ORDER
This case was referred to Magistrate Judge Leslie G. Foschio, pursuant to 28 U.S.C. § 636(b)(1), on April 24,1991. Defendants filed various motions to dismiss the Second Amended Complaint on grounds of immunity, lack of personal jurisdiction, improper venue and improper service of process. On January 16, 1996, Magistrate Judge Foschio filed a Report and Recommendation regarding the various motions. 1
Pursuant to 28 U.S.C. § 636(b)(1), this Court must make a de novo determination of those portions of the Report and Recommendation to which objections have been made. Upon a de novo review of the Report and Recommendation, and after reviewing the submissions of the parties and hearing argument from counsel, the Court adopts the proposed findings of the Report and Recommendation.
The Court finds the analysis of Magistrate Judge Foschio to be extremely thorough and well-reasoned. The Court will take this opportunity, however, to expand on Magistrate Judge Fosehio’s analysis regarding venue in light of two recent cases,
Paper Sys., Inc. v. Mitsubishi Corp.,
Under 15 U.S.C. § 22:
Any suit, action or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; and all process in such eases may be served in the district of which it is an inhabitant, or wherever it may be found.
The Court finds that the worldwide service of process clause in § 22 is totally independent from the venue clause.
See Paper Systems Inc. v. Mitsubishi Corp.,
Personal jurisdiction defines a court’s power; if § 22 provides for worldwide service. without exception, Congress has extended the federal court’s powers to their constitutional limit to enforce the antitrust laws. Perhaps more than any other law, the antitrust laws are national in scope and impact. The antitrust laws define the rules of the free market economy; like the weather, the economy respects no state or natural boundaries.
******
If the antitrust laws are to be effective, district courts’ jurisdiction must reach the limits of the power of the United States of America. In the case of antitrust laws, it makes no sense to tie a district court’s jurisdiction to the state in which it sits; it neither promotes the enforcement of antitrust law nor the management of litigation.
Id. at 368.
28 U.S.C. § 1391(b) provides, in pertinent part, that venue is proper in a federal question case in “a judicial district where any defendant resides, if all defendants reside in the same State.” 28 U.S.C.. § 1391(c) provides that “a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at .the time the action is commenced.” Because all the
The Second Circuit’s decision in
Goldlawr, Inc. v. Heiman,
The Court rejects defendants’ argument that application of the general venue provisions contained in 28 U.S.C. § 1391 in conjunction with the worldwide service of process clause in § 22 renders superfluous the special venue provisions contained in § 22. Defendants argue against such an application on the premise that Congress presumably intended the venue provisions contained in § 22 to have some meaning. This argument overlooks,' however, the fact that § 22 was enacted in 1914, decades before Congress expanded the general venue provisions in 1988. Thus, at the time § 22 was enacted, the special venue provisions contained therein served a definite purpose. It may well be that the 1988 amendments to § 1391 made those provisions superfluous, but'if so, such was the prerogative of Congress.
The Court also rejects defendants’ argument that it would be unfair to allow antitrust plaintiffs to obtain personal jurisdiction and venue over corporate defendants in any district in the United States. That is a policy issue best left to Congress. Had it desired to do so, Congress could have prevented this result- in 1988 by providing that § 1391(c), as amended, did not apply to antitrust actions, but it failed to do so. Even if Congress did not consider the impact that the amendment would have on antitrust cases brought against corporate defendants, it is certainly free to restrict antitrust venue through new legislation if desired. In the meantime, there are other safeguards against the filing and prosecution of an antitrust action in a district which has no meaningful connection to the location of the parties or the underlying controversy, including the doctrine of
forum non conveniens
and the right to seek a change of venue for the convenience of the parties and witnesses under 28 U.S.C. § 1404(a).
See Icon Indus. Controls Corp.,
The policies underlying the Clayton Act are “designed to expand the reach of the antitrust laws and make it easier for plaintiffs to sue for antitrust violations.”
Go-Video, Inc.,
Accordingly, for the reasons set forth in Magistrate Judge Foschio’s Report and Recommendation and this Order, defendants’ motions to dismiss are granted in part and denied in part as set forth at pages 278-79 of the Report and Recommendation.
In its objections, defendant Forsythe requests that, if the Court decides to adopt the Report and Recommendation, that the Court certify the following issues to the Second Circuit Court of Appeals for immediate review and determination: (1) does § 12 of the Clayton Act, 15 U.S.C. § 22, provide for “automatic”
in personam
jurisdiction and venue over any domestic corporation without
Although no authority is cited by Forsythe for such relief, the Court construes its request as a motion for certification for purposes of immediate interlocutory appeal pursuant to 28 U.S.C. § 1292(b). Section 1292(b) provides, in pertinent part:
When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he [or she] shall so state in writing in such order.
The Second Circuit has repeatedly cautioned that “use of this certification procedure should be strictly limited because only exceptional circumstances will justify a departure from the basic policy of postponing appellate review until after the entry of a final judgment.”
In re Flor,
Forsythe has failed to persuade the Court that there exist exceptional circumstances warranting an interlocutory appeal in this case. Although Forsythe asks for the Court’s certification for an interlocutory appeal, it provides no legal argument in support of its request. It states simply that “important legal issues” are involved and that the Court should therefore certify the case to the Second Circuit. Simply put, the issue of venue has been thoroughly considered by both Magistrate Judge Foschio and this Court and certification to the Second Circuit at this point would not best serve the interests of justice. There are approximately 176 plaintiffs and 30 defendants in this case. Magistrate Judge Fosehio’s Report and Recommendation was 347 pages long. The case is already over seven years old. An immediate appeal from this Order will not materially advance the ultimate termination of this litigation and will result instead in piecemeal litigation and further delay.
With regard to Forsythe in particular, the questions that it asks to be certified will not necessarily be dispositive. In an Order being filed concurrently with this Order, the Court affirms Magistrate Judge Foschio’s Decision and Order filed January 16, 1996, holding that Forsythe and several of the other defendants waived the defense of improper venue by failing to initially include it in their motion to dismiss. Thus, even if Forsythe were to prevail on the question of whether venue was proper, it would still face • the hurdle of having to show that it did not waive the defense of improper venue.
Accordingly, defendant Forsythe’s motion for certification for interlocutory appeal is denied. Moreover, the Court will not consider or grant any motion for reconsideration of this order or any other motion for certification for interlocutory appeal. The matter is hereby referred back to Magistrate Judge Foschio for further proceedings.
IT IS SO ORDERED.
REPORT and RECOMMENDATION
TABLE OF CONTENTS
JURISDICTION................................................................ 147
BACKGROUND................................................................ 148
DISCUSSION.................................................................. 150
I.Subject Matter Jurisdiction................................................. 150
a. Eleventh Amendment Immunity......................................... 151
1. Ohio State University Hospital.:.................................... 155
2. Oregon Health Sciences University Hospital.......................... 162
3. University of California Medical Centers............................. 165
4. University Hospital at State University of New York at Stony Brook... 171
5. University Hospital at the University of New Mexico School of Medicine ........................................................... 175
1.Lincoln Medical and Mental Health Center...........................184
2. Ohio State University Hospital......................................185
3. Oregon Health Sciences University Hospital..........................186
4. Tri-City Medical Center ...........................................187
5. University of California Medical Centers.............................188
6. University Hospital at State University of New York at Stony Brook... 189
7. University Hospital at the University of New Mexico School of Medicine .........'..................................................190
8. University of Massachusetts Medical Center..........................190
c. Local Government Antitrust Act Immunity................................191
1. Lincoln Medical and Mental Health Center...........................192
2. Oregon Health Sciences University Hospital, University of California
Medical Centers, University Hospital at the University of New
México School of Medicine, and University of Massachusetts Medical Center 194
3. Tri-City Medical Center ...........................................196
II. Personal-Jurisdiction.......................................................197
a. Jurisdiction Under Clayton Act Section 12................................197
b. Jurisdiction under New York State Law..................................201
1. New York Civil Practice Law and Rules Section 301 ...................202
a. Johns Hopkins Hospital, Part of the Johns Hopkins Health System ........................................................205
b. Children’s Hospital (San Diego)..................................206
c. Children’s Hospital of Michigan..................................206
d. Detroit Receiving Hospital and University Health Center...........207
e. Forsyth Memorial Hospital .....................................207
f. Kettering Medical Center.......................................208
g. Loma Linda University Medical Center...........................208
h. Lutheran General Hospital......................................209
i. Medical College of Pennsylvania and Hospital.....................209
j. Mercy Catholic Medical Center — Misc.icordia Division.............210
k. Mercy Hospital and Medical Center..............................211
l. Methodist Hospital of Indiana...................................211
m. Ohio State University Hospital..................................212
n. Oregon Health Sciences University Hospital.......................213
o. Riverside Methodist Hospitals...................................213
p. Saint Francis Medical Center ...................................214
q. St. Anthony Hospital...........................................215
r. Tri-City Medical Center (San Diego).............................215
s. University of California (Los Angeles) Medical Center..............215
t. University of California (Irvine) Medical Center-...................216
u. University of California (San Diego) Medical Center................216
v. University Hospital at the University of New Mexico ...............216
w. University of Massachusetts Medical Center......................216
x. University Medical Center, Tucson, Arizona.......................217
Council of Emergency Medicine Residency Directors...................227
2. Jurisdiction for Transacting Business under Section 302(a)(1)...........228
3. Conspiracy Jurisdiction under Section 302(a)(2) .......................230
a. Tortious Act Within New York ..................................231
b. Factual Showing of a Conspiracy in Restraint of Trade.............233
i. Corrupt Agreement........................................234
ii. Overt Act in Furtherance of Agreement......................246
iii. Parties’ Intentional Participation in Furtherance of Plan or Purpose.................................................246
iv. Resulting Damage or Injury '................................249
c. Specific Facts Alleged Warranting Inference that Each Defendant is a Member of the Conspiracy................................250
d. Imputing Conduct to Out-of-State Co-conspirators.................250
i. Defendants’ Awareness that its Activity had Effects in New York...................................................250
iii. . Exercise of Discretion or Control............................251
4.Jurisdiction Based on Tortious Acts under Sections 302(a)(3)(i) and 302(a)(3)(ii).....................................................252
Summary of Findings Regarding Personal Jurisdiction.........................255
III. Venue.....................................................................255
a. Venue in Antitrust Actions..............................................256
1. American Board of Emergency Medicine.............................259
2. Council of Emergency Medicine Residency Directors...................263
3. Children’s Hospital (San Diego).....................................264
4. Children’s Hospital of Michigan.....................................264
5. Detroit Receiving Hospital and University Health Center...............265
6. The Johns Hopkins Hospital, Part of the Johns Hopkins Health System ........................................................265
7. Loma Linda University Medical Center..............................266
8. Lutheran General Hospital.........................................266
9. Medical College of Pennsylvania and Hospital.........................267
10. Mercy Catholic Medical Center-Misc.icordia Division..................268
11. Mercy Hospital and Medical Center .................................268
12. Methodist Hospital of Indiana.......................................269
13. Oregon Health Sciences University Hospital..........................269
14. St. Anthony Hospital ..............................................270
15. University Medical Center (Tucson) .................................270
b. Venue under the General Venue Provisions................................271
1. Section 1391 ......................................................271
2. Section 1406 ......................................................276
IV. Service of Process .........................................................277
CONCLUSION.................................................................278
JURISDICTION
This matter was referred to the undersigned on April 24, 1991 by the Honorable Richard J. Arcara for report and recommendation. The matter is presently before the court on the “hospital Defendants’ ”
1
motions to dismiss the Second Amended Complaint on grounds .of immunity, lack of personal jurisdiction, improper venue, and improper service of process;
2
Defendant American Board of Emergency- Medicine’s motion to dismiss the . Second Amended Complaint on the ground of improper venue; and, Defendant Council of Emergency Medicine Residency Directors’ motion to dismiss the Sec
BACKGROUND
Plaintiff, an emergency medicine physician, filed this action on September 25, 1990, following the American Board of Emergency Medicine’s (“ABEM”) refusal to permit Plaintiff to take its examination as a prerequisite to certification as an ABEM Diplomate. Plaintiff filed an amended complaint (“the First Amended Complaint”) on February 7, 1991, asserting causes of action under Sections 1 and 2 of the Sherman Act, 15 U.S.C. § 1
et seq.,
and seeking relief pursuant to Sections 4 and 16 of the Clayton Act, 15 U.S.C. § 12
et seq.
