Diaz v. Farley

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
JUN 27 2000
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

ANTHONY DIAZ, PAUL DIEHL and
ALLAN KAMINSKY,

Plaintiffs-Appellants,
v.

MICHAEL FARLEY, MORRIS
MATTHEWS, JOAN ABELE, No. 98-4136
COTTONWOOD OBSTETRICS &
GYNECOLOGY & INFERTILITY,
OLD FARM OBSTETRICS &
GYNECOLOGY, and JOHN DOES I-
X,

Defendants-Appellees.

Appeal from the United States District Court
for the District of Utah
(D.C. No. 94-CV-1184-B)

Jay D. Gurmankin (Eliot M. Cohen and Chris R. Hogle with him on the briefs),
Berman, Gaufin, Tomsic, Savage & Campbell, Salt Lake City, Utah, for
Plaintiffs-Appellants.

George A. Hunt, Williams & Hunt, Salt Lake City, Utah and Randy T. Austin,
Kirton & McConkie, Salt Lake City, Utah (R. Stephen Marshall, Durham, Jones &
Pinegar, Salt Lake City, Utah; Kenneth W. Yeates, Van Cott, Bagley, Cornwall &
McCarthy; R. Brent Stephens, Snow, Christensen & Martineau, Salt Lake City,
Utah, with them on the brief) for Defendants-Appellees.
Before TACHA, BRORBY and EBEL, Circuit Judges.

EBEL, Circuit Judge.

Drs. Diaz, Diehl, and Kaminsky (collectively, the “plaintiffs”) are

anesthesiologists with privileges at Cottonwood Hospital in Murray, Utah. They

brought an antitrust suit against three other anesthesiologists with privileges at

Cottonwood, Drs. Farley, Matthews, and Abele (collectively, the “individual

defendants”), and against two entities, Cottonwood Obstetrics & Gynecology &

Infertility (“Cottonwood Ob/Gyn”) and Old Farm Obstetrics & Gynecology (“Old

Farm Ob/Gyn”). The plaintiffs alleged that the individual defendants engaged in

a horizontal group boycott that violated Section 1 of the Sherman Act and the

Utah Antitrust Act. They further alleged that Cottonwood Ob/Gyn and Old Farm

Ob/Gyn also violated Section 1 of the Sherman Act and the Utah Antitrust Act

when they horizontally agreed to honor the boycott engineered by the individual

defendants. The plaintiffs also sued all of the defendants for tortious interference

with economic relations, and they sued one of the individual defendants, Dr.

Abele, for defamation.

The plaintiffs maintain that the actions of the defendants were per se

unlawful under the antitrust laws, and they have conceded that they could not

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prove their claims if the rule of reason governs the conduct at issue. The district

court found that the rule of reason applies to the actions of the defendants;

therefore it granted the individual defendants’ motion for summary judgment on

the antitrust claims, and dismissed with prejudice the plaintiffs’ antitrust claims

against all of the defendants. 1 The district court then dismissed without prejudice

the pendant defamation and tortious interference with economic relations claims.

The plaintiffs now appeal, and we affirm.

I. BACKGROUND 2

A. Cottonwood Hospital and the Anesthesia Department

Cottonwood Hospital is located in Murray, Utah, just south of Salt Lake

City. The hospital is governed pursuant to bylaws recommended by the

Cottonwood Hospital medical staff and adopted by the Cottonwood Hospital

1
It was unclear whether the district court’s July 17, 1998 Memorandum
Decision disposed of all of the claims against all of the defendants, or just the
claims against the individual defendants. On June 12, 2000, the district court
filed a Supplemental Order clarifying that its Memorandum Decision was and is a
final judgment dismissing all of the plaintiffs’ claims against all of the
defendants. The district court also filed a Judgment pursuant to Federal Rule of
Civil Procedure 58.
2
The majority of the facts in this case are undisputed and are adopted from
the district court’s thorough opinion. See Diaz v. Farley, 15 F. Supp.2d 1138 (D.
Utah 1998). To the extent that any facts are disputed, we have viewed them in the
light most favorable to the plaintiffs, because this appeal stems from the grant of
a motion for summary judgment in favor of the defendants. See Kaul v. Stephan,
83 F.3d 1208, 1212 (10th Cir. 1996).

