Armstrong Surgical Center, Inc. v. Armstrong County Memorial Hospital

CENTER, SURGICAL ARMSTRONG

INC., Appellant, MEMORIAL COUNTY

ARMSTRONG Borja;

HOSPITAL; Rogelio Richard Chowdhry; Jeffrey

Bosco; Zafar Devries; Davie; Egbert

David; Frank Garrott; Frederick; John

Paul L. Genovese; Irving Klein;

Frank N. Koster; Kohl; H. John Lee

David H. Ondich; R.

Marty; P. Karl Michael Shook; Anthony

Saltrick; Willis Sotos; Yang

Smaldino; T. Peter Jae 97-3440.

No. Appeals, Court of

United States Circuit.

Third 23, 1998.

Argued April 27, 1999. July

Decided

OPINION OF THE COURT STAPLETON, Judge: Circuit Appellant Surgical Center, Armstrong (the Center”) “Surgical Inc. contends that Armstrong County Memorial (the physicians “Hospi- nineteen of its staff Defendants”) tal conspired prevent from establishing ambulatory surgery center, thereby restraining monopoliz- ing trade violation of sections 1 and 2 of the Sherman Act. District Court dis- complaint missed the concluding after conduct was immune from anti- scrutiny. trust will affirm. We I.

We review the District Court’s order dismissing Surgical complaint Center’s Jeremy de novo. See H. v. Mount Leba (3d Dist., non Sch. 95 F.3d Cir. 1996). order, reviewing employ we Laubach, Jr., Klee, L. P. John John used, the same standard the District Court Fulton, PA; Carnegie, Laubach & James allegations as true all factual accepting PA, (Argued), Pittsburgh, Ap- G. Park for complaint contained and all reason pellant. inferences that can drawn able there Resources, Schuylkill Energy from. See Garfínkel, Klett, Lieber,

Alan A. Rooney Co., Pennsylvania Light Inc. v. Power & PA; Schorling, Pittsburgh, & Jules S. (3d Cir.), 411 n. 2 cert. Klett, Lieber, (Argued), Rooney Henshell - denied, U.S. -, PA, Schorling, Harrisburg, Appellee & for (1997). L.Ed.2d 335 Armstrong County Hospital. Memorial Wendelynne (Argued), J. Newton Sheila DiNardo, Ingersoll

S. Buchanan Profes- II. PA, Corporation, Pittsburgh, sional for Surgical plans Center has to build a Bosco, Appellees Rogelio Borja, Richard free-standing ambulatory surgery center David, Chowdhry, Jeffrey Zafar Frank city Kittanning, Armstrong Coun- Davie, Devries, Frederick; Egbert Paul L. constructed, ty, Pennsylvania. If that fa- Garrott, Genovese, Irving John Frank N. cility provide outpatient surgical would Klein, Kohl, Koster, H. David Lee H. John services, including general surgery both Ondich, Marty, Michael P. Karl R. Sal- specialities. Currently, and various Smaldino, trick, Shook, Anthony Willis Pe- only facility operating is the with Yang. ter Sotos and Jae T. in Armstrong County, rooms and the nine- STAPLETON, physician perform Before: NYGAARD and teen staff defendants SCHWARTZ,* Judges surgeries Circuit District the vast in the coun- Judge. Only ambulatory ty. independent one sur- * Schwartz, Delaware, Murray Judge sitting by designation. Honorable M. Senior Dislricl of for the United States District Court they boycott announcing that counties in the four operates gery center (2) the outpatient center and proposed and this Armstrong County, that border false and submitting Hospital defendants fifty miles approximately center is Depart- information to the misleading If site. proposed Surgical Center’s Surgical the Center Specifically, ment. constructed, facility Surgical Center’s the in- Hospital the defendants alleges directly Hospital with the compete would that its nineteen Department the formed outpatient in the physicians its staff and Surgical the would use physicians not Moreover, Surgical the market. surgery that this infor- facility hope Center outpa- that it would offer alleges Center Department the mation would convince prices significant- surgical services tient facility not meet proposed could that the Hospital’s. than the ly lower a In statutory requirements for CON. the Pennsylvania Health Care the Under addition, claims that Surgical the Center Act, to anyone proposing estab- Facilities to mislead Hospital sought the defendants first facility care must a new health lish the believing that Department the into (“CON”) Need a of obtain Certificate outpa- open to its own Hospital intended Department of Health. Pennsylvania’s center, then under con- tient which was 448.701(a)(2). 35, § Pa. Ann. tit. Stat. See struction, facility would sat- and that this orderly “the and Act seeks to ensure The County’s outpatient isfy Armstrong all of care re- of health economical distribution partially Hospital’s needs. surgery The duplication prevent sources to needless facility designed pro- constructed Depart- § The Id. at 448.102. services.” sur- space outpatient for vide alternative applica- individually reviews CON ment then three geries conducted consisting proceeding in an extensive tions rooms. operating six mixed-use Hospital’s investigation, evaluation of sub- an an Center, Surgical howev- According to the materials, public hearing. and mitted er, knew that the Hospital defendants review, Department con- this During Hospital’s facility had construction issues, planning in- various health siders only the shell of the stopped been with existing health adequacy of cluding the Hospital building completed that the and need for additional providers and the care con- made no to resume had commitment § id. 448.707. or facilities. See services knowledge, it is Despite struction. care including health parties, Interested false- defendants alleged supply who similar services providers that its Department ly represented area, meetings may petition public very near either use or new center was to the information hearings submit or completion. any application. See Department on Surgical denied the Department The 448.704(b). 448.103, §§

id. Surgical application. Center’s CON Surgical Center March that decision to the Com- appealed Center with the for CON Health filed State Pennsylvania monwealth Thereafter, Board, ac- required. Hearing which conducted Facility com- Surgical to the Center’s received additional cording hearing own its defendants, including Depart- The Board affirmed plaint, evidence.1 (1) finding that originally sup- decision after physicians who ment’s fourteen facility en- would result Surgical project, Surgical Center’s Center’s ported existing facilities duplication conspiracy to subvert estab- needless into tered (2) services, Surgi- and health care facility. the new lishment of (1) economically via- cal Center not physicians involved: conspiracy Care review Health Pa. ferred its functions P.L. 1996 The Act of Feb. 10, 9(a) change affect (repealing Policy § Pa. Stat. Ann. tit. does not Board. This Laws 448.501-448.507), eliminated Surgical appeal. §§ has since Center's review of the our Facility Hearing and trans- Board the Health (1993); Schuylkill L.Ed.2d 247 see also Hospital sur- the nineteen ble because Resources, Energy 113 F.3d at 413. percent of performed ninety who geons Armstrong County’s surgeries would “A boycott classic involves con facility. Accord- Surgical use the Center purpose certed action with a either to ex Board, damaging most “the ing market, a person group clude or from the ap- [against Surgical Center’s evidence accomplish other anticompeti some physicians that the number of plication] is Fuentes, object, tive or both.” 946 F.2d at expected support have might who been (internal omitted); quotes see also St. facility significantly after decreased Barry, Paul Fire & Marine Ins. Co. v. projec- Applicant had submitted 531, 541, 2923, 2929-30, U.S. Surgical appealed Center tions.” (1978). commercially L.Ed.2d Such decision to the Commonwealth Board’s group boycotts, motivated or concerted re Pennsylvania, which affirmed the Court of deal, generally fusals to are considered Board’s decision. illegal per se under section See F.T.C. v. Ass’n, Lawyers Trial Superior Court 493 Surgical filed this antitrust Center 411, 431-32, 768, 779-80, 110 U.S. S.Ct. for, seeking damages treble inter action (1990); 107 L.Ed.2d 851 Weiss v. York alia, CON, denial of the lost value of (3d Cir.1984). 786, Hospital, 745 F.2d 818 center, outpatient proposed CON and the boycott’s a monopolize When aim is to It that the Hos- profits. and lost contends trade, might it also violate section 2. See conspiracy caused the pital defendants’ v. Baptist Retina Associates Southern deny application. its CON Fla., Inc., 1376, Hosp. 1384 of Surgical dismissed the The District Court (11th Cir.1997). a claim Center’s suit for failure to state deny defendants do not may granted, which relief be see a complaint alleges that threat of a 12(b)(6), that holding Fed.R.Civ.P. that under other circum- boycott might Hospital defendants’ conduct was immune stances constitute an antitrust violation. scrutiny. from antitrust insist, however, complaint