On January 13, 1994, the Second Amended Complaint was filed, adding one hundred and seventy-five additional Plaintiffs, all individual physicians who allege to have similar claims, and thirty Defendants, including the Council of Emergency Medicine Residency Directors (“CORD”) and twenty-eight teaching hospitals whom Plaintiffs allege are co-conspirators with Defendant ABEM. Specifically, in the Second Amended Complaint, Plaintiffs allege that ABEM" conspired with CORD and the hospital Defendants to unreasonably restrict competition between ABEM certified and nori-eertified emergency physicians, including Plaintiffs, by eliminating ABEM’s prior alternative qualification for eligibility to sit for ABEM’s certification examination on the basis of years of practice in the field of emergency medicine (referred to as the “practice-track”), under which Plaintiffs may have been eligible to sit for and successfully pass the examination thereby requiring ABEM’s certification. Plaintiffs allege that ABEM and the hospital Defendants perpetuated this restraint through a conspiracy involving various professional organizations in the field of emergency medicine, including CORD, as a result of the activities of various physicians whom had achieved ABEM certification under the “practice-track” and were either employed or affiliated with the hospital Defendants’ residency programs in emergency medicine. Familiarity with the further proceedings and orders of this court, addressing the sufficiency of the First Amended Complaint,
Daniel v. American Board of Emergency Medicine,
Defendants subsequently, in March, April, and May of 1994, moved to dismiss or for summary judgment 3 for lack of personal jurisdiction, improper venue, on grounds of immunity, and for insufficient service of process. 4 Following five months of jurisdictional *? discovery, 5 Plaintiffs file, on December 12, 1994, a memorandum in opposition to Defendants’ motions to dismiss or for summary judgment. Defendants subsequently filed both joint and individual memoranda in support of the motions. Oral argument was held on March 13,1995.
Based upon the discussion which follows, Defendants Ohio State University Hospital, Oregon Health Sciences University Hospital, University of California (Los Angeles) Medical Center, University of California (Irvine) Medical Center, University of California (San Diego) Medical Center, University Hospital of the State University of New York at Stony Brook, University Hospital at the University of New Mexico School of Medicine, and University of Massachusetts Medical Center should be dismissed from this action on grounds of Eleventh Amendment immunity. Alternatively, Defendants Lincoln Medical and Mental Health Center, Ohio State University Hospital, Oregon Health Sciences University Hospital, University of California (Los Angeles) Medical Center, University of California (Irvine) Medical Center, University of California (San Diego) Medical Center, University Hospital of the State University of New York at Stony Brook, University Hospital at the University of New Mexico School of Medicine and University of Massachusetts Medical Center, should be dismissed from the suit as they are exempt from federal antitrust laws under the state action doctrine. The action against Lincoln Medical and Mental Health Center and Tri-City Medical Center should be dismissed insofar as money damages are requested under the Local Government Antitrust Act.
This court also finds that under Section 12 of the Clayton Act, 15 U.S.C. § 22, each of the Defendants which are domestic corporations should be subject to personal jurisdiction in this district, including CORD, Children’s Hospital (San Diego), Children’s Hospital of Michigan,' Detroit Receiving Hospital and University Health Center, For-syth Memorial Hospital, Johns Hopkins Hospital, Part of the Johns Hopkins Health System, Kettering Medical Center, Loma Linda University Medical Center, Lutheran General Hospital, Medical College of Pennsylvania and Hospital, Mercy Catholic Medical Center-Misc.ieordia Division, Mercy Hospital and Medical Center, Methodist Hospital of Indiana, Oregon Health Sciences University Hospital, 6 Riverside Methodist Hospitals, Saint Francis Medical Center, St. Anthony Hospital, and University Medical Center (Tucson, Arizona). Thus, as to these Defendants, the motions to dismiss for lack of personal jurisdiction should be denied.
Alternatively, Johns Hopkins Hospital, Part of the Johns Hopkins Health System, should be subject to personal jurisdiction, pursuant to Section 301 of the New York Civil Practice Law and Rules (“N.Y.CPLR”), as the court finds it is doing or soliciting business in New York. However, the court finds that Plaintiffs have failed to demonstrate that CORD and the other hospital Defendants which have moved to dismiss for lack of personal jurisdiction are soliciting business pursuant to Section 301, or that they should be subject to personal jurisdiction, pursuant to New York’s long-arm statute, N.Y. CPLR Section 302(a)(1), (2) or (3), for transacting business, or committing a tor-tious act within the state, or committing a tortious act outside the-state causing injury within the state.
Therefore, even if, based on the District Judge’s determination of the asserted immunity claims, if remaining as parties to this action, the motions to dismiss for lack of personal jurisdiction, made by Ohio State
The court also finds that proper venue as to ABEM and Johns Hopkins Hospital, Part of the Johns Hopkins Health System exists pursuant to Section 12 of the Clayton Act, however, those Defendants which are not domestic corporations, if remaining as parties, are not subject to venue under this section. However, should the District Judge accept the Report and Recommendation regarding Eleventh Amendment immunity, the state action doctrine, the Local Government Antitrust Act, or lack of personal jurisdiction, Defendants Tri-City Medical Center, University of California (Los Angeles) Medical Center, University of California (Irvine) Medical Center, University of California (San Diego) Medical Center, University Hospital at the University of New Mexico School of Medicine, and the University of Massachusetts Medical Center will have been dismissed from the action as parties, leaving the remaining Defendants — Children’s Hospital (San Diego), Children’s Hospital of Michigan, CORD, Detroit Receiving Hospital and University Health Center, Forsyth Memorial Hospital, Johns Hopkins Hospital, Part of the Johns Hopkins Health System, Kettering Medical Center, Loma Linda University Medical Center, Lutheran General Hospital, Medical College of Pennsylvania and Hospital, Mercy Catholic Medical Center — Misc.i-cordia Division, Mercy Hospital and Medical Center, Methodist Hospital of Indiana, Riverside Methodist Hospitals, Saint Francis Medical Center, St. Anthony Hospital, and University Medical Center (Tucson) — as subject to venue in this district pursuant to 28 U.S.C. § 1391(b)(1). The motions to dismiss pursuant to 28 U.S.C. § 1406(a) should, nevertheless, be granted with respect to University of California (Los Angeles) Medical Center, University of California (Irvine) Medical Center and University of California (San Diego) Medical Center, but denied as to ABEM. CORD and Mercy Catholic Medical Center-Misc.icordia Division’s motions to dismiss for improper service of process should be denied.
DISCUSSION
On a motion to dismiss, the court looks to the four corners of the complaint and is required to accept a plaintiffs allegations as true and to construe those allegations in the light most favorable to plaintiff.
Scheuer v. Rhodes,
Defendants argue that Plaintiffs’ Second Amended Complaint should be dismissed for lack of subject matter jurisdiction, lack of personal jurisdiction, improper venue, and improper service of process pursuant to Federal Rules of Civil Procedure 12(b)(1), (2), (3) and (5). These contentions will be discussed in this Report and Recommendation.
I. Subject Matter Jurisdiction
This court has authority to examine and resolve the issues surrounding any motions challenging the jurisdiction of the court.
Thornhill Publishing v. General Telephone & Electronics,
*?
In evaluating a Rule 12(b)(1) motion to dismiss challenging the court’s subject matter jurisdiction, the court may resolve disputed jurisdictional fact issues by reference to evidence outside the pleadings, such as affidavits.
Antares Aircraft, L.P. v. Federal Republic of Nigeria,
Defendants Ohio State University Hospital, Oregon Health Sciences University Hospital, University of California (Los Angeles) Medical Center, University of California (Irvine) Medical Center, University of California (San Diego) Medical Center, University Hospital of the State University of New York at Stony Brook, University Hospital at the University of New Mexico School of Medicine, and the University of Massachusetts Medical Center, assert that, as hospitals connected with their respective state university medical schools, they qualify for Eleventh Amendment immunity, and that this court therefore lacks subject matter jurisdiction over them. Defendants Oregon Health Sciences University Hospital, Tri-City Medical Center, University of California (Los Angles) Medical Center, University of California (Irvine) Medical Center, University of California (San Diego) Medical Center, University Hospital of the State University of New York at Stony Brook, University Hospital at the University of New Mexico School of Medicine, and University of Massachusetts Medical Center also assert that the state action doctrine prohibits this court from enforcing federal antitrust laws against these Defendants. Further, Defendants Lincoln Medical & Mental Health Center, Oregon Health Sciences University Hospital, Tri-City Medical Center, University of California (Los Angles) Medical Center, University of California (Irvine) Medical Center, University of California (San Diego) Medical Center, University Hospital at the University of New Mexico School of Medicine, and University of Massachusetts Medical Center argue that they are immune from suit pursuant to the Local Government Antitrust Act of 1984, 15 U.S.C. §§ 34-36. Lincoln Medical & Mental Health Center and Tri-City Medical Center are units of municipal health care facilities located, respectively, in New York City and San Diego.
a. Eleventh Amendment Immunity
The Eleventh Amendment commands that “[t]he Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or Citizens or Subjects of any Foreign State.” U.S. Const. amend. XI. Its immunity extends to entities created by state governments that operate as instrumentalities of the state.
7
Hess v. Port Authority Trans-Hudson Corporation,
Courts have also examined the legal powers of the entity, including its capacity to sue or be sued independently from the state, enter into contracts in its own name, acquire property, enjoy immunity from state taxation, or having a distinct corporate status.
See, e.g., Fitzpatrick v. Bitzer,
Here, eight of the moving hospital Defendants are sponsored by state-created public universities.
11
The overwhelming majority of courts which considered the question of Eleventh Amendment immunity as to such institutions, found state universities share in their
In this case, Plaintiffs contend that Defendants asserting Eleventh Amendment immunity are not entitled to it as they are “independently operated and financially self-sufficient businesses engaged in commercial activities, not governmental organizations involved in legislative or regulatory functions.” Plaintiffs’ Memorandum of Law in Opposition to Jurisdictional and Immunity Motions, filed December 12, 1994, at p. VI-2 (“Plaintiffs’ Memorandum of Law”) (emphasis in original). Therefore, Plaintiffs contend, that the court should not allow these Defendants to evade responsibility in federal court for their conduct under the guise of Eleventh Amendment immunity. ' Further, Plaintiffs argue that if Defendants are granted immunity, they will be deprived of any remedy for the alleged antitrust violations. 12 See Plaintiffs’ Memorandum of Law at p. VI-2.
As an initial matter, Plaintiffs’ argument, Plaintiffs’ Memorandum of Law at VI-2, VI-17 - VI-38, that the Eleventh Amendment should not be applicable to the hospital Defendants as they operate as independent businesses is beside the point.
13
Many state agencies provide services that may also be readily available from, and perhaps, even more efficiently provided by, commercial private enterprises whether or not operated for profit. However, the Eleventh Amendment’s protection does not turn on whether the activity in question is one -that predominantly is associated with goods or services traditionally produced or purveyed in the private sector such as health care, but rather whether the entity providing such service is the state. Thus, the issue must, as stated in
Hess, supra,
at 47-48,
Any remedy to perceived unfairness to injured litigants is not to be found in bending the Eleventh Amendment beyond its contours to accommodate such arguably valid concerns, but with the legislatures which make important choices on behalf of the states they govern, including an election to waive the Amendment’s protection.