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Board of Trustees. The bylaws establish separate departments within Cottonwood

Hospital, including a Department of Anesthesiology. Anesthesiology services at

Cottonwood Hospital are provided by the members of the Department of

Anesthesiology (“Department”), all of whom are licensed anesthesiologists who

practice medicine independently of each other. The anesthesiologists are not

considered employees of the hospital. The Department schedules

anesthesiologists to cover the operating room (“OR”), the labor and delivery

room, and other areas of the hospital. Each area requires a specific number of

anesthesiologists each day. Historically, anesthesiologists working in one area

have not been regularly scheduled in another area. The OR and labor and delivery

divisions have each had a certain number of “slots,” or physicians, who rotate in

the schedule. A new physician is usually only added to the rotation in these areas

when another physician leaves.

Until November, 1993, two anesthesiologists from the Department were

responsible for scheduling anesthesiology services at Cottonwood. In November,

1993, a single anesthesiologist, Dr. Farley, became the monthly scheduler. He

was selected as scheduler by a two-thirds majority vote of the voting members of

the Department. As the scheduler, Dr. Farley was responsible for ensuring that a

sufficient number of anesthesiologists were assigned to cover each area of the

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hospital at all times. Prior to February, 1994, a single department member was

assigned to cover each 24-hour labor and delivery shift.

B. Plaintiffs-Appellants

Plaintiff-appellant Dr. Anthony Diaz practiced general anesthesiology at

Cottonwood, including obstetric (“ob/gyn”) anesthesiology between 1981 and

1982. He left Cottonwood in 1982 to practice medicine elsewhere and then

returned to Cottonwood in 1990. From 1990 to 1992, Dr. Diaz did some “fill in”

anesthesiology work on the labor and delivery schedule at the rate of

approximately two shifts per month. In 1993, he requested significant additional

labor and delivery shifts.

Plaintiff-appellant Dr. Paul Diehl practiced anesthesia in labor and delivery

at Cottonwood between 1981 and 1989. In 1989, Dr. Diehl left the labor and

delivery anesthesia practice to work in the OR anesthesia practice. 3 In 1992 and

1993, Dr. Diehl again sought significant work in labor and delivery.

Plaintiff-appellant Dr. Kaminsky practiced anesthesiology in labor and

delivery at Cottonwood between 1980 and 1983. In 1983, Dr. Kaminsky gave up

3
There is some uncertainty in the record whether Dr. Diehl left the labor
and delivery anesthesia practice in 1985 or 1989. We use the 1989 date because
that appears consistent with his deposition testimony, but if that fact is in dispute,
it is not determinative of our holding.

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his labor and delivery shifts for shifts in the OR division. In 1993, Dr. Kaminsky

asked to be included again in the labor and delivery schedule.

Thus, plaintiffs Drs. Diaz, Diehl, and Kaminsky each performed

anesthesiology services in the labor and delivery room at Cottonwood Hospital for

a period of time in the 1980s; each voluntarily ceased performing such services in

the labor and delivery room; and each sought to regain a significant number of

shifts on the labor and delivery schedule in 1993.

C. Defendants-Appellees

Defendant-appellee Dr. Michael Farley has been a member of

Cottonwood’s Department of Anesthesiology since 1986; defendant-appellee Dr.

Morris Matthews has been a member since 1983; and defendant-appellee Dr. Joan

Abele was a member from 1983 to 1996. All three individual defendants were

part of a five-physician rotation that regularly performed anesthesiology in labor

and delivery for several years prior to 1993. Defendants-appellees Cottonwood

Ob/Gyn and Old Farm Ob/Gyn are practice groups comprised of gynecologists

and obstetricians with privileges to practice at Cottonwood Hospital.

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D. Scheduling Dispute

In November, 1993, Dr. Diaz, who was the acting Anesthesia Department

Chairman, called a Department meeting to discuss the scheduling of ob/gyn

anesthesia. At that time, there was apparently only one open slot in the labor and

delivery rotation and Drs. Diaz, Diehl, and Kaminsky were all seeking increased

labor and delivery shifts. The Department members concluded that the plaintiffs

would be scheduled for “some” labor and delivery shifts.