They establishing they facts are im- alleges III. liability. Specifically, mune from antitrust are insu- they contend their activities begin by considering We scrutiny from antitrust because their lated claim that the Surgical Center’s occurred in the allegedly wrongful conduct conspired boycott outpa defendants supplying context of information center, thereby violating sections 1 tient Pennsylvania Department of Health dur- 2 of the Act. To state a claim and Sherman ing Surgical Center’s 1, allege under section a must “a injuries alleged process and because the contract, conspiracy; combination or a re de- solely Department’s resulted from the trade; and an effect on inter straint nial of the CON. v. South Hills state commerce.” Fuentes (3d 196, Cardiology, 946 F.2d 201 Cir. Brown, 341, 317 63 In Parker v. U.S. 1991). 2 Act pro Section of the Sherman 307, (1943), agricul- an 87 L.Ed. 315 S.Ct. monopolies attempts both hibits challenged marketing producer tural § 2. A claim monopolize. See 15 U.S.C. Director program adopted California’s “(1) 2 allege under section must under the Sher- Agriculture as invalid predatory engaged program defendant has Act. The served to restrict man (2) anticompetitive specific among growers conduct with and maintain competition (3) monopolize dangerous commodity “Rely- prices intent distribution. probability achieving monopoly power.” principles on of federalism and state ing McQuillan, held that Spectrum Sports, sovereignty, Supreme Court] Inc. v. [the 447, 884, 890-91, apply to anticom- 456, 122 the Sherman Act did not U.S. complementary Parker and Noerr are imposed the States petitive restraints ” that the an- expressions principle City Co- government.’ ‘as act business, poli- not regulate titrust laws Adver., Inc., 499 Outdoor lumbia v. Omni tics; protects the former decision 1344, 365, 113 L.Ed.2d 382 111 S.Ct. U.S. and the latter governing, States’ acts of (1991). in government. participation the citizens’ R.R. Presidents Eastern Conference Omni, 383, 111 S.Ct. 1344. 499 U.S. Inc., Freight, Noerr Motor U.S. v. empha Surgical As the Center (1961), 5 L.Ed.2d 464 sizes, however, immunity afforded to a Pennington, v. United Mine Workers unlimited. private party under Noerr is not 14 L.Ed.2d 626 U.S. conduct is challenged private Where (1965), held that anti- Supreme where “is only petitioning i.e., “sham” — liability predicated solely trust cannot favorable genuinely procuring aimed action government to secure petitioning to a valid government opposed action as are intended to even where those efforts action”— government effort to influence As the Court ex- competition. eliminate immunity is not available. Noerr Profes Noerr, right people Investors, plained “[t]he Real Estate Inc. Co sional Pictures, govern- Inc. 508 representatives their lumbia U.S. to inform (1993) 1920, 123 L.Ed.2d 611 S.Ct. respect with to the ment of their desires (“PRE”). essence, en petitioning In sham of laws cannot passage or enforcement governmental pro tails “the use of the depend made to on their inter- properly be outcome of that opposed cess - as to the Noerr, 139, 365 U.S. at doing est in so.” anticompetitive weapon.” an process—-as 81 S.Ct. 523. (em PRE, 61, at 113 S.Ct. 1920 508 U.S. doctrine and the Noerr- The Parker added). Accordingly, pe the sham phasis interpret have Pennington doctrine been in a titioning exception apply does not case protect each other to complementing ed as us where the like the one before principles upon but distinct the two related petitioning the con has not they Supreme are founded. As the than any purpose which was for other ob duct government action.2 recently taining more observed: favorable Court has government allegations procuring ac that both the threat aimed favorable 2. Plaintiffs PRE, 58, misrepresenta boycott and the claimed tion.” 508 U.S. at 113 S.Ct. 1920. ened Cheminor, to secure denial of the tions were intended we noted in PRE further holds As distinguish the situation before us from determining petition is a sham whether a Drugs, Ethyl Corp., First, cases like Cheminor Ltd. v. two-step process. requires a the Court (3d Cir.1999), 168 119 that deal with the F.3d petition "objective the is determines whether exception not, to the Noerr doctrine. In baseless;” "sham” petition ly if the is not sham Cheminor, defendant, Ethyl, peti the had regard subjective without intent Trade Commission tioned the International Second, objec petitioner. petition if the is Commerce, alleging and the (and only objectively tively if it is baseless dumping ibuprofen was bulk that Cheminor baseless), petition is to look to the the Court seeking imposi the U.S. market and "subjective and determine er's motivation” alleged subsi tion of extra duties to offset the [petition] an "whether the baseless conceals Although dies that enabled it to do so. Che- attempt directly with business interfere prior minor withdrew from the U.S. market relationships competitor through the of a use Ethyl’s petition, to a final decision on it al governmental process opposed —as leged resulting petition injuries from the process anticompeti of that an outcome —as against Ethyl. brought antitrust suit an 60-61, weapon.” U.S. at 113 S.Ct. tion Ethyl's response to reliance on Noerr immuni Noerr, (emphasis original) (quoting petition ty, was a Cheminor asserted that 523, Omni, 144, 81 S.Ct. 365 U.S. immunity "sham” and Noerr thus was un 1344). U.S. at 111 S.Ct. analyzed rejected Chemi- available. We petitioning Cheminor holds that where argument teachings nor’s under the of PRE. allegedly misrepresentations, effort involves Court, step, at the first must "determine immunity PRE Noerr is lost when holds that "sham,” i.e., petition objectively genuinely baseless petition [the] whether is "is at issue. a restraint party “[WJhere can be restraint private true that a It is also petitioning monopolization for bona-fide trade or is the re- held liable even action, that conduct has caused governmental op- conduct where sult of valid injury place. in the market action,” antitrust private urging direct those posed to Lawyers Trial Superior F.T.C. enjoy action absolute governmental Ass’n., 493 U.S. immunity liability antitrust for the (1990). Lawyers, In Trial L.Ed.2d 851 anticompetitive restraint. public defenders of the Dis example, the 492, 499, 108 486 U.S. in a concerted engaged trict of Columbia (1988) (citations omitted) L.Ed.2d 497 represent indigent defendants