See Hess, supra,
at 48-51,
Another premise underlying the Plaintiffs’ position that the public hospital Defendants are outside the Eleventh Amendment’s protection is that, as the majority of their respective revenues derive from patient fees and are held in accounts separate from the general treasury accounts of the sponsoring state itself, a money judgment in this action would not be one against the state and thus would not contravene the second of the “twin reasons,”
Hess, supra,
at 47-48,
Initially,
see
Discussion Section 1(a),
infra,
each such hospital Defendant is a public entity created either by state statute or constitution as an agency, arm or instrumentality of the state. Although only Ohio has specifically so stated by legislation, Ohio Rev.Code Ann. §§ 117.01 and 3345.05 (Baldwin 1995), the record supports a finding that these funds as generated by the hospitals are public monies. The court’s attention has been directed to no case supporting a finding that the term “state treasury” for Eleventh Amendment purposes is limited only to funds held in accounts controlled by a state officer, such as a comptroller or treasurer, and this court has found none. Indeed, as discussed,
see
Discussion Section 1(a),
infra,
the hospital Defendants claiming Eleventh Amendment immunity are subject to financial audits by other state officials. Such general auditing power strongly suggests a degree of interest in these funds equivalent to that as may be expected with respect to the state’s accounts for more common types of revenue sources such as income and sales taxes.
See, e.g., Rothstein v. Wyman,
Further, the question of whether state public funds would respond to a federal judgment depends on a careful examination of the entity’s relationship to the state and, in particular, whether the entity has the power to raise its own funds. See
Hess, supra; Baxter, supra,
at 732-33 (county department of welfare, as part of county having taxing power independent of state, not protected by Eleventh Amendment). Here, although each
1. Ohio State University Hospital
To determine whether Eleventh Amendment immunity applies to Ohio State University Hospital, Ohio statutory láw, the bylaws of Ohio State University, and the bylaws of the Medical Staff of the Ohio State University Hospitals which includes Defendant University Hospital must be reviewed. University Hospital has requested that the court take judicial notice of its bylaws. Exhibit B of Ohio State University Hospital’s Memorandum of Law in Support of Motion to Dismiss, filed May 2,1994. As the bylaws describe the powers and duties granted to University Hospital’s board of trustees and medical staff, their consideration is necessary to determine whether the hospital is an independent entity with respect to its degree of legal autonomy from the Ohio State University of which it is a unit and any other state governing bodies. Plaintiffs do not oppose this request. The court therefore takes judicial notice of the bylaws, as presented in Exhibit B. See Fed.R.Evid. 201(d) (court may take judicial notice- as requested by a party).
- When an action is brought against an entity or institution claiming immunity under the Eleventh Amendment, application of the amendment turns on whether the entity can be characterized as an arm of the state, or whether it should be treated as a non-immunized political subdivision of the state.
Mount Healthy City School District, supra,
at 280,
The Ohio State University was created as a state educational institution for higher education by the Ohio General Assembly; a board of trustees was simultaneously created to govern the university. Ohio Rev.Code Ann. §§ 3335.01, 3335.02, 3345.011 (Baldwin 1995).
14
The Ohio State University Board of Trustees (“the OSU Trustees”) consists of
The Ohio legislature has granted the OSU Trustees the ability to sue and be sued, 17 the authority to contract, and the power to make and use a common university seal, to enable the board of trustees to effectively operate the university. Ohio Rev.Code Ann. § 3335.03. These powers are, however, specifically defined and limited by the state legislature. For example, Ohio statutes prescribe the number of trustees necessary for a quorum, Ohio Rev.Code Ann. § 3335.06, the duration of fire protection contracts, Ohio Rev.Code Ann. § 3345.09, and even the penalty for the unauthorized duplication of keys, Ohio Rev.Code Ann. §§ 3345.13, 3345.99.
“The trustees are also given the power to adopt rules and regulations, Ohio Rev.Code Ann. § 3335.08, but it is not suggested that the state could not statutorily modify or invalidate such rules.”
Bailey v. Ohio State University,
University Hospital was created by the OSU Trustees on September 13,1963 as part of a program to establish a college of medicine. Ohio Rev.Code Ann. § 3335.15; Ohio State University Hospital’s Memorandum in Support of Motion to Dismiss, filed May 2, 1994, Exhibit B, Bylaws of Medical Staff of Ohio State University Hospitals, § 3335-43-01 (1993) (“Hospital Bylaws”). The hospital is governed by a board (“Hospital Board”), selected by the OSU Trustees. Hospital Bylaws § 3335-93-0HAX1). The Hospital Board consists of fourteen members, including two members of the OSU Trustees and twelve citizen members who are appointed by the OSU Trustees in consultation with the president of Ohio State University. Hospital Bylaws § 3335-93-01. The citizen members of the Hospital Board can be removed or suspended by the OSU Trustees, thus circumscribing- the independence of the Hospital Board. Hospital Bylaws § 3335-93-07(A).
It appears that the delegation of some of the OSU Trustees’ powers to the Hospital Board was necessary for-the College of Medicine and University Hospital to properly function. However, despite the myriad responsibilities of the Hospital Board, it remains ultimately subject to the authority of the OSU Trustees. Hospital Bylaws §§ 3335-93-02, 3335-93-03. Significantly, the powers expressly enumerated in the Hospital Bylaws can be amended or withdrawn at any time by the OSU Trustees. Hospital Bylaws § 3335-103-01.
Ohio State University has not granted the University Hospital separate corporate existence; further, the Ohio State University was not created as a corporation with perpetual existence. See Bailey, supra, at 604. Moreover, the hospital itself has no employees, as all members of its medical staff are. faculty members of the Ohio State University College of Medicine, an academic unit of the Ohio State University. Hospital Bylaws § 3335-43-04(A)(2).
Title to all land used by the Ohio State University and the University Hospital is held in the name of the state of Ohio. Ohio Rev.Code Ann. § 3335.13; 1995 Oh. Laws § 3345.12(P). Only property held for investment purposes or in the university’s endowment portfolio is held in trust by the OSU Trastees for Ohio State University. Ohio Rev.Code Ann. § 3335.13. Further, the OSU Trustees must “[njegotiate for and receive conveyances and transfers of property, both real and personal, to be used by [the college of medicine].” Ohio Rev.Code Ann. § 3335.15(B).
Additionally, Ohio Rev.Code Ann. § 2743.01(A) provides that an Ohio state university, such as the Ohio State University, Ohio Rev.Code Ann. § 3345.011, is an instrumentality of the state, and is amenable to suit in the state’s, court of claims. 19 Ohio Rev.Code Ann. § 3335.03(B).
The various powers delegated to the OSU Trustees and the Hospital Board indicate a
The court must next determine whether relevant case law treats the entity at issue as independent or as a surrogate of the state.
Feeney, supra,
at 629-30. Several Ohio cases have addressed the question of whether Eleventh Amendment immunity applies to the state colleges and universities of Ohio and have clearly held Ohio’s state colleges and universities, including the Ohio State University, to be arms of the state entitled to the amendment’s protection.
See Weaver v. University of Cincinnati,
As the degree of control over the University Hospital by the OSU Trustees and, through the OSU Trustees, the governor of Ohio is fairly substantial, and the Ohio courts, both federal and state, have determined Ohio State University and the Defendant University Hospital to be instrumentalities of the state, the court finds that the autonomy factor weighs in favor of according Eleventh Amendment immunity to the University Hospital.
Plaintiffs vigorously argue, as discussed, supra, that any judgment which might be obtained in this action would not necessarily be paid from the state treasury, but could be satisfied from the University Hospital’s self-generated revenue, its trust fund, or commercial insurance carried by it. Plaintiffs’ Memorandum of Law at VI-31 - VI-32. The University Hospital maintains an insurance trust fund to meet its liabilities for malpractice claims, which was established and funded pursuant to the authority of Ohio Revised Code Section 3345.201. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 19, pp. 93, 97,101. The hospital also maintains private insurance coverage in case the insurance trust fund is expended. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 19, pp. 101-102. The Executive Director of. the University Hospital stated that this insurance policy was intended for general liability claims. Id.
Plaintiffs contend, in an attempt to demonstrate that Eleventh Amendment immunity does not apply, that a judgment against the University Hospital could be paid from its insurance policies. However, Plaintiff cites no authority to support its argument that the presence of insurance displaces immunity afforded by the Eleventh Amendment. To the contrary, several courts which have consid
University Hospital maintains that its trust fund money consists of public funds as defined by Ohio law, Ohio Rev.Code Ann. § 117.01, and, therefore, any judgment against the hospital constitutes a judgment against the state. Ohio law also provides that any money received, collected by, or owed to a representative, officer, or employee of a state agency, 20 public institution, political subdivision, or other office pursuant to any order, resolution, or authority constitutes public money. Ohio Rev.Code Ann. § 117.01. The hospital continues the analysis to conclude that any damage award imposed by a federal court and paid from the hospital’s operating funds or funds allocated by the state, constitute Ohio public funds and would violate the' Eleventh Amendment. Ohio State University Hospital’s Memorandum of Law at pp. 14-15. Thus, it concludes, a federal money judgment in this action against the University Hospital could result in the depletion of Ohio’s public funds.
In determining whether a state university is entitled to Eleventh Amendment immunity, courts also consider the extent of state funding, the state’s oversight and control of the university’s fiscal affairs, the university’s ability to independently raise funds, whether the state taxes the university, and whether a judgment against the university would result in the state increasing its appropriations to the university. Kashani, supra, at 845.
Ohio State University’s College of Medicine only qualifies for state funding if it meets the legal requirements for state funding, including operating an accredited program of medical education in the state, and maintaining a department of family practice, including courses of study, clinical experience, preceptorships, and residencies in family practice. Ohio Rev.Code Ann. §§ 3333.10, 3333.11, 3335.15(A). The OSU Trustees are required to prepare and file a detailed statement regarding the condition of the university, all expenditures and disbursements made, the number of professors, staff, and students in each department, an estimate of expenses for the following year, a statement demonstrating progress of the university, and other such information. Ohio Rev.Code Ann. § 3335.07. A necessary component of this budget is the operating budget for the University Hospital. Defendant’s Reply Memorandum of Law, filed May 2, 1994, at p. 40. These statements are then submitted to the Ohio legislature for approval.
See Harden, supra,
at 1163 (‘Where the budget of an
By contrast with the state’s community colleges, school districts, and other political subdivisions of Ohio such as its counties, towns and villages, the Ohio State University and the University Hospital do not have the power to levy taxes to service a bond issue.
Cf. Mount Healthy, supra,
at 280,
The University Hospital receives the majority of its revenue from payment for services provided to patients, however, funds for the hospital may also be raised through the issuance of bonds by the OSU Trustees, but the limited ability to issue bonds and other obligations is regulated in detail by state law. 1995 Oh. Laws § 3345.12 (provides in-depth explanations of how obligations are authorized, prepared and secured). The debt obligations authorized by the OSU Trustees are secured by a pledge of and lien upon the available receipts of Ohio State University, as provided for in the bond proceedings, excluding money raised by taxation and state appropriations. 1995 Oh. Laws §§ 3345.12(B), (C). Significantly, payment of a judgment is not one of the purposes for which the Ohio State University is authorized to issue bonds. 1995 Oh. Laws §§ 3345 .12(B), (C). Further, the OSU Trustees and the Hospital Board are prohibited from contracting “a debt not previously authorized by the general assembly [the Ohio legislature].” Ohio Rev.Code Ann. § 3335.10.
Plaintiffs emphasize the fact that the University Hospital can avail itself of self-generated income from its own hospital charges for services it may provide and donations, and that any judgment rendered against the hospital could be paid by funds not appropriated from the Ohio General Assembly. However, “[b]y statute, the Ohio legislature permits the state colleges and universities to retain [self-generated] funds, rather than require them to be paid into the treasury and then appropriated back to the schools as needed, but it could just as easily amend that statute to require the converse.” Hall, supra, at 304.
