t A ttorney General

MAKAN DELRAHIM

Depu ty Assistan t Attorney

General

CATHERINE G. OSULLIVAN

DAVID SEIDMAN

Attorneys

U.S. Depar tm ent of J ust ice

601 D Str eet N W

Wash ington , DC 20530-0001

(202) 514-4510

J un e 1, 2004 (corr ected)


36/37

CERTIF ICATE OF COMP LIANCE WITH TYP E-VOLUME

LIMITATION, TYPEFACE REQUIREMENTS, AND TYPE STYLE

REQUIREMENTS

1. This brief complies with th e type-volume limita tion of Fed. R. App.

P . 32(a)(7)(B) and 29(d) becau se t h is brief conta ins 5850 words,

excluding t he par ts of the br ief exempt ed by Fed. R. App. P.

32(a)(7)(B)(iii).

2. This brief complies with the typeface requirements of Fed. R. App.

P . 32(a)(5) an d the type st yle requir emen ts of Fed. R. App. P. 32(a)(6)

becau se th is brief ha s been pr epar ed in a pr oport iona lly spaced t ypeface

(14 poin t N ew Cent ur y Schoolbook), using WordP erfect 10.

__________________________

David Seidma n

Att orn ey for th e Un ited Stat es

J un e 1, 2004


37/37

CERTIFICATE OF S ERVICE

I her eby cert ify tha t on th is 1st day of J un e, 2004, I cau sed two

copies of th e Brief for t he Un ited Sta tes a nd t he F edera l Trade

Comm ission as Amici Cur iae Ur ging Reversa l in Su pport of Appellan t

to be served by comm ercial car r ier for service with in 3 calen da r days on

each of the following:

Ha rr y M. Reasoner

Vinson & E lkins

1001 Fan nin Str eet

Su ite 2300 First City Tower

Houston , TX 77002-6760Counsel for J ackson , T enn.

Hospital Co.

David Marx, Jr .

312-984-7668

McDerm ott , Will & Em ery

227 W. Monroe Str eet

31st FloorChicago, IL 60606-5096

Counsel for West Tenn .

Healthcare, In c.

Kevin M. J ones

McDerm ott , Will & Emery

227 W. Monr oe Str eet

31st F loor

Chicago, IL 60606-5096

Counsel for J ackson-Madison

County General Hospital

District

Kevin D. McDonald

J ones Day

51 Louisiana Avenu e, N.W.

Wash ington, DC 20001-2113

Counsel for BlueCross

Blu eS hield of T ennessee, Inc.

__________________________

David Seidma n

US Department of Justice Antitrust Case Brief - 01203-203897

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Transcript of US Department of Justice Antitrust Case Brief - 01203-203897