refusal to Noerr, 365 U.S. at (quoting raising the District into pressure order to 523). paid. rate The Court held hourly principle in Mass. applied We held under could be liable defendants Andover, Inc. v. Ameri School Law at injuries Act for that resulted the Sherman (1997) Assoc., can Bar 107 F.3d 1026 boycott, though even directly from (“MSL”). There, plaintiff, unac govern intended to secure boycott was school, injuries complained credited law ment action. that, without ABA resulting from the fact Noerr The limitation on accreditation, graduates the school’s were Lawyers inapplica in Trial recognized refused admittance to most states’ bar ex ble, however, to a case where sole identified the critical is aminations. We injury directly by caused private as “whether state or conduct sue defen private action that the government injury alleges MSL it suffered.” caused Thus, even helped dant has to secure. Looking Id. at 1035. to the source petitioning might conduct where the same injury, that be restraint-causing we found liability injury for give to antitrust rise final author “every state retains the cause mar competitor in the directly caused to a rules,” any ity to set all the bar admission solely injury sought if relief is ketplace, the result injury plaintiff the suffered “is enjoy immuni the state would as to which Id. at and thus immune.” of state action Parker, ty private petitioner under the 1035-36. Supreme enjoys immunity. As the also in reasoning similarly applied Tube & Conduit This explained Allied Court Head, Nursing Care v. Aetna Casu Sandy Inc.: River Corp. v. Indian (1st Cir.1993), F.2d 1147 alty, 985 monopo efforts to restrain or Concerted allegedly insurers where the defendant government of by petitioning trade lize boycott in an effort to force employed a protected ficials are from antitrust liabil legislation permit enact legislature the ity the doctrine established under plain all the ting rate increases. Because [Noerr; Pennington, and California with injuries were associated tiffs claimed Transport Trucking v. Unl Motor Co. charged by the defendants increased rates protection of this scope imited]. lim the rate however, source, legislature after the removed the con depends, on its, “[plaintiffs the court concluded text, anticompetitive and nature of second, "subjective” and the pass test regard without to those under[PRE ] facts immunity would be exception to Noerr alleges petitioner] misrepre sham [plaintiff] [the Cheminor, inapplicable (empha here. F.3d at 123 sented." excep- on the sham un While Cheminor focuses original). Such a determination is sis in however, here, immunity, rejects Chemi- it also plaintiff tion to Noerr necessary because the argument "Noerr- general affirmatively alleges purpose nor’s more that defendants’ apply all to Pennington immunity does not process— was to secure the outcome Thus, containing misrepresentations.” Id. petitions denial the CON. even if defendants' extent, supports the conclusion opposition to be ob To that to the CON were found respect misrepre- (a reached below with jectively that could not baseless conclusion record), sentation claim. defendants would be reached Although Supreme suggested Court product viewed as injuries] must be were, Transport Motor Co. that the defendants state action” California Unlimited, 508, 512-13, Trucking 404 U.S. liability. immune from accordingly, (1972), 609, 30 92 S.Ct. L.Ed.2d com- Here, to the source of the looking activity involving knowingly petitioning that all of the injuries, we find plained of adjudica to an false information submitted injuries arise Surgical Center’s im enjoy antitrust might tive tribunal of the CON: solely from the denial munity, so held. See the Court has never pro- ability operate denial of the PRE, 6,n. at 61 508 U.S. value, of the CON’s posed facility; the loss whether (suggesting that the issues of the value of facility, the value of exception to misrepresentation there is a delay in se- proceeds; operation’s thereof, and, so, if the extent remain Noerr CON; and “other related loss- curing Motor, Moreover, open). since California injuries es.” Each of has decided a case that Supreme Depart- is a direct result claims exception casts doubt on whether such an ap- deny plaintiffs decision to ment’s any under circumstances and dic exists plication for a CON.3 that, circumstances of this tates case, Hospital defendants’ we honor the where, here, sum, plain- all of the In immunity. claim to ac- alleged injuries tiffs result state Adver., tion, liability imposed cannot be v. Omni Outdoor Columbia Inc., the state 499 U.S. private party on a who induced (1991), L.Ed.2d 382 Columbia Outdoor Ad anticompeti- means of concerted action (“COA”) vertising, per Inc. controlled 95 complaint activity. tive It follows cent of the billboard rental business upon which boycott claim fails to state Columbia, According to South Carolina. Noerr, 365 U.S. granted. relief can be See Advertising, respondent Omni Outdoor Parker, 523; 317 U.S. at market, (“Omni”), Inc. a newcomer to the 352, 63 S.Ct. 307. city conspired to re COA officials competition through in the market strain IV. limiting adoption zoning ordinance size, spacing, and location of billboards in Surgical second claim is Center’s city. against city the Omni filed suit defendants, a of part that as a alleging and COA violation Sher Department, conspiracy, their misled the jury Act. A found the existence of a man Board, and the Commonwealth Court COA, city and and conspiracy between the Hospital’s partially believing into injuries both were held liable for Omni’s facility open and constructed would soon they were en despite their insistence of the relevant market meet the needs immunity antitrust under Parker titled to defendants knew when Noerr, respectively. and facility completed. not be said, injury, it is was the denial resulting The Court first concluded that Omni’s for a Surgical application Center’s alleged injury was the result of state ac- deny The Center would have us had authorized its CON. tion. South Carolina immunity Hospital defen- municipalities regulate to the to land use and and, so, they grounds doing provided dants on the successful- construction in had using policy a to au- ly opposed the issuance of CON a “clear articulation of state mu- anticompetitive thorize conduct information known to be false. costs, it incurred costs at the plaintiff also claims "increased does not contend that 3. While otherwise, legal pursuing Plaintiff's level in excess of the cost it would have Board CON,” (or referenced costs boycott incurred had the threat of appeal plaintiff prose- apparently relate alleged misrepresentations) made. not been decision. Plaintiff cuted from the Board's agreement that an between shown regula with its the.de- in connection nicipality 372, governmental corrup- involved Omni, fendants at S.Ct. 499 U.S. tion.” tion, bribery, or other violations of state or City Hallie (quoting Town of of 1713, 34, 40, 105 immunity law. It held that Parker Claire, S.Ct. federal 471 U.S. Eau (1985)). ex As the Court remains such circumstances. 85 L.Ed.2d found the contention “impractical” plained: by govern- Parker is forfeited zoning regulation is very of purpose variously corruption, “defined mental business freedom unfettered displace public responsibilities ‘abandonment effect regularly has the in a manner that interests,’ ... faith ‘corrupt or bad competi- private normal acts of preventing decisions,’ mo- corrupt ... and ‘selfish or tion, part of new on the particularly ” Id. at 111 S.Ct. 1344. Such municipal A ordinance re- tives.’ entrants. location, size, call antitrust courts to spacing rule would stricting pur- form of action (surely speculate a common as to whether state billboards existing public bill- interest was necessarily protects portedly taken zoning) from competition judgment some an honest or de- against product boards gain. The Court stressed private newcomers. sire for [judg- that Parker “was not meant to shift (footnote omit- at Id. interest] public ments about ted). juries.” Id. judges elected officials city’s that “the concluded Having thus 377, 111 at was billboard construction restriction of immunity,” Parker facie entitled to prima that Par respect With to the contention the Court turned id. forfeited at least immunity should be ker of a whether the existence to the issue of activity may bribery illegal or other where and COA city officials conspiracy between making the state decision have subverted immunity. city of that stripped had ap that this the Court observed process, Parker im- the foundation of Itfirst noted practicality but had “the virtue of proach munity: pur to” the being vice of unrelated that, of Parker was The rationale Parker. Id. of the Sherman Act and poses commitment fed- light of our national rely on It chose to 111 S.Ct. 1344. eralism, language of the general Act to than the Sherman sanctions other interpreted Act should not be Sherman discourage such behavior: anticompetitive actions prohibit influence as the political unlawful To use governmental capaci- in their States un- regulation of state legality test of sovereign regulators. ties as (in a rather blunt doubtedly vindicates conspiracy that if Id. It then observed government. good way) principles than an “nothing mean more taken to construing is not But we are the statute in impose regulation agreement to has Congress to that end. directed immunity Parker purpose of question,” combating at other laws aimed passed “it is both inev- defeated because would be govern- in state and local corruption public that officials and desirable itable ments. or another to do what one agree often 378-79, 1344. at Id. urges upon citizens group private of 375, 111 S.Ct. 1344. them.” Id. at reasons, rejected the Court For these Act “any interpretation of Sherman jury had been instructed Because the look behind plaintiffs allow to ... that would agreement “an conspiracy that a was to base sovereigns in actions of state result accomplish an otherwise lawful state’s 5, [charges that manner,” 111 claims on n. their unlawful id. 376 an by corrupted making process 1344, decision next considered S.Ct. the Court activity].” Id. at bribery or other unlawful immunity when it is Parker is lost whether 162 itself, private party It Noerr where the 111 1344. concluded dis- S.Ct. city’s immunity by “deliberately public “reit- deceived the

cussion of the that, public lobby- in its possible with the market erating] officials” successful ing campaign, “deception, we said that any action that participant exception,4 is, reprehensible as it can be no con- ... ‘ipso action is facto qualifies as state sequence so as the Sherman Act is operation of the antitrust exempt from the far ” concerned.” 365 U.S. (empha- laws.’ Id. at S.Ct. Ronwin, 523. (quoting Hoover v. original) sis 558, 568, 104

466 U.S. S.Ct. 383-84, (emphasis Id. at S.Ct. (1984)). L.Ed.2d 590 added). Omni, Turning liability teachings perti of Omni are whether immuni Court addressed Noerr’s nent here. Considerations of federalism ty subject any for private parties was require interpretation an of the Sherman exceptions urged had been liability predicated Act that forecloses immunity.5 context of Parker It declined to anticompetitive' injuries that are inflicted way restrict Noerr in this for the by acting regulators. Liability states same reason it had declined to so restrict injuries by caused such state action is immunity: Parker precluded even where it is that a private party urging the action did so an immu- Insofar as identification of bribery, wrongful deceit or other conduct nity-destroying “conspiracy” is con- may have affected the decision mak cerned, generally Parker and Noerr ing process. remedy for such conduct present two faces of the same coin.... with rests laws addressed to it and not which, The same factors as we have looking with sovereign courts behind state above, impracticable described make it plaintiffs. action at the behest of antitrust beyond purpose or of the antitrust requires Federalism this result both with identify laws to and invalidate lawmak- respect respect to state actors and with ing by selfishly that has been infected private parties urged who have the state agreement private motivated with inter- action. impracticable ests likewise make it

beyond scope identify and invali- Here, Department is authorized lobbying produced date that has selfish- number, size, regulate state statute to ly agreement public motivated with offi- spacing of health care facilities. unlikely any cials. “It would be Like the statute in this statute Omni legislative effort influence action provides poli- a “clear articulation of state could succeed unless one or more mem- cy” which authorizes the “to legislative body bers of the became displace unfettered business freedom a ” ’coconspirators’ ... in some sense with that regularly manner has the effect of the private party urging such action. preventing competition, normal acts of invalidating And “conspiracy” is particularly part on the of new entrants.” if limited to one that involves some ele- Id. at While (beyond ment mere challenged true that decision of the of unlawfulness motivation), anticompetitive the invali- Department ap- involved individualized criteria, nothing dation would have to do with plication of established rather policies the antitrust laws. than the establishment criteria as possible exception persons governmental 4. referenced The relates to tions in which use the purchaser state action aas or seller in the process opposed to the outcome that —as sovereign regulator. market a rather than as process anticompetitive weapon.” an Id. —as sought only at 380. COA had to use the 5. The Court first concluded that the "sham'' process suppress competi- outcome of the exception inapplicable to Noerr was tion. exception "encompasses because that situa- Thus, Op. at 14. every abandoned.” Board was Omni, action Department’s the material, this issue was the of the the extent to the execution essential bit as makers reflects the decision the record that policy as was regulatory sovereign’s dispute was a and recognized that there by the zoning ordinance of the adoption credibility determination made a concern- council. city Columbia ing it. CON Surgical Center’s The complaint, the facts to determine On Department upon the