In December, 1993, the Department members met again to discuss whether

the plaintiffs should be given new “slots” so that everyone would work equally on

the labor and delivery schedule, or whether they would be given one slot to share

among the three of them. The Department members apparently decided that the

ob/gyn anesthesiologists currently filling the “slots” would meet separately to

discuss the issue. It is unclear whether that meeting ever took place. The

plaintiffs continued to work to some extent in labor and delivery, but there was no

definite resolution of the scheduling issue.

The individual defendants’ hesitations about granting plaintiffs’ requests to

return to the labor and delivery rotation apparently stemmed from the following:

concern over the plaintiffs’ absence from ob/gyn anesthesia, possible disruption

of the smoothly running ob/gyn anesthesia schedule, and a decrease in the

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individual defendants’ own total number of shifts with ob/gyn patients. At around

this time, individual defendant Dr. Matthews wrote the following in his journal:

Three people who had all left OB in the past now are asking to come
back on. There is one slot open, and another fellow in the OR wants
to do more OB. The OR people what [sic] us to equally divide the
shifts, but those of us who never left don’t want that. In addition
some of the OB’s don’t want one of them to come back. Since he
quit doing OB when I cam [sic] 10 years ago, I wonder how good his
memory is, but I think we’ll have to let him work some shifts and let
him remember why he gladly left a decade ago. We have some
problems in the department. About half of the people are easy to get
along with and all the surgeons will work with them. The others
have personality quirks or are slow, and some surgeons request not to
have them.

Shortly thereafter, Dr. Matthews sent Dr. Farley a letter, informing him that a

proposed contract being considered with Cottonwood Ob/Gyn would impact the

monthly anesthesia schedule. At around the same time, Dr. Abele circulated an

unauthorized informal “poll” to the Obstetrics Department at Cottonwood

Hospital, asking OB practitioners to rate anesthesiologists, including Drs. Diaz,

Diehl, and Kaminsky.

Dr. Ron Larkin, the managing partner of Cottonwood Ob/Gyn, testified that

he had concerns about the addition of the plaintiffs to the labor and delivery

schedule based on prior experiences with all three plaintiffs. Dr. Larkin stated

that he “did not want them taking care of our patients” because of those concerns.

On February 4, 1994, the physicians at Cottonwood Ob/Gyn requested that

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another anesthesiologist be scheduled for their patients whenever Plaintiff Dr.

Kaminsky was on call.

E. The Agreement Between Dr. Matthews and Cottonwood Ob/Gyn

Soon after Cottonwood Ob/Gyn’s request regarding Dr. Kaminsky,

Cottonwood Ob/Gyn and individual defendant Dr. Matthews reached an

agreement. The agreement obligated Dr. Matthews personally to provide

anesthesiology services to Cottonwood Ob/Gyn’s patients in the labor and

delivery room, or to select another physician of his choosing to perform such

services. The contract, which was signed on February 7, 1994, provided that Dr.

Matthews “shall have exclusive authority and control over all anesthesia services

provided to patients of Cottonwood obstetrics for labor, cesarean section and D &

Cs performed in the labor suite at Cottonwood Hospital.” Thus, according to the

agreement, either Dr. Matthews or an anesthesiologist selected by him would

provide anesthesiology services for Cottonwood Ob/Gyn patients in labor and

delivery.

F. Double Coverage of Plaintiffs’ Shifts at Cottonwood Hospital

After the agreement was made, Dr. Matthews informed Dr. Kaminsky that

he would be “double covered,” meaning that whenever Dr. Kaminsky was on the

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labor and delivery schedule, there would also be another anesthesiologist

(selected by Dr. Matthews) scheduled. The anesthesiologist selected by Dr.

Matthews would be the one who would provide anesthesiology services to the

patients of Cottonwood Ob/Gyn in labor and delivery. 4 Dr. Matthews offered Drs.

Diehl and Diaz two non-double covered shifts per month, with the possibility for

increased work for Cottonwood Ob/Gyn patients in the future if their ob/gyn

skills were deemed acceptable. Dr. Diaz accepted this offer, but Dr. Diehl

declined and was then subject to being double covered. Subsequently,

Cottonwood Ob/Gyn requested that Dr. Diaz not perform anesthesia on its

obstetrical patients because of poor performance; therefore, Dr. Diaz was

ultimately double covered as well. The double coverage policy operated to

preclude the plaintiffs from performing anesthesia services on Cottonwood

Ob/Gyn patients in the labor and delivery suite. Whenever they were scheduled in

labor and delivery, Dr. Matthews or an anesthesiologist selected by him was

scheduled as well. The other anesthesiologist performed the anesthesiology

services for the Cottonwood Ob/Gyn patients in labor and delivery.