Plaintiffs argue that the most relevant financial factor weighing against finding Eleventh Amendment immunity for the University Hospital is that the hospital’s operating funds do not come predominantly from the state. For example, for the hospital’s 1992 - 1993 fiscal year, only 2.8% of the
Here, the key question for Eleventh Amendment purposes is whether the funds which would used to satisfy the potential federal court judgment will come directly from the state treasury, or whether, if the hospital’s financial resources are insufficient or non-existent, the state must, under state law, reimburse the hospital, thereby effectively paying the obligation. Fitchik, supra, at 660. Although it appears that a judgment in this case would in all likelihood be paid from the hospital’s trust fund, which constitutes public money, or the university’s excess liability insurance policy, the judgment would be paid using public money, as Ohio has not specifically stated that it will not be liable for the debts and obligations incurred by the university. Ohio Rev.Code § 3335.01 et seq. Thus, the funding consideration favors University Hospital’s claim that it is entitled to immunity from suit in federal court.
The primary purpose of the university hospital is the advancement of higher education by providing research and training support as part of the Ohio State University College of Medicine. Ohio Rev.Code Ann. § 3335.15. Federal courts have long provided that university and professional education is recognized as a function of state government.
See Skehan v. State System of Higher Education,
In
Mount Healthy School District v. Doyle,
the Supreme Court looked not only to whether the entity at issue was formed with independent powers from the state but also to whether it served the state as a whole, or a particular region.
Mount Healthy School District,
Moreover, the powers and duties granted to the Hospital Board to enable the Ohio State University Hospital to carry out its primary purpose of providing medical education together with the Ohio State University Medical School, contrasts to those of a city or county whose exercise of their far more extensive police powers, are their very reason for existence. Therefore, the University Hospital is distinguishable from public entities which perform only local government functions, and this factor weighs in favor of granting the hospital sovereign immunity.
Compare Hess, supra,
at 42-44, 115 S.Ct. at
As the autonomy, financial independence, and function indicators point toward a finding of immunity, this court need not assess whether a judgment in this case against the hospital would potentially deplete the Ohio state treasury, and whether the sovereign dignity of the state is preserved, as discussed in
Hess, supra,
Accordingly, applying the factors bearing on the availability of Eleventh Amendment immunity, the court finds that the Defendant University Hospital is an arm of the state of Ohio and entitled to Eleventh Amendment immunity from suit in this court.
2. Oregon Health Sciences University Hospital
Oregon Health Sciences University and its University Hospital 22 were created as educational institutions for higher learning by the Oregon legislature. The Oregon Health Sciences University consists of a medical school, a dental school, a school of nursing, a hospital, and research centers. Or.Rev.Stat. § 352.055(1) (1993); Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 47, p. 8. The university was originally part of the Oregon State System of Higher Education, Or.Rev.Stat. § 352.002 (1993), however, in 1995, the Oregon legislature transformed Oregon Health Sciences University into a “public corporation.” 1995 Or.Laws ch. 162 §§ 1(2), 1(3). Under Oregon law, a public corporation is an entity “created by the state to carry out public missions and services ... [by] participating] in activities or providing] services that are also provided by private enterprise.” 23 ■ 1995 Or.Laws ch. 162 § 1(2).
The Board of Directors (“the Board”) which governs the university consists of seven members 24 appointed by the governor of Oregon and confirmed by the state senate. 25 1995 Or.Laws ch. 162 §§ 1(2), 4(1). The terms of office are four years for nonstudent members, and two years for student members. 1995 Or.Laws ch. 162 § 4(2). The governor may remove any member of the Board at any time for cause, after notice and public hearing. 1995 Or.Laws eh. 162 § 4(7). Thus, the state of Oregon exercises superincumbent authority over the Board, Oregon Health Sciences University, and the University Hospital.
The Oregon legislature granted the Board the power to appoint and employ personnel, make and enter contracts, purchase, control, or dispose of title to real and personal property,
26
sue or be sued in its own name in any
Oregon Health Sciences University may also issue and sell revenue bonds, however, the statute providing the procedure for a municipality to issue such bonds does not apply to revenue bonds issued by the University. 1995 Or.Laws ch. 162 § 59; Or.Rev. Stat. § 288.815 (1993). Also, the university’s enabling act provides that. “[n]o obligation of any kind incurred under [Oregon Revised Statute Sections] 288.805 to 288.945 shall be [considered] ... an indebtedness of the State of Oregon.” 1995 Or.Laws ch. 162 § 59.
Moreover, if there is a shortfall of university funds, secured by university generated revenues or property, available to satisfy state general bond obligations issued for university purposes, the state legislature may provide funds to satisfy the shortfall. Except for the requirement of Or.Rev.Stat. 291.445, that general obligation bonds to be paid from general fund appropriations, the legislature has no legal obligation to provide funds for bond obligations issued by the university. 1995 Or.Laws ch. 162 § 61a.
Although the Oregon legislature provided that the university “shall not be considered a unit of local ■ or municipal government or a state agency for purposes of state statutes or constitutional provisions,” 1995 Or.Laws ch. 162 § 2, which results in the fact that the Board maintains considerable authority over university affairs, Oregon law states that the university is a “government entity performing governmental functions and exercising governmental powers.” ' 1995 Or.Laws ch. 162 §§ 2, 8. Further, the university receives funding from the state, it is controlled by the state, and it performs state-wide educational and health care functions. 1995 Or.Laws ch. 162 §§ 1(2), 1(3), 3(l)(a), 3(3)(a)-(f). Thus, the .University Hospital as a component of Oregon Health Sciences University retains more of the characteristics of an arm or instrumentality of the state than a political subdivision.
Prior federal and state cases involving Oregon Health Sciences University in Oregon have accorded both Oregon’s state universities and the Oregon State Board of Higher Education immunity as instrumentalities of the state of Oregon.
29
Brinkley v. Oregon Health Sciences University,
Plaintiffs have argued that any judgment against the Oregon Health Sciences University Hospital would not be paid from the state treasury. Plaintiffs’ Memorandum of Law at VI-27 — VI-29. Specifically, Plaintiffs assert that the University Hospital is not dependent on the state for funding, in that the University Hospital is financially self-sufficient as it “generated an operating profit of over $10 million for [the period ending May 31, 1993],” Plaintiffs’ Memorandum of Law at VI-28, and only 5.6% of its revenues wei'e attributable to state funding for the period ending May 31, 1994. Plaintiffs’ Memorandum of Law at VI-27; Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 23, p. 27. However, no statutory limitations exist that restrict the amount of funding that the university and University Hospital can receive from the state. It is generally recognized that the state’s obligation to contribute to the revenues of the university is more important than the amount of the contribution.
Fitchik,
In determining whether the University Hospital should receive Eleventh Amendment immunity, the court must consider not only the extent of state funding, but also the state’s oversight and control of the Health Sciences University’s fiscal affairs, the university’s independent ability to raise funds, whether Oregon taxes the university, and whether a judgment against the university would result in the state increasing its appropriations to the university.
Kashani
In this case, Oregon Health Sciences University, with the approval of its Board, may enter into financing agreements which would be advantageous to the university. 1995 Or. Laws Ch. 162 §§ 17-21. However, there is no indication that money can be borrowed in order to pay a judgment against the university. Further, the university may issue revenue bonds, which are to be considered “obligations of a political subdivision of the state,” rather than obligations of the state itself. 1995 Or.Laws ch. 162 § 60. There is no evidence in the record that money raised through the issuance of these bonds could not be used to pay a judgment against the University Hospital.
Although these considerations point away from granting Eleventh Amendment immunity, the factors presented here relating to autonomy and control by the state persuasively point toward granting immunity. Oregon Health Sciences University must, pursuant to the statutes in effect on July 1, 1995, submit a funding request to the Oregon Department of Administrative Services and the Legislative Assembly, the Oregon State Legislature, as part of the governor’s budget every other year. 1995 Or.Laws ch. 162 § 13(1). Included within this budget is an allocation for the University Hospital, which is submitted by the various departments to the hospital administration, and then to the university. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 23, pp. 6-10. Any request approved by Oregon’s Legislative Assembly is appropriated to the Department of Administrative Services for direct allocation to the university. 1995 Or.Laws eh. 162 § 13(1). Thus, the fact that the Oregon Health Sciences University Hospital must submit a budget to the state for approval suggests that it is an agency of the state for Eleventh Amendment purposes.
See Harden,
The mission of Oregon Health Sciences University and the University Hospital is to serve the people of Oregon as the primary provider of education in the health professions for students of the state of Oregon and the northwest region of the country. 1995 Or.Laws ch. 162 § 3(l)(a). The courts have considered education, particularly professional education, to be a recognized function of state government, so long as the educational entity does not limit enrollment to city or county residents.
See Skehan, supra,
at 248. As Oregon Health Sciences University and the University Hospital are intended to serve all residents of the state of Oregon, they
On the other hand, despite the fact that the university must submit a budget to the Oregon Department of-Administrative Services and the Oregon legislature and, as & result, receives some state appropriations, the remaining aspects of Oregon Health Sciences University and the University Hospital’s economic life are largely independent of the state. The property owned or leased by the University is not subject to property taxes. 1995 Or.Laws eh. 162 § 21; Or .Rev. Stat. § 307.090(1) (1993) (“all property of the state and all public or corporate property used or intended for corporate purposes of the several counties, cities, towns, ... and all other public or municipal corporations in this state, is exempt from taxation”). However, as under Oregon law both state and local entities are exempt from taxation, this factor does not facilitate a decision as to whether Oregon Health Sciences University Hospital is an arm of the state or a political subdivision.
As the relevant indicators of Eleventh Amendment immunity as to the University Hospital appear to point in different directions, the court must determine whether a judgment against the Oregon Health Sciences University Hospital would burden the state treasury, and ensure that the dignity of the state is preserved.
Hess, supra,
at 51-53,
Oregon Health Sciences University maintains the authority to issue bonds to raise revenue and without pledging the full faith and credit of the state, but the hospital itself does not share the university’s authority to use these procedures to raise capital, as only the Board possesses this power. The University Hospital does generate an operating profit, however this fact does not demonstrate that a judgment against the University Hospital would not require the expenditure of state resources as the purpose of immunity is that its protection does depend upon the actual outcome of the litigation, rather, it operates to bar litigation and exposure to any liability at the outset. Given the direct state control over the university’s budget and overall operation in providing the people of Oregon with educational opportunities and health care, such a judgment would nevertheless offend the dignity of the state of Oregon. 1995 Or.Laws ch. 162 §§ 1(2), 1(3), 3(l)(a), 3(3)(a)-(f). The court therefore finds Oregon Health Sciences University Hospital is an arm or-instrumentality of the state of Oregon, entitled to Eleventh Amendment protection.
3. University of California Medical Centers
Plaintiffs argue that the University of California Medical Centers at Los Angeles, Irvine, and San Diego, are “financially self-sustaining” business entities which should not be granted Eleventh Amendment immunity. Plaintiffs’ Memorandum of Law at VI-17 — VI-18, VI-21, VI-24. The medical centers contend that the Regents of the University of California (“the Regents”) own and operate each of the California state universities and their respective medical centers, which are part of the University of California, and therefore arms of the state of California for purposes of the Eleventh Amendment. Defendants’ Reply Memorandum of Law at p. 15; - Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 39, p. 8.
In determining whether the University of California Medical Centers sued are agencies of the state of California such that the state is the real party in interest, the court must review the powers, characteristics and relationships among the Regents, the University of California, and the medical centers.
Each of the California state universities and their respective Defendant medical centers are owned and operated by the Regents of the state of California, a public corporation established by the California constitution, which administers the University of California, a public trust under the California State Constitution. Cal. Const. of 1879, art. IX, § 9; Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 39, p. 9. Accordingly, California courts have considered the Regents as an arm of the state or “fourth branch of [state] government.”