called clear that state decision makers was in is also the new ASC opening of a whether the disinterested, their conducted own con- were Department interest. the public and afforded all interested investigation, held and then investigation its own ducted set the record opportunity an parties parties all interested hearing at which a then decision was straight. The initial evidence to tender opportunity the had anyone who be- Finally, and twice reviewed. findings It then made argument. and committed on the that a fraud was the lieved CON that the issuance determined could have moved Department or Board After a public interest. was not the attempted to and reopen proceeding was the hearing, that determination second materially they were Board, persuade them that and the Com- by the concurred See, 35.231, §§ e.g., 1 Pa.Code misled. concluded thereafter monwealth reopening a of an ad- (authorizing supported by 35.233 decision was that Board’s the on motion of proceeding ministrative evidence. substantial whenever agency participant that the issue not clear to us It is cur- requires). As matters interest public facility would Hospital’s new whether however, stand, Department’s rently important was considered completed be public inter- where the concerning decision Neither or the Board. the final place remains in deci- est lies It finding on that issue.6 express made judgment of the the Board sion of decision, the Board’s written clear Court. Commonwealth however, Board heard evidence circumstances, Omni compels In these issue, halt- had been knew construction Indeed, Court.7 to affirm the District evi- us ed, “there was credible believed follow, fortiori, a result seems not been such project ha[d] dence that Surgical Cen- pro- care While health services. projection formula” “need Board’s suggested higher projected need and operating ter rooms. The jected a need for 6.5 larger area facility serve a than its would purpose currently general had six projections hospital, the Board found "short and a room used for operating rooms opinion of the Commonwealth flawed. The endoscopies, colonosco- procedures” such as also understood that it Court establishes when the sigmoidoscopies. If and pies and ruling, a the Board's basis the basis for to be facility completed, proposed Hospital’s support in the record. for which it found purpose operating rooms general of the three surgical ambulatory be closed and would we building acknowledge the result reach would provided in the 7. We main services Surgical holding the court St. facility. in conflict with provided in the new America, Hospital Corp. operating Joseph's rooms v. proposed to add two Center 1986) (11th and with Health Cir. the State circumstances where under indicated, v. Northwest analysis in Kottle need-project of the courts formula Plan’s Cir.1998) Centers, (9th (seventh) most, oper- Kidney F.3d need for one additional City Hospital population to be Center ating of the and Potters Medical room. In terms Cir.1986). Ass'n., (6th To surgical be ren- F.2d 568 services to and the served conflict, respectfully dis dered, we project do Surgical extent of that Center’s expressed. We operating agree there number of with the views than raise the other little Joseph’s Hospital in St. Armstrong County the limit that the courts above note rooms Board, Center did not have Plan. The and Potters Medical by the State Health set therefore, Supreme Court’s 1991 decision approval in- benefit concluded analysis does brief and that in need- in Omni Kottle’s application would result stant not reference decision. existing duplication of less facilities here, given presence misrepresentations from Omni the conceded material that af makers, decision an fect the core of a litigant’s here of disinterested submissions to an independent investigation, open pro- body an administrative are not entitled to cess, Noerr-Pennington immunity. Chemi opportunities and extensive for error See Drugs, Ethyl Corp., nor Ltd. v. plaintiffs The risk that 168 F.3d correction. (3d Cir.1999). injury is not the result of a fide bona policy of is far sub- execution state less I respectfully dissent for three reasons. is, stantial here than Omni and there First, I misrepresentation believe the ex- justification far accordingly, less feder- ception Noerr-Pennington to the doctrine policy judg- al court review state’s applied should be when intentional false- reasons, ment. For these we must decline pervade hoods the entire state administra- Surgical Center’s invitation to look be- proceeding tive leading to the denial of hind Department, the decisions of the plaintiffs application for a certificate of Board, and the Commonwealth Court. (“CON”). Second, majority’s po- need Rather, Omni, based on we are constrained sition that misrepresentation exception to honor the defendants’ claim to place jurisprudence has no of this immunity.8 Noerr Circuit is not supported by case law. Fi- nally, majority Supreme relies on a

V. Court decision that is not applicable Accordingly, consequence, we will affirm the District case. As a the defendant should not dismissing Surgical escape liability Court’s order Cen- be able to for its complaint ter’s for failure to state a claim under either the state action or may granted. Noerr-Pennington immunity which relief doc- trines. SCHWARTZ, Judge, Senior District According to majority opinion, Dissenting: are defendants immune from antitrust lia- today, majority With its decision bility for their during conduct the course private parties holds misrepre- who make petitioning Pennsylvania State pervasively sentations that influence the (“Board”) Facility Hearing Health Board making process public decision entities deny plaintiffs application for a CON. immunity are entitled to under both the majority opinion City finds Colum- immunity state action doctrine and the Inc., bia v. Advertising, Omni Outdoor immunity doctrine. U.S. 113 L.Ed.2d 382 majority opinion (1991), conflicts with the supports the plaintiffs dismissal of teaching of opinion First, this Court issued claim. finds that the less than four ago, months which held that properly boy- District Court dismissed the under certain circumstances applicable misrepresentation cott and claims under ing 8. This not a Equip., patent. Accordingly, case like WalkerProcess the issuance of a Machinery Corp., applicant Inc. v. Food and Chem. when the has submitted false factu- information, U.S. dependent 15 L.Ed.2d 247 al the state action is (1965), Exploration financially or Woods & Prod. making. Co. interested decision America, Company Elhauge, Aluminum Making See Einer Sense Antitrust (5th Cir.1971). Walker, Petitioning Immunity, the state ac- 80 Calif. L.Rev. (1992) patent alleg- tion was the issuance of a which (suggesting edly procured by exception recognized had been fraud. The at- "very in Walker is nar- tempted patent against enforcement of applies only financially row" and when inter- parties essentially was held actionable under the Sher- ested made the factual de- making process man Act. The decision triggered governmental there terminations that restraint). parte was an ex one in which the Patent The same is true of the situation in wholly dependent applicant Office was on the Woods where the Texas Railroad Commission for the wholly dependent facts. While the Patent Office can on the antitrust defen- records, prior determine the act from its own dants for the factual information on which it effectively necessarily delegates predicated production its allocation of from a applicant underly- given the factual determinations field.

165 announcing facility by of its ma- establishment The Noerr-Pennington doctrine. the Board, reviewing the and Cheminor which was that Omni to the jority believes misrepre- on whether doubt their Drugs application, cast Center’s CON Surgical exception to sentation facility, by and sub- boycott the intent to any circumstances. under immunity exists information to misleading and mitting false ex- Further, misrepresentation if a even Hospital’s the ASC. regarding the Board majority asserts exists, the ception boycott misrepre- and of the purpose irrele- were alleged misrepresentations the potential new was eliminate sentations CON the Board denied the vant because adversely would competition whose entrant misrepre- independent grounds on Hospital the defendants. affect all majority emphasizes sentations. monopoly providing area complete has a disinterested, were makers decision the The nineteen room services. operating investigation, independent conducted per- letters boycott sent physicians who opportunities afforded process and the surgery the nearly 90% all formed majori- the summary, In correction. error Thus, the area. Hos- geographic relevant the denial of the essentially found ty has targeted two criteria parties’ actions pital misrep- by alleged the untainted was reviewing a CON considers the Board boycott threats. or resentations (1) facility, the the need for application: it Second, majority argues decision the (2) viability. prospective economic and misrepresentation, boycott the not was of the CON the denial but rather question sent physicians The nineteen Surgical Center’s the cause of direct the Board, considering itas was the letters to concludes injuries. The alleged stating they would application, the CON action and state of the CON was denial ASC, only but plaintiffs not use the immunized therefore parties are Hospital (fictional) by the provided ASC use the action state liability under The letters stated: Hospital. inju- “[ljiability for arguing that immunity, preclud- action is state caused such ries surgery at perform intend to I do not that a private where ed even Surgical Cen- Armstrong proposed ... did so the action urging party to use services I intend ter. may have affected wrongful conduct that at Arm- Surgery Center Ambulatory [Majority making process.” decision Hospital. The County Memorial strong procedur- Given page 162]. opinion Ambulatory Surgical Center hospital’s dismiss, I believe of a motion posture al quality medical highest provides only imper- not conclusion is majority’s cost. most reasonable care contrary to also fact-finding, but missible to all since the suggest entitlement Surgical go Center’s on to The letters of fac- and resolution proposed inferences superior, favorable ASC Hospital’s in its favor.1 disputes tual duplicates “It ser- unnecessary: ASC is it is being already provided, vices

DISCUSSION letters sub- All nineteen cost effective.” Hospital Parties’ Actions I. The the Board were mitted to the same lan- contained stationery, and asserts Surgical Center Armstrong guage. conspired subvert parties dismiss, attached to the complaint, exhibits court in the ruling on motion In public See record. complaint, and matters of pleaded facts as true accept the well must Co., 147 Pittsburgh Penn Power City v. West light most favorable them resolve (1998); Group, Inc. Resorts, Steinhardt F.3d 259 Inc. Casino Trump & Hotels plaintiff. 1997). (3d Cir. (3d Inc., Citicorp, F.3d v. F.3d Mirage Resorts dissent, majority, Dist., like the Accordingly, this 1998); v. Lower Merion Sch. Morse Cir. addition, decision 1997). the Board's both (3d considers Cir. decision. allegations Commonwealth may contained court consider Pennsylvania Department The of Health most damaging [T]he evidence is that (“Department”) disapproved plaintiffs physicians the number of might who 23, have application expected support CON on November 1993. been the facili- ty Department’s significantly The Board affirmed the de- decreased Ap- after the 13, plicant had projec- cision on March 1996. The Board re- submitted .... physicians tions The grounds affirming lied on two for the deni- nineteen who (1) opposed project in writing are re- al of the CON: the Board found the sponsible approximately percent for Hospital Armstrong’s ASC made ASC du- (2) surgery performed of all at Hospital plicative unnecessary, Arm- and each Hospital’s is on the staff. strong’s economically ASC would not be physicians words, viable 90% of the staff because In other after the application (and reason) would not it. use was submitted for whatever support facility for the eroded among Hospital misrepresented The physicians who supported either had Board that its substantially ASC was built initially or being were counted ready and would be for use in the near their eventual participation. Because Hospital parties future. When the made the Applicant would therefore have to their misrepresentations, they knew the generate much of its volume from out- Hospital had ceased construction out- of its side the patients service area or from patient facility hearing, months before the who reside the service area but cur- and that construction had not resumed. rently “migrate” to other for am- locales fact The that the learned that bulatory surgery, seriously we doubt representation was false before it de- projections the volume made for the nied the CON does not detract from the facility can be achieved. falsity representation. Depart- The (citations Op. Board at 47-48 and footnote ment and the Board learned construction omitted). Hospital on the interrupted, ASC had been mind, With these facts I turn to the they but did not Hospital know the had no majority conclusion that the Hospital par- intent to build operate Hospital or ASC. ties have immunity injuries for the result- fact, In opinion Board demonstrates ing from their misrepresentations. opposite was true. Although the Board knew the Hospital using was Applicability II. of the Noerr- building storage facility, as a it was led to Pennington Doctrine Hospital believe that had not aban- Hospital The parties contend the Noerr- Further, doned the project. because it Pennington immunity applies doctrine be interest, was not in its economic the Hospi- cause their announced intentions not to tal plan did not to resume construction if perform operations at Armstrong’s ASC Armstrong’s CON was denied. facility and statements regarding the exis misrep- Board’s decision relied on the Hospital tence of the ASC came in the resentation that was or ASC context of supplying information to state would boycott. be built and the threat of a agencies. general, Noerr-Penning