Plaintiffs were also ultimately double covered for Cottonwood Ob/Gyn

patients seen in the OR after physicians in the OR indicated that they would

4
This still allowed Doctor Kaminsky to provide anesthesiology services to
ob/gyn patients admitted to Cottonwood Hospital who were not from Cottonwood
Ob/Gyn.

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prefer not to be scheduled with them. In addition, the plaintiffs allege that the

effects of the agreement and the double coverage policy have been extended as

Dr. Matthews has asked other groups of obstetricians and gynecologists who

deliver babies at Cottonwood to enter into agreements similar to the one he had

with Cottonwood Ob/Gyn.

On March 7, 1994, Dr. Matthews sent a letter to Dr. Alan Rappeleye of Old

Farm Ob/Gyn in an attempt to solicit Old Farm Ob/Gyn to enter into an agreement

similar to the agreement he had with Cottonwood Ob/Gyn. On June 8, 1994, Old

Farm Ob/Gyn sent a letter to Cottonwood Ob/Gyn indicating that Old Farm

Ob/Gyn would abide by the Cottonwood Ob/Gyn agreement. Plaintiffs allege that

the June 8th letter serves as evidence of a horizontal agreement between Old Farm

Ob/Gyn and Cottonwood Ob/Gyn to boycott plaintiffs.

H. Procedural History

The plaintiffs sued under Section 1 of the Sherman Act, 15 U.S.C. § 1

(1990), 5 alleging that the defendants engaged in a conspiracy that unreasonably

restrained trade. They argued that the conduct at issue amounted to a horizontal

5
15 U.S.C. § 1 provides in relevant part: “Every contract, combination in
the form of trust or otherwise, or conspiracy, in restraint of trade or commerce
among the several States, or with foreign nations, is hereby declared to be
illegal.”

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group boycott that merited per se condemnation under the antitrust laws. They

conceded to the district court that they did not have sufficient evidence to proceed

under a theory that the alleged conduct violated the rule of reason.

The district court granted the individual defendants’ motion for summary

judgment and dismissed the plaintiffs’ antitrust claims against all of the

defendants after finding that per se treatment was inappropriate for three reasons:

(1) the boycott alleged by the plaintiffs was not the type that has been historically

shown to always or almost always negatively affect competition; (2) a preliminary

examination of market conditions did not reveal any anticompetitive impact; and

(3) the defendants offered procompetitive justifications for their actions. The

district court then declined to exercise supplemental jurisdiction over plaintiffs’

defamation and tortious interference with economic relations claims pursuant to

28 U.S.C. § 1367, and dismissed those claims without prejudice. Plaintiffs do not

appeal that dismissal.

In this appeal, plaintiffs allege that the district court relied on an inaccurate

and inconsistent characterization of the facts, and they maintain that the per se

rule applies to the conduct of the defendants.

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 II. DISCUSSION
The district court had original jurisdiction over the antitrust claims

pursuant to 28 U.S.C. § 1337 6 and 15 U.S.C. § 15. 7 We have jurisdiction under

28 U.S.C. § 1291.

We review de novo a district court’s order granting summary judgment.

See Kaul, 83 F.3d at 1212.

Summary judgment is appropriate if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a
matter of law. When applying this standard, we examine the factual
record and reasonable inferences therefrom in the light most
favorable to the party opposing summary judgment. If there is no
genuine issue of material fact in dispute, then we next determine if
the substantive law was correctly applied by the district court.

Id.

6
28 U.S.C. § 1337 provides in relevant part:
(a) The district courts shall have original jurisdiction of any civil
action or proceeding arising under any Act of Congress regulating
commerce or protecting trade and commerce against restraints and
monopolies.
7
15 U.S.C. § 15 provides in relevant part:
Except as provided in subsection (b) of this section [regarding
foreign states], any person who shall be injured in his business or
property by reason of anything forbidden in the antitrust laws may
sue therefor in any district court of the United States in the district in
which the defendant resides or is found or has an agent, without
respect to the amount in controversy, and shall recover threefold the
damages by him sustained, and the cost of suit, including a
reasonable attorney’s fee.