See Regents of University of California v. City of Santa
The Regents consist of a twenty-five member board, with seven
ex-officio
members, including the state’s governor, lieutenant governor, the speaker of the California assembly, superintendent of public instruction, president and vice-president of the alumni association of the university, and the acting president of the university, who is appointed by the trustees of the university, and eighteen members appointed by the governor and approved by the senate. Cal. Const. of 1879, art. IX, § 9(a). Each' appointed member of the Regents serves a twelve year term. Cal. Const. of 1879, art. IX, § 9(b). Thus, the state of California is empowered to exercise significant direction over the operations of the Regents through its constitutional officers and the University of California system including the university medical centers.
See Rutledge v. Arizona Board of Regents,
The California constitution gives the California Regents “full powers of organization and government, subject only to such legislative control as may be necessary to insure the security of its funds and compliance with the terms of the endowments of the university and such competitive bidding procedures as may be applicable.... ” Cal. Const, art. IX, § 9(a); Cal. Public Contract Code § 10500 et seq. (requiring competitive bidding for projects in excess of fifty thousand dollars). These powers include holding legal title to all real and personal property of the university, 30 the power to sue or be sued, 31 to use a seal, and to delegate authority to committees or faculty as the Regents may deem appropriate. Cal. Const, art. IX, § 9(f). See Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 31, pp. 6,19; Volume 10, Exhibit 39, pp. 46, 65, 66-67, 71, 75, 83; Volume 11, Exhibit 63, pp. 22, 65, 70-71, 78, 79, 94; Volume 11, Exhibit 67, pp. 23, 26. Similarly, the Regents have by statute the power to make contracts, 32 leases, and agreements including with any “state or federal agency.” Cal.Educ.Code §§ 92436, 92437 (West 1989). 33
Moreover, the California Regents have complete power over construction projects. The Regents can issue revenue bonds to finance construction projects, and structure the terms of the bonds, including using its property to secure the bonds and redeem them. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 39, pp. 39, 67. Further, the Regents can invest any bond proceeds in a construction fund as it desires, subject to limitations included in indentures relating to the issuance of revenue bonds.
See
Cal.Educ.Code §§ 92441, 92482, 92525, 92532. Additionally, surplus money from revenue bonds can be used by the Regents for any purpose.
34
Cal.Educ.Code § 92533.
The Regents must submit reports to each house of the California legislature on “matters pertaining to and affecting salaries, wages, hours of work, conditions of work, and other matters relating to personnel under the jurisdiction of the Regents and the employees of the University of California.” Ciba-Geigy Corporation, supra, at 623.
In view of the plenary authority of the Regents over the University of California, the California courts have concluded “that the University has quasi-judicial powers over its own personnel disputes, and that the state courts must show deference when reviewing the factual findings of a University adjudicatory officer.”
Unix System Laboratories, Inc. v. Berkeley Software Design, Inc.,
In administering the trust of the University of California, the Regents were granted “all the powers necessary or convenient for the effective administration of its trust, including the power ... to delegate to its committees or to the faculty of the university, or to others, such authority or functions as it may deem wise....” Cal. Const. art. IX, §§ 9(a), (f). Thus, the Regents have granted the medical centers the power to administer their day to day operations. See Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 28, p. 6, Exhibit 31, pp. 6, 10-11, Exhibit 39, pp. 40, 46, 58-59, 66-67, 70, 86; Volume 11, Exhibit 63, pp. 19, 21, 66-67, 69-70, 79, Exhibit 67, pp. 8-9, 22, 26.
In contrast to the Regents, the medical centers of the various universities of California are not independent legal entities, rather, they are physical extensions of the Regents existing under their sole aegis.
Lujan v. Regents of the University of California,
The University of California medical centers generate substantial income through patient revenues, however, state appropriations to the Regents and the university’s medical centers are used to pay for teaching faculty, leasing equipment, and tort and contract judgments against the Regents.
35
Plaintiffs’
Although the medical centers govern their own day to day operations, they remain accountable to the Regents, and do not possess the authority to enter any necessary contracts, to sue, issue bonds, or own or hold property. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 31, pp. 12, 18-19, Exhibit 39, pp. 11, 15, 17-22, 26, 40, 61, 66-67; Volume 11, Exhibit 63, pp. 8, 21, 22, 78, Exhibit 67, pp. 7-8, 19. Further, the medical centers cannot be sued in their own name, rather, they must be sued in the name of the Regents. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 39, p. 83; Volume 11, Exhibit 63, p. 94. Thus, as the medical centers lack the degree of autonomy from the state necessary to function independently of the Regents and the state as to legal matters affecting them, in an action against the medical centers the true party in interest is the Regents, indisputedly an arm of the state of California.
Plaintiffs argue nevertheless that the medical centers, in their day to day activities, operate as independent business entities. Plaintiffs’ Memorandum of Law at VI-17 - VI-25. However, the medical centers do not have employees, and do not hire or fire any persons who work in the centers, rather “[a]ll persons who provide services to [the medical centers] are either employees of or contractors with The Regents of the University of California.” Defendants’ Immunity Reply Memorandum at p. 17; Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 36, p. 23, Exhibit 39,- p. 61; Volume 11, Exhibit 53, p. 7. Moreover, university or state approval is required in order to hire or fire employees of the medical centers, as these employees are employed by the university. Id.
Although each medical center maintains its own financial records and statements, Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 31, pp. 10-11, 13; Exhibit 39, p. 40; Volume 11, Exhibit 63, pp. 19, 66-67; Exhibit 67, pp. 8-9, these statements are compiled with those of the particular university of which it is a part, which forwards a complete proposed budget to the Regents and, ultimately, the California state legislature for appropriations. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 39, pp. 17-22. Moreover, the medical centers do not function as entities separate from their respective universities and the Regents. Even though each medical center is responsible for proposing, reviewing, evaluating, and approving their own policies regarding patient admissions, fee scheduling, and physician credentialing, these policies are reviewed at the university level. Plaintiffs’ Memorandum at VI-21, VI-23; Appendix Volume 10, Exhibit 28, p. 6; Exhibit 32, p. 8; Exhibit 39, pp. 58-59, 61; Volume 11,
Plaintiffs assert that University of California (Los Angeles) Medical Center and University of California (Irvine) Medical Center have accumulated several million dollars in excess revenues, which, Plaintiffs maintain, supports their view that these hospitals are financially independent. Plaintiffs’ Memorandum of Law at VI-19, VI-24. The state, however, retains authority to appropriate any excess revenues generated by the medical centers. Plaintiffs’ Memorandum of Law at VI-19 n. 10. Such “excess” is often administratively “loaned” to the medical center’s affiliated university, without obligation to repay. Plaintiffs’ Memorandum of Law, Volume 11, Exhibit 67, pp. 15, 22. Further, upon deposit, excess revenues become assets of the Regents. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 31, p. 21; Exhibit 39, . p. 75; Volume 11, Exhibit 63, p. 66. The medical centers may, however, retain such excess revenues to pay their expenses. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 31, pp. 22-25; Volume 11, Exhibit 63, pp. 69-70; Exhibit 67, p. 22.
The Regents delegated some duties to the chancellors of the medical centers including management of patient care facilities, implementation of operating policies, reviewing hospital operations policies, as well as serving as chief administrator of their respective medical centers. Plaintiffs’ Memorandum of Law at VI-21, VI-24 — VI-25. However, the medical centers have only a limited right to contract without the approval of the Regents or the president of the University of California; they may enter contracts up to $250,000 to purchase equipment, and are authorized to pay personnel, or pay for services or other capital expenditures. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 31, p. 19; Exhibit 39, pp. 66-67; Volume 11, Exhibit 63, pp. 22, 79; Exhibit 67, p. 26.
The Regents delegated the authority to approve and execute contracts on behalf of the university to the president of the University of California. Defendants’ Immunity Reply Memorandum at p. 16. However, the president must obtain specific authorization from the Regents prior to entering into certain contracts involving exceptions to approved university programs and policies, and construction contracts in excess of approved funds. Defendants’ Immunity Reply Memorandum at p. 16. Thus, the medical centers have limited fiscal autonomy in fact and law, and must report to the University of California or the Regents for approval of expenditures.
The University of California system and its medical centers were created under the California constitution, and were intended to be governed by the authority of the Regents.
See
Cal. Const. art. IX, § 9. Several federal court decisions have, consistent with this statement of fundamental California law, dismissed cases involving the Regents finding the Regents to be an arm or instrumentality of the state of California, entitling the Regents to Eleventh Amendment immunity from suit in federal court.
See, e.g., Mascheroni v. Board of Regents of the University of California,
California has exempted the state universities of California from taxation by state or local authorities, Cal.Educ.Code § 92443, a special status which some courts find indicative that an entity is an arm of the state rather than a subdivision.
Kashani, supra,
at 846. The Regents and its universities are also exempt from local building codes, municipal and zoning regulations, permit fees, and inspection fees for construction improvements solely for educational purposes. Cal. Gov.Code §§ 6103, 6103.6, 6103.7;
City of Santa Monica, supra,
at 136,
The autonomy of the Regents from other branches of state government, and its incorporation as a public entity, stems from the mandate in the California constitution - to ensure that the Regents performs its governmental mission, to engage in higher education, without political or sectarian influence. Cal. Const. art. IX, § 9(f).
See also Jain,
Finally, the court must consider whether a judgment against the medical centers would be paid from state funds. The medical centers maintain a self-insurance fund, professional liability insurance, general liability insurance, and a trust fund through the university. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 31, pp. 33-34; Volume 11, Exhibit 67, pp. 24-26. The medical centers contribute to payment of the premiums on these policies. Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 67, pp. 25-26. The self-insurance program is intended to pay for liability" to the extent that sovereign immunity as to státe law claims is waived pursuant to the California tort claims act. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 39, pp. 75-76. Both the general liability policy and trust fund were intended to pay for campus related claims, such as torts or accidents. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 39, pp. 77-78. The trust fund, however, which is held by the Regents, is generated from several sources, including the medical centers, student health services fees, and state appropriations.
Id.
at pp. 75-79. As the resources in the trust fund include funds from state appropriations, any judgment against the fund could ultimately consume financial resources from the state treasury.
See Vaughn, supra,
at 1353 (the Regents could not satisfy a judgment from' its funds, as the property of the Regents is the property of the state, and the Regents was not authorized to' issue bonds to pay for claims
Further, California has not disclaimed liability for the debts of the University of California or its medical centers. Instead, the California constitution mandates the state to ensure the “security of the University of California’s funds.” Cal. Const. art. IX, § 9(a); Ciba-Geigy Corporation, supra, at 624. Also, demonstrating the close financial link between the state and the Regents is the extent of direct control which the state exercises over the finances of the Regents and the University of California. For example, the legislature oversees the University of California’s budgets and may limit the uses for state moneys appropriated to the University of California. Cib'ar-Geigy Corporation, supra, at 624. The California “legislature has ‘prohibited the [Regents] from expending funds for new large-scale computers ... and has required the [Regents] to use certain funds ... to support additional primary care medical residences.’” Ciba-Geigy Corporation, supra, at 624 (quoting Autonomy and Accountability: The University of California and the State Constitution, 38 Hastings L.J. 933-34 (1987) (citations omitted)). Likewise, the Regents must submit reports to the State Public Works Board of any state money that it allocates for a construction project. Cal. Educ.Code § 92101. If the Regents fail to use the money allocated for construction projects, the unused funds revert to the state’s General Fund. Cal.Educ.Code § 92101. Additionally, the Regents “can only issue revenue bonds for its construction projects and not to pay its judgments.” Ciba-Geigy Corporation, supra, at 624.