Armstrong’s ASC would not be economi- ton doctrine immunizes concerted efforts cally viable physi- because the nineteen monopolize to restrain or peti trade when performed nearly cians who all surgeries tioning government. Eastern R.R. in the area would not use facility the new if Presidents v. Noerr Motor Conference Inc., completed they because Freight, use the 365 U.S. (1961); ASC. The Board noted the effect L.Ed.2d 464 see Real Professional boycott Investors, letters sent physi- Estate Inc. v. Columbia Pic in explaining Indus., cians Arm- (“PRE”), its denial of tures Inc. 508 U.S. strong’s application: (1993). 123 L.Ed.2d 611 held that Supreme defendant. gov- petitioning motive purpose for antitrust not liable irrelevant; fact the defendant officials ernment city. made to for statements destroy a violations be to might purpose sole 382, 111 1344. Omni S.Ct. protec- 499 U.S. not undermine does competitor Noerr, misrepresenta that deliberate immunity. 365 reaffirmed by the tion afforded arena, “reprehensi legislative true This is tions U.S. consequence are], of no [they an “inciden- can be injury” is ble if “some direct even activity, concerned.” Act is petitioning the Sherman legitimate so far as of tal effect” majority’s is petitioner 384, 1344. The 111 whether at S.Ct. of Id. regardless injury. Id. be persuasive not of such is infliction oh Omni reliance aware here, adjudicatory an 143-144, setting 523.2 is S.Ct. at 81 cause legislative one arena, lobbying or not a expressed simply had physicians If the in Omni. facility proposed to opposition their adminis misleading intentionally without proposi for the majority cites Omni intent their makers about trative decision ex misrepresentation is no that there tion ASC, the Hospital uncompleted to use PRE, two which was decided ception. protect would doctrine Noerr-Pennington Omni, issue suggests after years Hospi if Similarly, their statements. misrepresentation is a whether there the administrative informed had not tal Noerr-Pennington remains exception and to build going it was makers decision 6,n. 113 508 U.S. 61 open question. an ASC, in if it had or operate PRE cited 1920. While S.Ct. California originally makers it the decision formed Trucking Unlimit Transport Co. Motor operate to build intended 609, 508, 512-13, 30 ed, 92 S.Ct. 404 U.S. longer no concluded would ASC but had (1972), the Su approval, with L.Ed.2d 642 immunity would so, Noerr-Pennington do decide declined to PRE Court in preme However, as set them. be available liability antitrust permits Noerr whether opinion, in the above and forth misrepresen or other litigant’s fraud for a what occurred. not that is 6, 113 S.Ct. at 61 n. tations. 508 U.S. 1920. Distinguished Between Have A. Courts In The

Misrepresentations Made stated, not has Supreme Court Opposed to the As Context Political twice, “[m]isrepresentations, once, that but Adjudicative Con- or Administrative arena, are political in the condoned text adjudicatory used immunized when 404 Transp., Motor process.” City Co majority’s reliance California Tube & 513, Allied Inc., 92 S.Ct. U.S. Advertising, v. Omni Outdoor lumbia Inc., Head, 486 Corp. v. Indian 1344, L.Ed.2d Conduit 365, 113 499 U.S. 1931, 100 492, 499-500, 108 is U.S. there (1991), proposition 382 (1988), unethical stated that 497 L.Ed.2d to Noerr- exception misrepresentation no political in “less deceptive practices misplaced. immunity is Pennington adjudi arenas,” administrative such as Omni, persuade sought one defendant could violate catory settings, zoning ordi to create city of Columbia has Thus, Supreme Court laws. effect on nances, a detrimental had which immuni- broadly hinted competitor was a who plaintiff, those equally inevitable it seems And stated: in Noerr 2. The Court aware campaign be conducting inevitable, attempt an whenever It pros- of, by, the pleased possibly even campaign by a legislation made influence the know- injury. hold that To pect of such effect of publicity, that incidental injuiy renders of such ing infliction of some may campaign infliction illegal be tanta- would thus campaign itself party upon the injury interests direct campaigns. outlawing all such mount campaign is directed. against whom ty is not intended to shield petitioning police false information to —communica further, activities that do not but rather tions which “do not constitute the type of distort, decision-making process ‘political activity’ protected the Noerr- non-legislative context. Pennington doctrine”—would fall within the sham exception); Clipper Exxpress v. Appeal Several Circuit Courts of also Rocky Bureau, Mountain Motor Tariff have distinguished between the level of Inc., (9th Cir.1982) 690 F.2d afforded to (stating that Noerr does not immunize made in different forums. In Potters given false information to an administra Ass’n, City Hospital Medical Center v. denied, tive or adjudicatory body), cert. (6th Cir.1986), F.2d 459 U.S. 75 L.Ed.2d hospital’s that the defendant certif (1983); Labs., Inc., Israel v. Baxter icate of need contained materi (D.C.Cir.1972) (“No ac ally plaintiff. false statements about the tions [efforts deceive Food and the. The court stated “the knowing and Drug which impair Administration] the fair willful submission of false facts to a gov and impartial functioning of an administra agency ernment falls within the sham ex tive agency should be able to hide behind ception to doc the cloak of an exemption.”). antitrust trine.” Id. at 580. The Fifth in Circuit Exploration Woods & Producing limiting Co. v. rationale for immunity for America, 1286, private Aluminum Co. adjudica 438 F.2d actors’ efforts to mislead (5th Cir.1971), denied, tory 1296-98 cert. or 404 administrative officials these 1047, 701, entities, U.S. 92 S.Ct. 30 compared L.Ed.2d 736 legislative bodies, (1972), rely held that Noerr did on protect, supplied by not information parties alia, inter to a filing production greater of false legislative extent than bodies. Tube, regulatory 499-500, forecasts with a state Allied commis 486 U.S.

sion. The court stated that Noerr- 1931. The Ninth Circuit in Clipper Exx Pennington press, 1261, protect doctrine seeks to at 690 F.2d at explained: tempts policies to influence and held that emphasis There is an debate “the abuse of the process administrative political sphere, which could accommo- here alleged justify does not im date false statements and reveal their munity.” Id. at 1298. falsity. In the adjudicatory sphere, however, supplied information by the Other cases have held the Noerr-Pen parties is relied on as accurate for deci- nington doctrine does not immunize mis sion making dispute and resolving. The representations made the administrative supplying of fraudulent information thus adjudicative See, context. e.g., Chemi threatens fair impartial func- Drugs, nor Ethyl Ltd. v. Corp., 168 F.3d tioning agencies of these and does not (3d Cir.1999) 119, 124 (holding that materi deserve immunity from the antitrust misrepresentations al in an adjudicative laws. arena are protected by Noerr-Pen nington immunity); Abell, Whelan v. 48 majority recognizes the by decision (D.C.Cir.1995) F.3d (finding deny the CON involved that if sham claim involves administrative an individualized application of established agencies, then Noerr does not protect “pe However, criteria. it attempts to reconcile falsehoods”); titions based on known St. the difference adjudicative between the Joseph’s Hosp., Inc. v. Hospital Corp. legislative context and context arguing Am., 948, 955, 795 F.2d reh’g denied Department’s en that the deny decision to banc, (11th Cir.1986), 801 F.2d 404 see certificate of need was “essential to the infra; Ottensmeyer v. Chesapeake & Poto execution of the sovereign’s regulatory Co., (4th mac Tel. policy” Cir. regarding health care facilities. 1985) (suggesting that knowing [Majority submission opinion at page This 163]. dis- fully tion so that it could make a Although gov informed unpersuasive.