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A. The District Court’s Characterization of the Facts

Plaintiffs first contend that the district court relied on an inaccurate and

internally inconsistent characterization of the facts in reaching its decision. They

argue that the district court placed too much emphasis on the agreement between

Dr. Matthews and Cottonwood Ob/Gyn, and ignored other evidence of

conversations and agreements involving the defendants. Although the district

court did not specifically mention the substance of every relevant conversation in

which the defendants engaged in the months leading up to the agreement between

Dr. Matthews and Cottonwood Ob/Gyn, the district court did discuss several

meetings and conversations involving the defendants that preceded the

Matthews/Cottonwood Ob/Gyn agreement. Plaintiffs have failed to show how any

of the evidence they cite that was not mentioned in the district court opinion

would alter the horizontal group boycott analysis. 8

8
Plaintiffs point specifically to the district court’s failure to mention an
agreement between Drs. Farley and Matthews that Dr. Farley would make the
labor and delivery schedule in accordance with Dr. Matthews’ decisions. In
acting in accordance with Dr. Matthews’ decisions when developing the schedule,
Dr. Farley was simply abiding by the agreement between Dr. Matthews and
Cottonwood Ob/Gyn and carrying out his duties as the scheduler. Thus, the
district court did not “ignore” the agreement between Dr. Matthews and Dr.
Farley; rather, it likely considered Dr. Farley’s actions as an element of the
overall agreement between Dr. Matthews and Cottonwood Ob/Gyn.

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 Plaintiffs also claim that the district court erred in giving credence to the

alleged concerns about their obstetrical anesthesiology skills. They argue that

because Dr. Matthews offered Drs. Diaz and Diehl two non-double covered shifts

per month, any concern about their skills was merely a “red herring argument.”

Dr. Matthews, however, offered Drs. Diaz and Diehl those shifts on an

“experimental test basis” to allow them to prove that concerns about their skills

were unwarranted. Thus, the fact that Dr. Matthews offered Drs. Diaz and Diehl

non-double covered shifts is not indicative of a lack of concern about their skills.

In addition, the record contains evidence that there was some basis for concern

about the obstetric anesthesiology skills of the plaintiffs.

Plaintiffs also point to what they consider a fundamental contradiction

within the district court’s rendition of the facts. The district court opinion

contained the following two statements: (1) “[T]he ob/gyn doctor or patient had

no realistic choice but to use the anesthesiologist on call when an obstetric case

presented itself,” Diaz, 15 F. Supp.2d at 1147; and (2) “The agreement enables

the patient or ob/gyn doctor performing a procedure to choose which

anesthesiologist he or she will use rather than requiring the doctor to use

whichever anesthesiologist happens to be on call,” Id. at 1148. The statements

are not fundamentally contradictory; rather, they are easily reconciled. In the first

statement, the district court describes the situation as it existed prior to the

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Matthews/Cottonwood Ob/Gyn agreement; and in the second statement, the

district court describes the situation as it existed after the agreement. Before the

agreement, neither the ob/gyn doctor nor the patient could choose an

anesthesiologist. After the agreement, Cottonwood Ob/Gyn doctors could tell Dr.

Matthews which anesthesiologists they preferred for their patients. Then,

whenever a non-preferred anesthesiologist was on the labor and delivery schedule,

a preferred anesthesiologist could be scheduled as well to provide services for the

Cottonwood Ob/Gyn patients. The district court made these observations in

support of its conclusion that the agreement increased user choices.

Thus, plaintiffs’ first argument fails. They have not demonstrated that the

district court relied on an inaccurate or inconsistent characterization of the facts

in reaching its decision.

B. Per Se Versus Rule of Reason Analysis

Plaintiffs next argue that the district court erred in finding that per se

analysis does not govern the conduct of the defendants in this case. We agree

with the district court’s resolution of this issue and we find its analysis thorough;

therefore, we adopt much of its reasoning in this opinion.