Finally, the Regents are subject to state audits, and its financial statements, including funds that it receives from non-state sources, are part of the annual financial report of the Auditor General of California.
See Harden,
“‘The power of the Regents to operate, control, and administer the University is virtually exclusive.’ ”
City of Santa Monica, supra,
at 135,
4. University Hospital at State University of New York at Stony Brook
The State University of New York (“SUNY”) was established in 1948 by Chapter 695 of the Laws of 1948, as amended (New York Education Law § 352) (McKinney 1988).
37
SUNY currently consists of, among other general and specialized - edu
SUNY is governed by a Board of Trustees consisting of sixteen members. N.Y.Educ.L. § 353. Fifteen of the members are appointed by the governor with the advice and consent of the state senate. 38 N.Y.Educ.L. § 353. The trustees are responsible for administration, supervision, and coordination of state operated institutions, programs of higher education, the provision of standards and regulations covering the organization and operation of their programs, setting tuition charges and fees, establishing health and medical centers, professional and graduate schools, research centers and other facilities. N.Y.Educ.L. § 355(1). The trustees are required to submit their proposed long-range plan for SUNY to the state Board of Regents 39 and the governor every four years, as well as reporting to the Board of Regents, the governor, and the legislature on the progress of SUNY. N.Y.Educ.L. § 354(1), (2), (3). •
The SUNY trustees may “take, hold and administer ... real and personal property ... either absolutely or in trust for any educational or other purpose within the jurisdiction and corporate purposes of the state university.” N.Y.Educ.L. § 355(2)(a). Real property may be acquired or purchased, including through eminent domain, by the trustees. N.Y.Educ.L. §§ 307(1), 355(2)(a). Additionally, the trustees are authorized to expend appropriations made for SUNY by the Comptroller of the state, an elected state officer, from the funds specifically appropriated for that purpose by the state legislature. N.Y.Educ.L. §§ 355(4)(b), (4)(c), (8).
The trustees are also empowered to establish health and medical centers, as well as graduate and professional schools. N.Y.Educ.L. § 355(l)(d). The trustees may appoint a head for each state operated institution, and prescribe the functions, powers and duties of the head of the institution, as well as providing for the appointment of the instructional and administrative staff. N.Y.Educ.L. § 355(2)(g).
The trustees may also enter contracts and perform other acts which are necessary or appropriate to effectively carry out the objects and purposes of SUNY. N.Y.Educ.L. §§ 355(2)(n), (2)(p), (6). Moreover, the trustees are required to make an annual report of its activities and recommendations to the
Further, the trustees are required to review and coordinate the budget and appropriation requests of all state operated institutions within SUNY, and combine these requests with the fiscal requirements for institutions of higher education into a university budget for submission to the governor. N.Y.Educ.L. § 355(4)(a); Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 51, pp. 63-64, 66-67.
The State University at Stony Brook Hospital and School of Medicine were created pursuant to New York Education Law Section 355(l)(d), with the university hospital’s activities in support of the educational and research mission of the university. N.Y.Educ.L. § 351(d). Stony Brook University Hospital is therefore an integral part of the University at Stony Brook, and, as such, of the SUNY system. The hospital is also subject to general oversight and control by the governor and the legislature, as all appropriations to Stony Brook and its hospital are approved by both the governor and legislature. Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 51, pp. 63-64, 66-67.
Additionally, hospital activities, such as purchasing and contracting, are subject to audit by the state comptroller. Id. at 55, 70-71, 77-79. All contracts entered by Stony Brook are contracts of the state, and contracts which exceed $50,000 for goods or $35,000 for services must be approved by the state comptroller and the attorney general, also an elected state officer. N.Y.Educ.L. § 355(5)(a); Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 51, p. 55. Further, all contracts of the University Hospital must be approved by the Director of the Stony Brook Medical Center and are subject to the approval of the state. Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 51, pp. 55, 71.
The University Hospital itself has no independent right to hold title to property and no bank accounts or insurance, and the hospital’s funds are controlled by the state, pursuant to New York Education Law and the New York State Finance Law. Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 51, pp. 15, 32-35, 68. The payments for services are received by the hospital and then deposited in New York state accounts. Id. at 15, 32-35.
The Stony Brook University Hospital is not separately incorporated from SUNY, rather, SUNY manages, administers, and oversees the University Hospital as a unit of the University at Stony Brook. Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 51, pp. 37-40. Persons who perform services for Stony Brook University Hospital are all state employees, rather than employees of the hospital. N.Y.Educ.L. § 355a; Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 51, pp. 12-13, 40, 49-50. Members of the hospital’s medical staff have been delegated the responsibility of hiring lower level employees for the hospital. Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 51, pp. 48-52. However, the physicians at the University Hospital are all members of the Stony Brook medical faculty appointed by the president of the State University of New York, at Stony Brook. Id. at p. 50.
Plaintiffs argue that the University Hospital is financially self-sufficient, as New York state provides a small percentage of the hospital’s net operating costs.
40
The hospital maintains its own financial statements, and prepares its own budget. Plaintiffs’ Memorandum of Law, Appendix Volume 9, Exhibit 6, Volume 11, Exhibit 51, pp. 16, 63-64. However, the University Hospital’s budget is submitted for approval to the Dean and Director of the Stony Brook Medical Center, the university vice-president of Health Sciences, the president of the university, and the chancellor of SUNY. Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhib
As stated, the primary purpose of Stony Brook University Hospital is to provide “educational and research programs in the health sciences through the provision of high quality health care at ... [the] hospitals].... ” N.Y.Educ.L. § 351(d). As such, the hospital provides an important state governmental function.
See Skehan,
Several courts have granted SUNY entities the protection of Eleventh Amendment immunity.
See, e.g., Yoonessi v. State University of New York,
All SUNY entities, including Stony Brook University Hospital, are broadly controlled by the trustees; such entities lack the requisite degree of legal autonomy from the state government to be considered political subdivisions of New York state and thereby outside the ambit of the Eleventh Amendment. Indeed, although SUNY has some attributes of self-governance, its fiscal affairs are substantially intertwined with those of the state as to make such autonomy illusory. Also, as noted SUNY legally exists as a corporation within the University of State of New York, a state constitutionally created entity, headed by the Regents of New York, a body which is unquestionably an arm of the state. As such, SUNY must similarly be cast as an extension of this arm of the state. Moreover, SUNY entities including Stony Brook University Hospital have been protected from suit in federal court by extending Eleventh Amendment immunity to them. These factors weigh strongly in favor of granting Eleventh Amendment immunity to Stony Brook University Hospital in this action.
Further, it is clear that any judgment against SUNY or one of its constituent units in excess of insurance coverage or an uninsured claim would be paid out of the judgment and claims account of the state of New York, funded by legislatively appropriated
Balancing all of the relevant factors, the court finds the State University of New York at Stony Brook University Hospital is immune from suit in this court under the Eleventh Amendment. As each of the factors indicative of Eleventh Amendment immunity supports granting such immunity, the court need not apply the Hess analysis, as it would reach the same conclusion.
5. University Hospital at the University of New Mexico School of Medicine
The University of New Mexico is a state educational institution created by the New Mexico state constitution. N.M. Const. art. XII, § 11; N.M.StatAnn. § 21-7-1 (Michie 1994).
42
Control and management of the university and University Hospital is vested with the Board of Regents (“the Regents”), whose seven members are nominated by the governor of New Mexico, and confirmed by the state senate.
43
N.M. Const. art. XII, § 13; N.M.StatAnn. § 21-7-3. The Regents are responsible for the “care and preservation of all [university] property, the erection and construction of all buildings necessary for [university] use and the disbursements and expenditures of all money.” N.M.Stat.Ann. § 21-7-3. The Regents also retain the power to sue
44
and to contract. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 29, pp. 37, 43. However, the Regents “may delegate authority or functions to officers or subordinate bodies within the state educational institutions ... for the efficient functioning of their respective educational institutions.” 1995 N.M. Laws Ch. 167, § 21-1-10. New Mexico University Hospital is one of the institutions of higher learning created by the New Mexico Constitution, Article XII, Section 11. The hospital is defined as a state agency under to Section 11-4-2.1 of the New Mexico Statutes Annotated, which states that a state agency includes “any department, institution, board, bureau, commission, district or committee of government----”
See Korgich v. Regents of the New Mexico School of Mines,
Thus, the Regents appointed a president for the University of New Mexico as its chief executive officer, and created a Board of Trustees to operate the University Hospital. Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 42, pp. 5-6, 14-15. The trustees are authorized to adopt bylaws and policies for the management of the property and business of the hospital. Plaintiffs’ Memorandum of Law at VI-30.
The chief executive officer of the University Hospital is responsible for fiscal planning, budgeting and management, as well as the hiring and firing of hospital employees. Plaintiffs’ Memorandum of Law at VI-30. The employees of the hospital are employees of the University of New Mexico. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 29, p. 15. Moreover, the hospital’s chief executive officer has been granted the authority to incur capital expenditures for the hospital, and fix the fees to be charged to patients for services it provides. Plaintiffs’ Memorandum of Law at VI-30 — VI-31. However, all expenditures of the University
Although the, hospital’s trustees and chief executive officer are authorized to manage and administer its daily business and administrative affairs, Plaintiffs’ Memorandum of Law at VI-30, they remain ultimately responsible to the Regents. Plaintiffs’ Memorandum of Law at VI-30. Thus, the state of New Mexico retains a significant degree of influence over the operations of the Regents and, through the Regents, the university.
Although the University Hospital maintains its own,separate records and financial statements, and has dedicated bank accounts in the name of the university; Plaintiffs’ Memorandum of Law at VI-31, Appendix Volume 10, Exhibit 29, pp. 17, 30-31, the-hospital’s financial affairs are controlled by the New Mexico State Commission on Higher Education. N.M.Stat.Ann. § 21-1-26. The university’s budget, including the hospital’s budget, is also subject to review and adjustment by the State Commission on Higher Education, N.M.StatAnn. §§ 21-1-26 A, B, prior to its submission to the state budget subdivision of the Department of Finance and Administration for final approval. N.M.Stat.Ann. § 21-1-26 A(3). The Commission on Higher Education must also conduct annual audits of New Mexico’s institutions of higher education, the results of which are reported to the state Department of Finance and Administration and the legislative Finance Committee. N.M.Stat.Ann. § 21 — 1— 26.3. Further, the commission considers the audit findings in making its recommendations to the state’s executive and legislature for higher education funding. N.M.Stat.Ann. § 21-1-26.3.
The University Hospital is located on land which it leases from the County of Bernalillo, a political subdivision of New Mexico. However, as discussed, the hospital is administered by the University of New Mexico and the Regents, not the county. Defendants’ Immunity Reply at p. 24.
New Mexico has exempted the University of New Mexico and its institutions from taxation, a status that some courts find indicative that an entity is an arm of the state rather than a subdivision. Kashani, supra, at 846. N.M.Stat.Ann. § 7-9-13 A(2). New Mexico, however, also extends that status to its political subdivisions, so as to this Defendant, such exemption is of less significance. N.M.Stat. Ann. § 7-9-13 A(2).
As the University Hospital lacks the authority to initiate legal action, Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 29, p. 37, the Regents therefore must file suit on its behalf. Also, all contracts which the hospital wishes to make must be reviewed by both the university and the state’s Department of Health Sciences counsel. Plaintiffs’ Memorandum of Law, Appendix Volume ' 10, Exhibit 29, at pp. 43-44.
“In determining whether an action brought against a governmental institution is actually a suit against the state within the meaning of the Eleventh Amendment, state law is decisive.”