tinction is majority’s certifi opinion recog- decision on the decision. The agency’s ernment viewed as could be nizes the Board was misled cate of need because care facili regulating credibility health Board “made determination” essential ties, 795 F.2d at Joseph’s Hospital, project. “that not been aban- ha[d] St. Centers, Kidney [Majority opinion Kottle v. Northwest doned.” at page 163]. (9th Cir.1998), However, cert. majority F.3d acknowl- refuses to - U.S. -, denied, edge opinion the Board demonstrates (1999), misrep both held that L.Ed.2d 40 that the denial of the CON was based on belief, context do not have resentations the false nurtured defendants, immunity. Every adjudicative deci Noerr would build to a sion could be viewed as essential its ASC. thus,

sovereign’s regulatory policy nullify the distinction B. Have Held That Similar Cases Mis- courts Supreme appellate Court and other Relating representations have made between Noerr Im- Application Enjoy Do Not opposed context as legislative made in the munity adjudicative con administrative or Joseph’s Hospital closely The facts St. text. parallel alleged by plaintiff. those argue that the appears The defendant, Memorial Medical Center by Department process employed (“MMC”), provider was the sole of cardiac because misrepresentations could uncover surgery in the relevant market services Department conducted its own investi- opposed F.2d at 952. It St. area. 795 Cheminor, However, gov- in gation. Joseph’s application, claiming it al- Department bodies—the ernmental ready capacity perform had the more (“DOC”) International and the Commerce procedures region heart than re- (“ITC”) conduct- Trade Commission —also quired, making competitor’s thus ser- investigation, own but another ed their unnecessary. Id. The Board relied vices mis- panel of this Court still held material denying this information in St. Jo- core of the that affect the representations Joseph’s for a Id. seph’s request CON. St. petition preclude will Noerr- defendant’s sued, infor- asserting provided MMC false immunity. F.3d at Pennington Id. at mation to the Board. (stating and ITC make “DOC misrepresentations court found that they have con- final determinations after political in arena and were not made ... investigations their own ducted furnishing false informa- parties held that they arguments have heard further after on government agency passing tion to involved”); parties Clipper see applications certificate are not en- specific (stating F.2d at 1261-62 Exxpress, 690 im- Noerr-Pennington petitioning titled to in an ad- submitting false information court held: munity. The judicatory proceeding can be the basis for agency such as governmental When liability agency if the was antitrust even Planning Agency] Health [the State information). ma- by the not misled applica- certificate passing specific view, extreme, jority’s logical carried to its acting judicially. Misrepre- tions allow more liar to avoid would skillful do under these circumstances sentations liability long as the decision so enjoy immunity. no not Noerr investigation. maker conducts its own Moreover, court re- Accordingly, at 955. Department it is not clear the Id. grant- investigation. versed the district court’s decision independent conducted an Rather, to dismiss. Id. ing the Hos- the defendant’s motion Department relied on truthful informa- at 957. pital give defendants to contrast, in Circuit, plaintiffs complaint In the Eleventh like

The Ninth misrepresen- Joseph’s Hospital, alleged also held this case details the in Circuit St. defendants, pro does not and the Noerr-Pennington by tations made misrepresenta that such party’s tect a intentional Board decision demonstrates Kottle v. circumstances. tions similar influenced its misrepresentations material Centers, 146 F.3d 1056 Kidney decision, Northwest as well as that of the Common- - denied, U.S. -, (9th Cir.1998), cert. wealth Court. See infra. (1999). L.Ed.2d 40 As case, in Kottle district court in this Nullify Actions C. The Defendants’ to dismiss. motion granted the defendant’s Their ex The Kottle court also Id. at 1058-59. Immunity relating false information allegedly amined Id. at 1058. The application. ato CON Drugs, recent decision Cheminor Our misrepresentations if court stated (3d Ethyl Corp., Ltd. v. 168 F.3d 119 Cir. magni of such were made defendant 1999), majority’s support posi does proceeding was tude that the “entire CON Cheminor, Ethyl the defendant tion. then the sham legitimacy,” of its deprived complained to the ITC and Corporation Noerr-Pennington immunity exception to Cheminor DOC Id. at 1063. apply. selling ibuprofen at less than dumping and brought fair value. Id. at 120. Cheminor were Kottle alleged in which it adjudicatory antitrust claims in an administrative or made Health, base Ethyl’s statements to ITC were arena because maker, less, faith, public conducted contained false the decision made bad argu- and oral hearings, accepted statements, written brought only and were ments, representation by coun- permitted Id. The issue anti-competitive reasons. sel, and its deci- findings, issued written decided this Court was whether In at 1062. this appealable. sion was Id. by Ethyl vitiated its misrepresentations case, pub- also conducted Department the Noerr-Pennington immunity. The Court argu- hearings, accepted lic evidence misrepre in Cheminor found the made find- parties, from interested ment material, nor af sentations were neither appealable. was ings, and its decision petition the core of the defendant’s fected found that the court in Kottle Since relating to misrepresentations because made in the misrepresentations were not “only were a profitability the defendant’s context, ap- the court political lobbying or of the numerous factors proportion small than the one set plied a different standard making consider when a the ITC must (stating forth in Omni. Id. “intention- injury.” determination of material Id. misrepresentation government to offi- al Therefore, affirmed decision 126. we differently treated “outside of the cials” is grant summary judgment to favor of realm”). found, howev- political The court satisfy Ethyl did not because Cheminor er, plaintiffs complaint fell short step exception the first of PRE’s sham to invoking exception the sham because Noerr-Pennington doctrine. Id. at misrep- plaintiffs vague allegations were insufficient to overcome resentation misrepresenta- held material Cheminor immu- Noerr-Pennington the defendant’s defen- tions that “infect the core” of the court could not nity. Id. at 1064. The result- government’s claim and the dant’s representations [the “what de- ascertain entitled to Noerr- whom; ing actions are not made, with whom fendant] or to “objec- Pennington immunity under the ... or what conspired [the defendant] of PRE. Id. at 123. tively prong baseless” may testimony have other misrep- evaluation of requires Cheminor influenced its decision had that could have determining whether a de- Id. deny [plaintiff’s application.” resentations Noerr-Pennington specific language cited with approval by is entitled to fendant majority relies on the reads: immunity. The Cheminor language Cheminor to assert following objective determination [A] [of basis] proposition stands for the Cheminor consideration, alia, requires inter of ... misrepresenta- has held Circuit particular the nature of the allegations part jurispru- of its exception tion petition or actions before the ad- dence. agency ministrative claimed be fraud- exception decline to carve out new We improper, ulent or and whether these immunity that Noerr-Pen to the broad claimed improper or Rather, will nington provides. we de significant actions would have been petition [defendant]^ termine whether the ultimate outcome continuation of objectively under the baseless Su proceeding. PRE, test in without re preme Court’s Cheminor, gard [plaintiff] alleges to those facts that at 124 (citing Music misrepresented. Center, 549) [defendant] F.Supp. (emphasis add ed). If any regarding there were doubts majori- Id. There are three answers to the the court’s reliance on Music Center and First, it the immedi- ty position. ignores approval misrepresentation ex succeeding opinion: ately sentence ception Noerr-Pennington immunity, alleged misrepresented If facts do the Cheminor court set them to rest: Ethyl’s core of claim and not infect the actions, government’s resulting then government’s If the action was not de- petition objective had an basis and pendent misrepresented infor- will immuni- receive mation, misrepresented information ty step the first of PRE. under go was not material and did not language meaning Id. I read this sum, Ethyl’s petition. core of a ma- prior determining “petition whether the misrepresentation terial affects objective had an basis” the Court must very litigant’s core ... case will alleged misrepresented determine “[i]f preclude Noerr-Pennington immunity, ... Ethyl’s facts do infect the core of every misrepresentation but not is ma- do, they If misrepresenta- claim.” Id. question peti- terial to the rvhether exception applies tion and there can be no Ethyl’s objective tion such as had an “objective posi- for the defendant’s basis” basis. If, hand, misrepre- tion. on the other the (second emphasis at 124 added and Id. exception applicable, sentation is not the omitted). simply footnote I am unable to an ob- petition defendant’s could well have accept majority’s reading the of Cheminor. jective basis.' Second, Further, the test set forth in Cheminor majority explained the has not applicable here the mis- why, if the Cheminor court held there was is because exception representations to the in Cheminor were made misrepresentation no doctrine, adjudicative ap- it formulated context. Omni is not misrepresentation plicable alleged misrepresen- a because the exception test for the legisla- in a painstakingly applied and the test tations that case were made then case, factually In a similar analyzing misrepresented whether tive context. gov- a Ethyl’s core claim the 11th Circuit found that “[w]hen facts affected “the resulting agency passing specific ac ... government’s and the ernment ” Third, acting it is applications .... the court in certificate [of need] tion Id. Chemi case, judicially.” Joseph’s Hospital, 795 on a district court Music St. nor relied un- Misrepresentations v. F.2d at 955. made Center S.N.C. Di Luciano Pisoni & C. enjoy do not Corp., Prestini Instruments 874 der these circumstances Musical (E.D.N.Y.1995). immunity. Noerr Id. F.Supp. Hospital partially constructed troubling aspect of is a final