Section 1 of the Sherman Act prohibits “every contract, combination . . . or

conspiracy in restraint of trade or commerce . . . .” 15 U.S.C. § 1. The Sherman

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Act’s prohibition generally precludes only restraints that are unreasonable. See

Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472

U.S. 284, 289, 105 S. Ct. 2613, 86 L. Ed.2d 202 (1985). The Supreme Court has

developed two main analytical approaches for determining whether a defendant’s

conduct unreasonably restrains trade: the per se rule and the rule of reason. The

rule of reason is the usual method of analyzing conduct under the Sherman Act.

See Northwest Wholesale, 472 U.S. at 289. It requires “the fact finder [to]

weigh[] all of the circumstances of a case in deciding whether a restrictive

practice should be prohibited as imposing an unreasonable restraint on

competition.” Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 49, 97

S. Ct. 2549, 2557, 53 L. Ed.2d 568 (1977). Per se analysis is reserved for

“‘agreements or practices which because of their pernicious effect on competition

and lack of any redeeming virtue are conclusively presumed to be unreasonable

and therefore illegal without elaborate inquiry as to the precise harm they have

caused or the business excuse for their use.’” Northwest Wholesale, 472 U.S. at

289 (quoting Northern Pacific Ry. Co. v. United States, 356 U.S. 1, 5, 78 S. Ct.

514, 518, 2 L. Ed.2d 545 (1958)). “The decision to apply the per se rule turns on

‘whether the practice facially appears to be one that would always or almost

always tend to restrict competition and decrease output . . . or instead one

designed to increase economic efficiency and render markets more, rather than

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less, competitive.’” Id. at 289-90 (quoting Broadcast Music, Inc. v. Columbia

Broadcasting System, Inc., 441 U.S. 1, 19-20, 99 S. Ct. 1551, 1562-63, 60 L.

Ed.2d 1 (1979) (further quotations and citations omitted)). Because plaintiffs

conceded below that they did not have sufficient evidence to proceed under a

theory that defendants’ conduct violated the rule of reason, if we find, as the

district court did, that the per se rule does not apply, the order dismissing

plaintiffs’ antitrust claims must be affirmed.

Plaintiffs allege that defendants engaged in a horizontal restraint of trade in

the form of a group boycott. In Northwest Wholesale, the Supreme Court

clarified its earlier language from Klor’s, Inc. v. Broadway-Hale Stores, Inc., 359

U.S. 207, 79 S. Ct. 705, 3 L. Ed.2d 741 (1959), and held quite clearly that not all

group boycotts or horizontal restraints of trade are to be judged under a per se

standard. See Northwest Wholesale, 472 U.S. at 295. There, the court stated that

unless the defendants in a group boycott situation “possess[] market power or

exclusive access to an element essential to effective competition, the conclusion

that expulsion [of the plaintiff] is virtually always likely to have an

anticompetitive effect [thereby invoking a per se analysis] is not warranted.” Id.

at 296. The Court also stated that in per se cases, “the practices were generally

not justified by plausible arguments that they were intended to enhance overall

efficiency and make markets more competitive.” Id. at 294.

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 With regard to each of the three factors mentioned above, we agree with the

district court that “[t]he present situation is quite different from the Supreme

Court cases meriting per se review.” Diaz, 15 F. Supp.2d at 1146. There is no

showing that the defendants hold a dominant position in a relevant market; the

defendants did not control access to an element “essential” to enable plaintiffs to

compete; and the agreements the plaintiffs challenge did, in some regards, make

the markets more competitive.

First, plaintiffs have not shown that defendants hold a dominant position in

a relevant market. As stated by the district court:

In this case, the plaintiffs have not alleged market power on
the part of the defendants. Indeed, the plaintiffs have not defined
any relevant market. Accordingly, the court has no basis on which to
determine the size of Cottonwood Ob/Gyn’s and Old Farm Ob/Gyn’s
practices at Cottonwood Hospital compared to other ob/gyn groups or
how significantly the agreement between Dr. Matthews and
Cottonwood Ob/Gyn and Old Farm Ob/Gyn affects the plaintiffs’ or
other anesthesiologists’ ability to practice ob/gyn anesthesia at
Cottonwood Hospital or any other relevant geographic market.

Diaz, 15 F. Supp.2d at 1148.