Korgich, supra,
at 551 (citing
Harris v. Tooele County School District,
Additionally, the New Mexico Tort Claims Act, which authorizes suits against the state and its agencies by limiting the application of sovereign immunity as to certain state law claims, applies to the university and its employees, including the employees of the University Hospital. Clothier, supra, at 871-72 (University of New Mexico Hospital is the principal teaching hospital of the university, thus, the doctors and staff of the hospital are public employees which may be hable under the state’s tort claims act). Further, the exclusive jurisdiction for any claim under the state’s tort claims act is in the district state courts of New Mexico. 45 N.M.Stat.Ann. § 41-4-18 A. This factor, along with the fact that the University Hospital retains only limited autonomy from the Regents, weighs in favor of granting the hospital Eleventh Amendment immunity.
The primary purpose of the University of New Mexico and its various institutions is to “provide the inhabitants of the state of New Mexico with the means of acquiring a thorough knowledge of the various branches of literature, science and arts.” N.M.Stat.Ann. § 21-7-2. Further, the University of New Mexico was to develop and maintain programs of research, scholarship, and cultural innovation, as well as programs of direct public services which derive from these edu-eational efforts, for the post-secondary student. See Defendants’ Immunity Reply Brief, Exhibit F. As -the principal teaching hospital of the University of New Mexico, the hospital is a state educational institution whose state-wide purposes reflect the exercise of sovereign state power, an attribute justifying the application of the Eleventh Amendment.
Plaintiffs argue that the University Hospital is financially self-sufficient as only 8.4% of the hospital’s net operating budget comes from sources other than patient revenue, including funding from both the state and county, and that as any judgment achieved in this case would therefore not appreciably affect the state’s treasury, Eleventh Amendment immunity is unwarranted. Plaintiffs’ Memorandum of Law at VI-29. However, the hospital states that the costs of this suit, and any judgment resulting from it, would be paid by the Risk Management Division of the New Mexico General Services Department, an agency of the state, rather than any independently generated revenues. N.M.Stat. Ann. § 15-7-1 et seq.; Defendants’ Immunity Reply at p. 25; Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 29, at p. 44.
Although the University Hospital may retain its excess revenues, it must obtain permission from the Regents and its trustees before using these funds, as they are considered state funds. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 29, pp. 16-17, 41-42. The hospital also maintains a self-insurance trust fund through the Risk Management Division of the University of New Mexico. The Risk Management Division receives funds from the New Mexico, legislature, and is responsible for paying any settlement or judgment resulting from a claim against the University or New Mexico University Hospital. 1995 N.M.Laws Ch. 173, § 1.
As each of the relevant indicia demonstrate that New Mexico University Hospital is subject to significant controls by the state and thus acts as an arm of the state, and as
6. University of Massachusetts Medical Center
The University of Massachusetts was created by state statute as a “state university.” Mass.Gen.L. ch. 75, § 1 (West 1994). 46 The university is governed by a board of nineteen voting trustees, seventeen of whom are appointed by the governor of Massachusetts to serve a five year term. 47 Mass.Gen.L. ch. 75, §§ 1, 1A. The two remaining members are full-time students of the university, who each serve a one year term. Mass.Gen.L. ch. 75, § 1A..
The Massachusetts legislature granted the university’s Board of Trustees the responsibility of establishing the policies necessary for the administrative management of personnel, staff services, and the general business of the university. The trustees were also granted the duties of managing and administering, on behalf of the Commonwealth of Massachusetts, the university and all real and personal property belonging to the commonwealth and used or occupied by the university. Mass.Gen.L. ch. 75, § 12. The trustees may sell or lease commonwealth property to any professor, instructor, employee, or society or association, after the conveyance has been approved by the governor and the Higher Education Coordinating Council. 48 Mass.Gen.L. ch. 75, §§ 25-27. Additionally, the trustees have the authority to make purchases for $100,000 or less, or to purchase, without limitation, library books, educational and scientific supplies and equipment. Mass.Gen.L. ch. 75, § 13.
The trustees may delegate some authority or responsibility to the president of the university, or other officers of the university. 49 Mass.Gen.L. ch. 75, §§ 1A, 3A. Further, the trustees were given the authority to establish schools or colleges of the university to meet the needs of the commonwealth in the field of public higher education. Mass.Gen.L. eh. 75, § 2. Each campus, including the University Medical Center, has a council appointed by the trustees, which advises the campus president and the trustees. Mass.Gen.L. ch. 75, § 14B. Thus, the Commonwealth of Massachusetts exercises significant influence over the operations of the trustees and the university’s medical center.
The trustees appoint the chancellor of the medical center, who in turn fills the senior management positions. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 26, pp. 43-45. However, the trustees may reject someone whom the chancellor has selected or appointed in a leadership position. Id. at p. 45. All officers and employees of the medical center, professional and non-professional, are employees of the commonwealth, irrespective of the source from which their salaries or wages are paid. Mass. Gen.L. ch. 75, § 14. These employees retain the same retirement benefits, group insurance, industrial accident coverage, and other coverage as all other commonwealth employees retain. Mass.Gen.L. ch. 75, § 14.
The medical center was created by state statute, which required the trustees to maintain a medical school for the University of Massachusetts. Mass.Gen.L. ch. 75, § 34.
In order to provide the university medical center some degree of autonomy, Massachusetts law requires that the budget estimates and annual financial forecasts for the medical school are to be submitted to the trustees separately from those of the university. Mass.Gen.L. ch. 75, § 36. The trustees then submit the medical school budget to the Higher Education Coordination Council, which submits the budget, along with its recommendations and comments, to the Commonwealth’s Secretary of Administration and Finance, the Massachusetts legislature’s house and senate committees on ways and means, and the legislature’s joint committee on education, arts, and humanities. Mass.Gen.L. ch. 15A, § 15B. The trustees of the university subsequently receive the state appropriation directly, in one lump sum. Mass.Gen.L. ch. 15A, § 15.
All university accounts, including the medical center’s, under the direction and control of the trustees, are audited annually by the state auditor. Mass.Gen.L. ch. 75, § 6. The trustees are required to prepare and submit' a detailed budget for the university, including the medical center, to the governor. Mass.Gen.L. ch. 75, § 7. Further, monthly statements of the receipts and expenditures of the university, including medical center, must also be made to the state comptroller, and a complete financial report covering all university receipts and expenditures is given annually to the governor and the legislature. Mass.Gen.L. ch. 75, § 10. Thus, the funds of both the medical center and the university are regulated through the trustees, acting on behalf of the governor and legislature.
The university medical center may enter into contracts on its own behalf, however, this authority is restricted. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 26, p. 46. The medical center cannot enter into contracts for professional services or consultation (non-medical) services. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 26, pp. 46-47. However, the trustees are often involved in authorized contract negotiations to provide guidance, and the trustees may disapprove any contract that the medical center is authorized to enter. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 26, pp. 47-48.
Although only about 7%
50
of the medical center’s funding comes from state appropriations, whereas two-thirds of the funding represents patient services revenue, these funds are used to support the hospital’s physical maintenance and pay faculty salaries. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 26, pp. 8-9. Plaintiffs argue that the commonwealth’s “insignificant contribution to [the medical center’s] operations proves that the State does not bear significant financial responsibility for the medical center under
Hess.”
Plaintiffs’ Memorandum of Law at VI-25. However, in determining whether Massachusetts bears financial responsibility for the medical center, the court must consider more than the amount of aid received in the form of direct state appropriations.
Fitchik,
The University of Massachusetts Medical Center cannot issue bonds to raise revenue. Plaintiffs’- Memorandum of Law, Appendix Volume 10, Exhibit 26, p. 20. Although the medical center received eleven million dollars in tax-exempt financing from the Massachusetts Health and Education Administration, there is no indication in the record that the medical center could obtain financing to satisfy a judgment against it. Plaintiffs’ Memo
The patient revenues received by the medical center are not paid over to the Massachusetts treasury, rather, they become part of an account into which all funds generated by the University of Massachusetts campuses are placed. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 26, p. 24. The trustees control this account, and any request, including one from the .medical center, to receive finances from the account for expenses, must be approved by the trustees. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 26, pp. 24-28.
The medical center cannot sue or be sued in its own name, and state case law makes clear that the medical center is financially accountable to the commonwealth.
See McNamara v. Honeyman,
Relevant ease law also indicates that the University of Massachusetts is an arm of the state.
Robinson v. Commonwealth,
Although courts have rendered judgments against the medical center, there is no fund separate from the state treasury to pay such judgments except for a separate fund for payment of medical malpractice judgments. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 26, pp. 51-54. Any other judgment rendered against the medical center must be submitted to the commonwealth’s Secretary of Administration Finance, a member of the governor’s cabinet, for determination as to how to pay the judgment. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 26, pp. 53-54, 65.
The university’s enabling statute provides that the Commonwealth shall settle the affairs of the corporation, and shall be subject to its legal obligations and liable for its lawful debts. Mass.Gen.L. ch. 75, § 1. As the statute requires the commonwealth to pay the university’s legal obligations and lawful debts, it is clear that any money judgment achieved against the university and its medical center in this action would be against the university and ultimately the commonwealth. This fact amply supports the finding that medical center is an instrumentality of the commonwealth.
Finally, Plaintiffs contend that the medical center is not entitled to Eleventh Amendment immunity because it is engaged in a commercial, rather than a governmental function. Plaintiffs’ Memorandum of Law at VI-26. However, Plaintiffs’ argument fails to recognize that the medical center was created solely as an public educational institution, to provide research facilities and quality care to the residents of Massachusetts. The primary purpose of the medical center is to “promote high standards of health care within the Commonwealth by providing high quality patient services to the public and by supporting the clinical education programs of the Medical School.” Plaintiffs’ Memorandum of Law, Appendix Volume 6, Exhibit 3, Doc. No. LL14 00181. Providing education is considered a governmental, rather than a proprietary, function.
Hall, supra,
Based upon the factors relevant to an Eleventh Amendment inquiry discussed, the
Summary of Findings on Eleventh Amendment Defenses
Upon review of the legal organization and powers of the foregoing hospital Defendants in determining whether each is more like an arm or instrumentality of a state or a political subdivision, the degree of control and state supervision over each entity, their respective degree of financial autonomy and the state’s obligations and liabilities with respect to each,
see Lake Country Estates,
b. State Action Doctrine
Plaintiffs assert that Defendants have engaged in unlawful anticompetitive conduct, and seek a judgment from this court for damages and enjoining the Defendants from the continuing violation of both the Sherman Act and the Clayton Act. Second Amended Complaint at ¶ 1. Several of the hospital Defendants created by' state law — Lincoln Medical and Mental Health Center, Ohio State University Hospital, Oregon Health Sciences University Hospital, Tri-City Medical Center, the University of California (Los Angeles) Medical Center, the University of California (Irvine) Medical Center, the University of California (San Diego) Medical Center, University Hospital at the State University of New York at Stony Brook, University Hospital at the University of New Mexico School of Medicine, and University of Massachusetts Medical Center,— counter that they are entitled to an exemption from federal antitrust laws because they are acting as an arm of state government, for and on behalf of their respective states, in their sovereign capacity, and that their requirements that emergency physicians be ABEM certified or eligible for certification is therefore not actionable. These Defendants rely upon the landmark case of
Parker v. Brown,
Parker
and its progeny established the general proposition that states acting in their sovereign capacities are exempt from federal antitrust laws, the so-called state action doctrine. To qualify for this judicially created exemption from the" antitrust laws, amendment must demonstrate either that it is the state
51
acting in its sovereign capacity or that it is acting pursuant to a “clearly articulated and affirmatively expressed state policy.”
Hoover v. Ronwin,
It is clear under the state action doctrine that the legislative and judicial branches of state government act as the state in its sovereign capacity.
See Parker, supra,
at 351,
The Supreme Court has stated that when anticompetitive conduct is undertaken by the sovereign itself, for example, through its legislature or its supreme court, that activity is
ipso facto
immune from federal antitrust laws, regardless of the state’s motives in taking the action.
Hoover, supra,
at 579-580,
However, to avoid the argument that the entity’s actions fall outside the actual scope of delegation of state power to an agency, municipality, or other state subdivision, a claimed reliance upon broad legislative authority to regulate free of antitrust challenge in a specific area must foreseeably result from an entity’s properly exercising anticom-petitive power.