There population same and Assuming this dis- would serve the majority’s opinion. essentially the same sur- provide correct that Cheminor would position is sent’s exception misrepresentation a recognizes gical services. jurisprudence part of this Circuit’s Applicant’s proposed ambu- 28.The misrep- majority there is no that the holds needlessly surgery center would latory Noerr-Pen- exception to the

resentation existing facilities and health duplicate doctrine, majority nington County. Armstrong care services in something it cannot do. Under has done (citations omitted). Taken Op. at 6 Board Operating Proce- 9.1 of the Internal Rule “needlessly duplicate phrase in context the Court, subsequent panel of this “no dures facilities,” only existing supra, can mean opin- holding published in a overrules would du- Armstrong’s proposed ASC previous panel.” a ion of In Hospital ASC. ad- plicate proposed dition, physicians from the 19 letters Alleged Misrepre- Defendants’ 1. The facility duplicated proposed stated that the In- Material And sentations Were As already being provided. the services The Defendants’ fected The Core Of rehearsed, Hospital parties previously To The Statements no commitment or intent knew there was legitimacy of the Board’s decision is complete functioning Hospital ASC. upon it relied material- question because Fact, Findings of also only Not but influenced ly false information and was opinion the Board make clear boycott. As stated illegal of an threats Board, misrepresenta- relying upon the stage litigation, previously, Hospital parties, premised its tions of the to all favorable is entitled and its entire discussion factual denial CON and resolution of dis- inferences being there no Therefore, projection upon of need the court putes in its favor. Hospital’s two ASC need for ASCs—the Armstrong Surgical must examine whether Armstrong’s entitled, minimum, ASC: to an inference only were not Although outpatient surgery at the Hos material, also affected the core of the but performed oper now in the same pital is claims. defendant’s ating inpatient surgery, room as completed con Hospital partially9 has concluded the Board would building premises of a on its regard- struction have denied the CON surgery fa outpatient house a dedicated Hospital would be less of whether the ASC construction, However, cility. Upon completing opinion completed. the Board’s existing move three clearly premised shows that it the denial of building. operating rooms into the new misrepresen- Hospital’s complete operate that it would tation population to be regard With Findings successive ASC. surgical served and the services to be Board found: Fact the offered, be little difference there would Hospital partially has com- 25. The ambulatory sur- Applicant’s between the building of a on its pleted construction Hospi- that the gical center and the one a dedicated premises that would house except that partially completed, tal has facility. outpatient surgical project would raise the Applicant’s Hospi- Upon completion 26. of the Arm- operating rooms in number of surgical facility, three of outpatient tal’s County by above the limit set strong operating would be existing its rooms approval conclude that of the SHP. We building. into the new moved result in application would instant CON existing of facilities ambulatory duplication needless proposed 27. The sur- care services. been and health gery center and the one which has believe that the set forth more We factors cost efficient than the continued use above, themselves, are sufficient to of the hospital six operating rooms. The finding that the support Applicant has Hospital’s own accountant documented proposed to establish need for the failed projected average savings cost per $400 facility by population to be case if an ASC were used relative to the served.... current Hospital operating rooms. The before issue the Board was whether after 9.Apparently, construction there overcapacity would be if ASCs building and some of the interior walls CON were issued to Armstrong. Because completed, had physicians been staff the misrepresentations led the Board to Hospital began question whether ASC, believe Hospital there would be a a separate outpatient facility was neces- never reached issue of delivering effec- sary. Although building currently is tive and cost efficient medical un- services a storage facility, used as there being der the scenario which there was no project was credible evidence that Hospital There simply way ASC. no been abandoned. has not the District Court or this Court to deter- (citations omitted). at 14 Op. Board It is mine grant- whether Board would have noteworthy that the three Commonwealth ed the had it known the true facts. review, judges, conducting judicial Court With the having accept Court well- all were Hospital belief that the ASC pleaded facts as true and resolve them completed: would be light nonmovant, most favorable to the hospital partially completed has Resorts, Trump see Hotels & Casino Inc. of a building premis- construction on its Inc., v. Mirage Resorts es that would house a outpa- dedicated (3d Cir.1998), surely entitled surgical facility. tient Upon completion to the reasonable inference the Board hospital’s outpatient facil- surgical decision, predicated major its part, on ity, three of existing operating rooms Hospital belief that a ASC would would be moved into the building. new Therefore, completed. I would hold the proposed surgery ambulatory alleged misrepresentations deprive the and the one which par- center been has Hospital parties Noerr-Pennington im- tially constructed hospital munity because their population serve same and would very were material and infected the es- provide essentially surgical the same sence or pro- core the administrative Armstrong’s proposed services. ambu- ceeding consequent denial of the CON latory surgery needlessly center would by the Board and affirmance of the duplicate existing facilities health Board’s decision the Commonwealth care services in Armstrong county. here, Court. misrepresenta- Where as Op. Court p. very Commonwealth 5. At the tions caused the Board and Common- judges least four Commonwealth —three wealth to make their determinations judges and judge the Board —read based the existence of a fictional opinion indicating ASC, Hospital proceed- administrative believed the ASC would be com- ing and Commonwealth Court review have pleted. deprived legitimacy. been of their of a presence absence significant. granted ASC was A if CON is Immunity a proposed expenditure health care will Not Protect Threats Does meet popula- medical needs of the target Illegal Boycott of tion in an effective and cost man- efficient § ner. Pa. Stat. Ann. tit. 35 448.707. impression, See While an issue of first the question There is no that an question Noerr-Pennington ASC was whether conduct, pursuant antitrust wise actionable of an immunity protects threats petitioning to, action. in reliance state Sec- upon, in answered boycott must also illegal ond, when immunity applies state action has Supreme The negative. the arises injury complained of “[tjhere many forms of the stated, other are action, distinguished as directly from state which practice reprehensible illegal alleged in the com- private action from the judicial or may corrupt the administrative Noerr, 365 U.S. plaint before us. may in anti- which result processes and case, aspect neither 523. this Motor 81 S.Ct. violations.” trust California immunity applicable.3 is If state action 609. Transp., 404 U.S. immunize not Supreme the Court would complained of clear the It is actions judicial or ad- in the misrepresentations to, upon, in reliance pursuant not or were context, surely it would not ministrative Indeed, upon the action. reliance state activity illegal when threats of immunize of the CON im- action of denial state adjudica- the administrative they corrupt anti-competitive unlawful conduct munize illegal a threat process. tion Where prior to and caused the which occurred strong a role activity plays such concep- presents of the CON severe denial decision-making process administrative only The state action tual difficulties. for an adminis- part of the and forms basis parties Hospital denial of the CON. decision, say that impossible is trative unlawful anticom- in no engaged alleged corrupted. De- process has not been follotoing the denial petitive behavior immunity to nying Rather, misrepresentations the CON. false information provide those who intent to en- expressed with the combined decision- in its government deliberative boycott in a occurred gage all before the in- only improve can making process denial of CON. With state Board’s flowing government. formation affairs, understand it is difficult to how to whether is now turned coupled Attention with the by state parties protected are Hospital boycott are somehow im- stated intent to majority. immunity urged by the CON, action as by alleged where the munized wrongful activity was directed itself Applicability III. of State the CON. Fur- resulted the denial of Immunity Action thermore, conceptual assuming even these insurmountable, there is are not opinion also dismisses difficulties majority Hospital parties theory that no indication relied Armstrong’s complaint on carrying out of the CON upon are im- the denial actions defendants’ anticompetitive be- action im- unlawful under the state munized Parker Brown, haviors, by the state to or were authorized munity See Parker doctrine. Indeed, expressly court the Parker L.Ed. 315 do so. 317 U.S. immunity give “a not (1943). noted that state does immunity doc- The state action byAct First, the Sherman to those who violate aspects. has two related trine it, Parker, authorizing them to declar- immuni- violate action state elaborated is lawful.” 317 U.S. ing in other- that their action engage who ty protects parties accurately ... not Court’s decision is ana- physicians eschewed 3. The staff defendants immunity.” lyzed immunity, under state action Individ- upon action Parker state reliance Thus, a Appellee’s this is not argument, ual Br. at their stating in catch line of litigant's where a counsel over- Attempt Appeal circumstance to Reframe this “Plaintiff’s theory. Court is Misguid- While this not Immunity looked Action Terms of State litigants, by positions at 20. limited advanced Appellee's Br. Individual ed....” Further, capable where counsel reference to caution warranted dropped all on a defense. Appellee's expressly disavow reliance appeal. state action deliberate, relied has stale choice nonetheless reasoned made counsel impliedly explicitly and dis- going action defense rely theory, so far as to on the by carded defendants. of the District state that “the correctness (5) Therefore, 351, “au- Complete 63 S.Ct. 307. loss of the value of the CON, aspect of state action immuni- or a reduction in thorization” its value when and if ty applicable ultimately granted. to the facts of this case. (6) Complete loss of the value of Plain- aspect The second of state action immu- [facility], tiffs or reduction of its value nity inju- doctrine antitrust “immunizes” permitted when and if operated. directly by caused action. It is ries state (7) of, Complete in, loss or reduction aspect upon majority which second income and cash flow which Plaintiff rests, in- opinion arguing liability for would have operation received from