Second, the defendants did not control access to an element “essential” to

plaintiffs’ ability to compete. The plaintiffs remained free to practice

anesthesiology at Cottonwood and free to compete to increase their access to

ob/gyn patients. Although agreements between the individual defendants and the

two groups of doctor-users of anesthesiology services effectively precluded the

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plaintiffs from performing anesthesiology services on Cottonwood Ob/Gyn and

Old Farm Ob/Gyn patients during the term of the agreements, that result is a

necessary consequence of all such agreements between providers and users of

goods and services. Here, plaintiffs could compete for all the other ob/gyn work,

and there is no showing by plaintiffs of the percentage of the market that was

precluded because of the agreements with Cottonwood Ob/Gyn and Old Farm

Ob/Gyn. In addition, the agreements with Cottonwood Ob/Gyn and Old Farm

Ob/Gyn were apparently terminable-at-will, and there is no showing that plaintiffs

were precluded from trying to improve their skills and relationships with doctors

in order to compete for business with the doctors in those groups. Finally,

plaintiffs still had staff privileges and could utilize Cottonwood Hospital to

service their own patients. 9

Third, Northwest Wholesale explicitly allows courts to consider plausible

arguments concerning procompetitive effects in determining whether the per se

rule or the rule of reason should apply to a horizontal group boycott. See

9
This case is easily distinguishable from Full Draw Productions v. Easton
Sports, Inc., 182 F.3d 745 (10th Cir. 1999), where this court reversed the district
court’s dismissal of an antitrust claim for failure to allege antitrust injury
adequately. In Full Draw, the plaintiffs alleged that the defendants’ group
boycott cut off their access to suppliers and exhibitors of archery goods and
services, which was an essential element for the plaintiff to be able to compete in
the market of sponsoring trade shows for archery products. See Full Draw, 182
F.3d at 751. We found the plaintiffs’ allegations sufficient to state a violation of
§ 1 of the Sherman Act. See id.

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Northwest Wholesale, 472 U.S. 284, 294 (stating that group boycott cases

analyzed under the per se rule “were generally not justified by plausible

arguments that they were intended to enhance overall efficiency and make

markets more competitive”). If there are no such plausible arguments, “the

likelihood of anticompetitive effects is clear and the possibility of countervailing

procompetitive effects is remote.” Id. Here, the defendants advance a plausible

argument that the agreements in question actually enhanced competition by

increasing a doctor’s ability to choose which anesthesiologists he or she would

use at Cottonwood Hospital. Before the agreements, the ob/gyn doctors largely

had to accept whoever was scheduled to be on shift at the time of any particular

delivery. This argument further counsels against use of the per se approach.

Finally, the fact that the conduct at issue in this case concerns decisions

relating to health care presents a further reason why we should be cautious in

applying a per se test. Because agreements pertaining to the provision of health

care services often raise issues of professional medical judgment, it is typically

useful to apply a rule of reason approach:

Allegations of a concerted refusal to deal arise frequently in the
health care industry. Denial of hospital staff privileges is frequently
alleged to be the product of a group boycott organized by competing
health care providers. In such cases, the courts have generally
applied the rule of reason, holding that a hospital must be allowed, in
conjunction with its medical staff, to exclude individual doctors on
the basis of their lack of professional competence or unprofessional
conduct. Actions to enforce ethical rules by medical associations are

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 also frequently alleged to constitute a group boycott. Again, the
courts generally apply the rule of reason, examining whether the
rules serve a legitimate purpose in establishing professional
standards of care without unduly limiting competition among
providers.

ABA Section of Antitrust Law, Antitrust Law Developments 118 (4th ed. 1997)

(citations omitted). We cannot say that the type of internal hospital scheduling

practice at issue in this case is the kind of practice that has historically posed

anticompetitive consequences. As the district court here observed:

Furthermore, this case deals with a call system that
appears to be common throughout the health care industry. The
unique nature of the call system and the relative inexperience of
the courts in understanding and regulating internal hospital
scheduling practices make it wholly inappropriate to justify
condemning one type of scheduling practice as per se violative
of the Sherman Act. The United States Supreme Court has
cautioned that “It is only after considerable experience with
certain business relationships that courts classify them as per se
violations.” Broadcast Music, Inc., 441 U.S. at 9. It may be
that this type of scheduling practice actually involved a
combination or concerted action by the defendants and that it is
anticompetitive, but such a conclusion should only be reached
after an analysis of all relevant factors under the Rule of
Reason. In sum, defendants’ alleged practice is not the type
that regularly poses anticompetitive consequences.
Consequently, per se analysis is not appropriate.