juries by pre- caused such state action is the [center]. where it alleged cluded even (8) Other related losses. private party urging by the action did do unlawful conduct. Because of boycott, the threatened damage 5, claims 6 and 7 would have occurred even protect- The defendants’ actions are not if Armstrong had received the coveted by immunity ed state action for two rea- boycott plaintiffs CON. surgical First, injuries sons. at least some of the by center physicians perform who 90% of Armstrong complains of which were not surgical procedures in geo- the relevant only the direct result of the state action graphic surely market would serve to re- Second, alleged denial of the CON. —the plaintiffs duce the of the facility, value misrepresentation exception to state action either by the loss of business or the in- immunity apply must under the circum- crease costs associated with attracting presented by stances this case. personnel facility. agreement An plaintiff finds the failed to plaintiff exclude the from the relevant allege injuries that its were caused market boycott and mis- economic hospital parties’ alleged boycott economic representations to the may Board result in Rather, misrepresentations. the ma- See, injury. e.g., antitrust Brader v. Alle- jority injuries asserts the were ei- (3d gheny Hosp., Gen. 64 F.3d directly ther related to the denial of the Cir.1995) (finding complaint al- adequately CON, consequences or the thereof. Even leged injury where al- accepting arguendo that state action im- leged unreasonably that defendants re- case, munity applies to this some of the ability stricted to practice his medicine in injuries alleged by Armstrong are not the the relevant market and thus reduced action, direct result of state but Therefore, competition). I agree cannot alleged misrepresentations conspiracy majority’s damage with the conclusion that boycott. reciting After throughout claims 6 and 7 stemmed from denial of complaint boycott and misrepresenta- the CON. tions, Surgical Center lists the follow- misrepresentation exception ing damages: immunity should also (1) required Denial of the CON to es- apply adju state action operate ambulatory tablish and sur- [its dicatory or administrative context. Where gery center]. misrepresentations threats of ille and/or (2) ability Denial of to establish and [its] gal activity subvert the entire decision proposed facility]. operate [the making process, the direct cause (3) CON, Delay securing required action, injury is not the state but rather ultimately granted, if for the establish- or threats which operation ment and [ambulatory made a decision on accurate infor based surgery center]. impossible. Explora mation See Woods (4) costs, otherwise, legal Producing Increased tion & v. Aluminum Co. Co. of (5th Am., pursuing Cir.1971), Plaintiffs for a denied, CON. cert. U.S.

176 law, excep misrepresentation a (1972); also Walker see L.Ed.2d 736 30 necessary immunity is to Mach. & tion to Parker v. Food Inc. Equip., Process exception 172, 176, misrepresentation 86 effectuate the 382 U.S. Corp., Chem. (1965) immunity. Without that (holding to 347, 247 L.Ed.2d 15 misrepresentations by exception fraud on the for those patent procurement influence on admin pervasive is actionable Patent Office which have States United decisions, Act, only notwithstanding adjudicative istrative under the Sherman effectively sub granting who most action intervening state those defendants ones whose process patent). vert the state’s —the in favorable re results improper behavior arena, it is legislative difficult In the administra them from the state’s sults for action, matter no any particular say be adjudicatory processes tive —would in a particular results inappropriate, how immunity. state action immune under However, injury. causes legislation which result, perverse only not This would arenas, judicial in the administrative misrepresen entirely vitiate but would courts write reasoned agencies and where Noerr-Pennington im exception tation on in- make decisions based opinions and munity. they by parties, supplied formation parties provide on the depend must Woods. This is similar to case above, stated defendants, As Woods, accurate information.4 owners of a partial noted different field, has Supreme intentionally false gave natural gas in administra- to conduct apply standards fore- production their information about Allied adjudicatory processes. tive the Texas Railroad Commission. casts to Head, Indian Corp. v. Tube & Conduit used F.2d at 1295. The Commission 438 1931, 500, Inc., 492, 100 108 S.Ct. 486 U.S. determine allowable information (1988); Motor L.Ed.2d 497 rejected “the Id. The court production. California Unlimited, Trucking 404 v. Transp. Co. by any public that action facile conclusion 609, 508, 513, 642 30 L.Ed.2d 92 S.Ct. U.S. exemption.” automatically confers official (1972); misrep- Part II.A. The supra, see omitted). (citations The court at 1294 Id. least, here, very largely at the resentations not immunity was state action held that very probably dictated influenced and because applicable process. the administrative outcome of con- the outcome: “defendants’ dictated circumstance, misrep- it is the Under to have way in no be said can duct here action, resentations, which the state not of the state with the action merged become injuries and dictated alleged caused the was the real the Commission neither since deny the CON.5 decision to the Board’s have intended maker nor would decision Id. based on false facts.” its order to be comple- and Noerr are Because Parker Thus, directly injury 1295. principle of mentary of one expressions anticompeti- engaged in by can Bar Association reliance for this It is reason graduates unac- Sandy Nursing Care Aetna River tive because conduct 1138, Cir.), (1st cert. Casualty, F.2d 1142 not sit for most state schools could credited denied, 114 S.Ct. 510 U.S. This Court concluded bar examinations. (1993), misplaced. case That L.Ed.2d 39 injury of each of was the action source change by legislature a boycott. a decision involved the "every state retains those because states impossi It is law face admission authority to set all the bar final boycott dictated out say that ble to distinguish- Id. at 1035. That case rules." legislature’s decision. come of the case two reasons. the instant able from First, case was non- state action in that majority’s reliance on Massachusetts 5. The Second, and more adjudicative in nature. Andover, Inc. v. Law American School allegation importantly, the made no Cir.), Ass’n, (3d de cert. Bar misrepresenta- knowingly - made that the ABA -, nied, U.S. state’s ac- There, were central to each tions which (1997), misplaced. also is L.Ed.2d 191 tions. Ameri- school an unaccredited law denied, - (9th action, Cir.1998), caused state but the misrep- cert. case, Similarly in the -, resentations: instant U.S. 143 L.Ed.2d 40 Hospital the Board relied on the parties’ (1999), Eleventh, Joseph’s St. Hospital v. subjective statements of intent in making Hospital America, Corp. 795 F.2d of its decision. (11th Cir.1986), and District of Colum bia, Abell, 1247, 1254-55 Whelan v. 48 F.3d majority believes Woods is dis- (D.C.Cir.1995). Cheminor, See also tinguishable from present case because (Sloviter, J., F.3d at 131 dissenting) (citing Texas Railroad Commission “was Whelan wholly dependent on the and Kottle for proposition antitrust defen- dants for the factual PRE preserves information on which exception fraud to anti predicated it production its allocation of trust immunity). given from a [Majority opinion field.” were material as 164 n. The court in 8]. Woods stated that there is an overpowering inference that in the Railroad opportu- Commission had “no denying the CON the accepted Board nity meaningful for supervision or verifica- Hospital parties’ misrepresentation that tion” of the defendants’ statements and would complete construction therefore, rely Commission “must operate a Hospital ASC. These same gas producers.” truthfulness of the misrepresentations caused the Board and

Id. at 1295. I do not find Woods to be so Commonwealth pass upon Here, different from this case. the De- question of whether there was a need for partment and way Board had no of ascer- two ASCs. Specifically, misrepresenta- taining Hospital truly whether the intend- deprived tions the Board complete passing ed to its ASC. The upon application the CON and the Board were reasonable in based relying statements, on the defendants’ true hospital which facts—six rooms vis-a-vis the clearly implied that grant ASC of Armstrong’s application Further, completed CON, would be and utilized. with concomitant savings cost court in require Woods did not case, per thereby meeting the statu- $400 government entity “wholly” dependent tory goal meeting medical needs in an on the information provided by a defen- effective and cost efficient manner. We do dant in order deny state action immuni- know, course, whether the Board ty- granted would have or denied the CON proceeding had its not been so

CONCLUSION pervasively infected misrepresenta- For the reasons stated above I would boycott. tions and threat of hold state action pro does not I respectfully regrettably dissent tect the defendants’ actions. I also con for all of the reasons set forth above. clude misrepresentation there is a excep my While respecting colleagues differing tion to Noerr-Pennington immunity and views, I agree regret cannot with them. I applies that it My this case. view that majority First, result for two reasons. material misrepresentations can vitiate Cheminor, the majority opinion, light Noerr-Pennington immunity supported little, provided any, has if guidance to the Cheminor, 168 F.3d and the bar, Second, litigants future public. or the circuits, case law of other specifically to the extent the provides result Fifth, Exploration Woods Producing & guidance, signals it .willing America, Co. v. Aluminum Co. (5th they immunize clear antitrust violations if Cir.1971), Sixth, Potters Ass’n, disguised, can be disingenuously, Medical Center v. however City Hospital (6th Cir.1986), Ninth, petitioning F.2d regard Kottle activities without Centers, Kidney Northwest they 146 F.3d whether are legitimate, and without they are in which arena distinguishing

made. of America STATES

UNITED COPENHAVER, Appellant

Brian 98-1305, 98-1306.

Nos. Appeals,

United States

Third Circuit. July 1999.

Submitted July

Decided Eisenhower, III, Montgomery,

James J. Rhoads, McCracken, Philadel- Walker & PA, Appellant. phia,

Case Details

Case Name: Armstrong Surgical Center, Inc. v. Armstrong County Memorial Hospital

Court Name: Court of Appeals for the Third Circuit

Date Published: Jul 27, 1999

Citation: 185 F.3d 154

Docket Number: 97-3440

Court Abbreviation: 3rd Cir.