Diaz, 15 F. Supp.2d at 1147-48; see also Retina Assoc. v. Southern Baptist Hosp.,

105 F.3d 1376, 1381-82 (11th Cir. 1997) (finding per se analysis inappropriate for

an opthalmological care provider group’s allegedly exclusive referral practices, in

part because the effect of the referral practices was “not fully understood” and

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had not been historically shown to always or almost always adversely affect

competition).

Therefore, we find that plaintiffs have not shown that the conduct at issue

in this case constitutes the type of horizontal group boycott deserving of per se

analysis. They have failed to “present a threshold case that the challenged

activity falls into a category likely to have predominately anticompetitive effects.”

Northwest Wholesale, 472 U.S. 284, 298.

Plaintiffs’ citations to this court’s decisions in Brown v. Presbyterian

Healthcare Servs., 101 F.3d 1324 (10th Cir. 1996), Coffey v. Healthtrust, 955

F.2d 1388 (10th Cir. 1992), and Tarabishi v. McAlester Regional Hospital, 951

F.2d 1558 (10th Cir. 1991), are unavailing. Brown is distinguishable from the

present case because it did not even involve the issue of whether to use a per se

or rule of reason standard in evaluating the defendant’s conduct. The only

antitrust issue in that appeal was an issue of causation. See Brown, 101 F.3d at

1334-1335. Furthermore, factually we note that the plaintiff in Brown was denied

all privileges to practice at the hospital in question, see Brown, 101 F.3d at 1328,

whereas here, the plaintiffs continued to be able to practice at Cottonwood.

Although Coffey indicated that a horizontal, as opposed to a vertical, group

boycott is a necessary condition for application of the per se rule, it did not

imply, as plaintiffs suggest, that it was a sufficient condition for using the per se

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rule. See Coffey, 955 F.2d at 1392. In fact, the holding of Northwest Wholesale

is inconsistent with such a suggestion. See Northwest Wholesale, 472 U.S. at

(finding that the rule of reason governed the legality of horizontal agreements that

resulted in the expulsion of a competitor from a purchasing cooperative). Thus,

contrary to plaintiffs’ suggestion, Coffey does not dictate that because defendants

engaged in horizontal agreements that limited plaintiffs’ access to ob/gyn

anesthesiology, per se analysis must govern their conduct.

Tarabishi actually lends support to the district court’s decision that a per se

analysis is inappropriate in the present situation. In Tarabishi, this court relied in

part on the fact that the defendants had terminated the plaintiff doctor’s staff

privileges “at least ostensibly because of a lack of professional competence or

unprofessional conduct,” in order to conclude that “Weiss does not dictate the use

of per se analysis.” 10 Tarabishi, 951 F.2d at 1570 n.18. The court in Tarabishi

stated, “Denying staff privileges to a physician through peer review on the basis

that the physician’s conduct is unprofessional and inappropriate is not an activity

‘likely to have predominantly anticompetitive effects’ such that per se treatment

10
The reference is to Weiss v. York Hospital, 745 F.2d 786, 818-20 (3rd
Cir. 1984), a case in which the Third Circuit analyzed a situation it found
analogous to a traditional boycott under the per se rule. Because Weiss involved
facts different from those present here, and because the statements in Weiss
regarding analysis of group boycotts were superseded by the Supreme Court’s
ruling in Northwest Wholesale, we do not find Weiss instructive in our analysis in
this case.

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is necessary.” Id. at 1571 (citation omitted). Here, although there was not a

“peer review,” the conduct of the defendants was similarly motivated, at least in

part, by issues of the plaintiffs’ competency to provide medical services. That

suggests that this claim is a poor candidate to be evaluated under a per se

standard of review.

III. CONCLUSION

We find that the district court did not rely on an inaccurate and internally

inconsistent characterization of the facts in reaching its decision, and we agree

with the district court that per se analysis does not govern the conduct at issue in

this case. We also find no error in the district court’s recognition of the plausible

procompetitive justifications for the agreement between Dr. Matthews and

Cottonwood Ob/Gyn. Therefore, we AFFIRM the district court’s order granting

summary judgment to the individual defendants and dismissing the plaintiffs’

claims against all of the defendants.

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