See, e.g., Town of Hallie, supra
(where the municipality’s anticompeti-tive conduct in providing sewage collection and transportation services were authorized by the state).
Cf. Cantor v. Detroit Edison Co.,
The Second Circuit has concluded that to provide a basis for application of the state action doctrine the enabling legislation need not explicitly authorize the precise actions undertaken, rather, it is only necessary that the permitted actions produce anticom-petitive consequences that foreseeably flow from the grant of general state authority to the entity in question.
Cine 42nd Street,
The second requirement, active state supervision, is no longer required in the case of a municipality, as, unlike a private party, municipalities are considered to have no incentive to act other than in the public interest.
Town of Hallie, supra,
at 45-46,
None of the hospital Defendants can claim that it is
ipso facto
immune as the state simply because it exits and operates by action of the state. Rather, each hospital- Defendant must demonstrate that its alleged anticompetitive actions were authorized by the state.
Goldfarb, supra,
at 792,
In the instant case, the high level of direct participation or control by the legislative or executive branch of state government in the affairs of each hospital Defendant is absent, and thus militates against finding that the hospital Defendants were directly acting in a sovereign capacity when they are alleged to have violated federal antitrust laws. Therefore, it is necessary to evaluate whether the anticompetitive conduct attribut
1. Lincoln Medical and Menial Health Center '
In 1969, the New York State legislature authorized the New York Health and Hospital Corporation (“the HHC”) to operate Lincoln in the interest of providing and maintaining medical services, research, education, and training programs for the residents of New York state. N.Y.Unconsol.L. §§ 7382, 7385(8), (11) (McKinney 1979 & 1995 Supp.).
54
The HHC is a public corporation created and empowered by New York State to operate a public hospital system in New York City, including Lincoln Medical and Mental Health Center.
See Bryan v. Koch,
The HHC is empowered to “operate, manage, superintend and control” the hospitals under its authority. N.Y.Unconsol.L. § 7385(7). The corporation also has the capacity to sue or be sued, make contracts, borrow money, acquire or sell property, and adopt, alter, or repeal rules and regulations for the management, organization, and regulation of its affairs. N.Y.Unconsol.L. §§ 7385(l)-(6). Moreover, the HHC was intended to provide continuous medical services, and sponsor and conduct research, educational and training programs, in connection with its purpose of providing quality care and treatment through adequately trained and qualified personnel. N.Y.Un-consol.L. §§ 7382, 7385(8). In fulfilling these purposes, the HHC was also granted the authority to determine, in accordance with standards established by the New York City Department of Health, “the conditions under which a physician may be extended the privilege of practicing within a facility under the jurisdiction of [the HHC],” as well as “[t]o cooperate with any organization, public or private ... the objects of which are similar to the purposes of [the HHC].” N.Y.Unconsol.L. §§ 7385(10), (12), (18).
The HHC is governed by a sixteen member Board of Directors consisting of five New York City officials, ten persons appointed by the Mayor and City Council, and the remaining director is the chief executive officer of the corporation. N.Y.Unconsol.L. § 7384(1). All of the hospitals, including Lincoln Medical and Mental Health Center, operated by HHC are subject to supervision by the New York State Department of Health, inspection by various New York City agencies, and are obligated to conform their respective services and regulations with the New York City Department of Health’s policies. N.Y.Unconsol.L. §§ 7384(9), 7386(7).
From its inception, the HHC was structured to operate independently of both the state and city governments. As a public benefit corporation, the HHC exercises governmental authority, and interacts with the City of New York in providing medical services through HHC hospitals.
See
N.Y.Unconsol.L. §§ 7386(l)(a), (3)(c); Lincoln Medical and Mental Health Center’s Motion to Dismiss, filed May 2, 1994, Exhibit B. In determining whether Lincoln is entitled to the state action doctrine defense, the court must find that Lincoln, which is concededly not a state agency, is a political subdivision
55
of the State of New York and that the state has authorized the political subdivision to perform the challenged action by clearly articulating a state policy authorizing antieom-
Lincoln asserts, correctly, that it was authorized to determine what credentials were necessary for a physician to receive privileges to practice, and to cooperate with organizations which pursue purposes similar to those of the HHC/ N.Y.Unconsol.L. §§ 7385(10), (12), (18). Therefore, the court finds that the New York legislature has granted the HHC authority to establish accreditation standards for its physicians. However, Lincoln and the HHC must also demonstrate that the state statutes provide a clearly expressed state policy authorizing the anticompetitive conduct or from where the conduct at issue was reasonably foreseeable. Cine k.2nd Street, supra, at 1043.
The New York legislature clearly expressed concerned about hiring a highly qualified and trained medical staff to provide services for the residents of New York City. See N.Y.Unconsol.L. §§ 7382, 7385(10). Thus, it is probable that the legislature envisioned in creating the HHC that anticompeti-tive effects could result from its legislation. Further, as it was reasonably foreseeable that anticompetitive consequences would result from a requirement for well-trained physicians, the statute must be considered a clearly articulated state policy authorizing anticompetitive behavior. Thus, Lincoln Medical and Mental Health Center is exempt in this action from antitrust liability pursuant to the state action doctrine.
2. Ohio State University Hospital
The Ohio state legislature has vested in the Ohio State University substantial powers to supervise, regulate and control the University Hospital and its staff. As Ohio State University and the Ohio State University Board of Trustees are- not the sovereign, to claim the defense of state action doctrine the University Hospital must show that its alleged anticompetitive conduct, the requirement of board certification for all medical staff members, was required pursuant to a clearly articulated state policy.
The Ohio State University Hospital was established and structured to provide high quality health care for its patients, and educational training services for its students. Hospital Bylaws § 3335-43-02(A)-(D). 56 The Ohio State University Trustees granted the hospital’s board responsibility for the oversight of the hospital’s accreditation process, Hospital Bylaws § 3335-93-02(E), and approval of medical appointments and clinical privileges, Hospital Bylaws § 3335-93-02(F), including the requirement that all applicants for medical staff positions be board certified in a medical specialty. Hospital Bylaws § 3335-43-04(A)(4). For purposes of this inquiry, the most significant power granted to the hospital board is the power to oversee medical faculty accreditation issues, demonstrating that the trustees envisioned that the hospital board would set the standards for the medical staff at the hospital. By granting the hospital board the ability to direct the credentialling process for the hospital’s medical staff, 57 the trustees likely envisioned a health care and educational facility with a highly competent staff having excellent professional qualifications.
Certainly, the Ohio legislature contemplated the hiring of physicians for the medical school when it granted the trustees the authority to “[c]reate, establish, provide for, and maintain ... a college of medicine.... ” Ohio Rev.Code Ann. § 3335.15(A). It is unreasonable to assert that the legislature would not conceive any resulting anticompeti-tive effect upon physicians seeking employ
As anticompetitive conduct was a foreseeable result of legislatively empowering the trustees to create a school of medicine, 58 the statute clearly contemplated that Ohio State University Hospital could engage in anticompetitive conduct in employing physicians to provide high quality health care for its patients and excellent instruction for its students. Thus, a clearly articulated state policy exists which resulted in foreseeable consequences based on the legislature’s delegation of power to the Ohio State University Trustees. As the challenged actions of the University Hospital were foreseeable consequences of the state’s delegation of the power to the trustees, Ohio State University Hospital is entitled, in this action, to exemption from federal antitrust laws.
3. Oregon Health Sciences University Hospital
Oregon Health Sciences University Hospital is part of a public corporation formed to provide educational and health care services to the people of Oregon. 1995 Or.Laws eh. 162, §§ 1(2), (3). Although the university’s enabling statute indicates that it is a “government entity performing governmental functions and exercising governmental powers ... [the University] shall not be considered a unit of local or municipal government or a state agency for purposes of state statutes or constitutional provisions.” 1995 Or.Laws ch. 162, §§ 2, 8.
The university exercises several powers which were delegated by the Oregon legislature to its Board of Directors. Discussion Section 1(a)(2), supra. The university is highly autonomous, but, although, for Eleventh Amendment purposes, properly considered as an arm or instrumentality of the state of Oregon, see Discussion Section 1(a)(2), supra, it is clearly not the state itself. As such, to successfully invoke the state action defense, the university hospital must demonstrate that the state has generally authorized the challenged action by clearly articulating a state policy reasonably contemplating anticompetitive conduct. See Town of Hattie, supra.
As noted, the Oregon legislature granted Oregon Health Sciences University significant autonomy in achieving its purpose of serving the people of Oregon as the state’s primary center for health sciences education. Discussion Section 1(a)(2),
supra.
The state legislature vested in the Oregon Health Sciences University Board of Directors substantial powers to regulate and control Oregon Health Sciences University, the university hospital and its medical staff. 1995 Or.Laws ch. 162, § 8(2) (Board of Directors [of the university] shall appoint and employ instructional, administrative and professional personnel as necessary and appropriate to carry out the mission of the University). To achieve the purpose of providing the people of Oregon with high quality health care and related education, the legislature could have foreseen that the Oregon Health Sciences University Hospital and medical school would require highly qualified faculty members with board certification. Therefore, the Oregon legislature did clearly articulate a state policy authorizing anticompetitive conduct,
4. Tri-City Medical Center
In order to determine whether, as Tri-City Medical Center has asserted, the state action doctrine and Local Government Antitrust Act, 15 U.S.C. §§ 34-36, apply to it, the court must review California statutory and caselaw, and the rules and regulations of the medical center’s Department of Emergency Medicine. Tri-City Medical Center has requested that the court take judicial notice of California statutes and the rules and regulations of the Department of Emergency Medicine, see, Tri-City Medical Center’s Request for Judicial Notice, filed March 21, 1994; Tri-City Medical Center’s Supplemental Request for Judicial Notice, filed January 30,1995. As the California statutes and law describe the powers and duties granted to the medical center’s board of directors and medical staff, their consideration is necessary to determine whether the hospital is an entity entitled to interpose either defense. Plaintiffs have not submitted any opposition to these requests. The court therefore takes judicial notice of the California statutes and Tri-City Medical Center’s rules and regulations, as presented in Exhibits A through I, see Fed.R.Evid. 201(d), and will first consider whether the medical center is entitled to an exemption from federal antitrust law under the state action doctrine. Whether the medical center is also immune from jurisdiction for antitrust damage claims under the Local Government Antitrust Act will be considered in the next section of this Report and Recommendation. See Discussion Section 1(c), infra.
Tri-City Medical Center was established in 1957 as a hospital district by the California Health & Safety Code §§ 32000 - 32313 (Deering 1986 & 1992 Supp.)
59
(providing for formation of a hospital district and organization and powers of the board of directors). Tri-City Medical Center’s Request for Judicial Notice, filed March 21, 1994, Exhibit B. Tri-City Medical Center is a hospital district with the primary purpose of providing hospital services and health care in areas where .hospital facilities are inadequate.
Talley v. Northern San Diego Hospital District,
In fulfilling its purposes, Tri-City Medical Center’s medical staff, executive committee, and ultimately its board of directors have the authority to determine the conditions under which a physician may be extended the privilege of practicing at the medical center. Plaintiffs’ Memorandum of Law, Appendix Volume 9, Exhibit 4; pp. 3, 5; Volume 10, Exhibit 20, pp. 16-19. The rules and regulations of the Department of Emergency Medicine currently require physicians practicing
Tri-City Medical Center has asserted that it is entitled to an exemption from federal antitrust law pursuant to the state action doctrine. However, at the deposition of Karen L. Ladley, the interim Chief Executive Officer of Tri-City Medical Center, counsel for the medical center assured Plaintiffs that Tri-City’s defenses in this action were limited to the Local Government Antitrust Act of 1984 and lack of personal jurisdiction, thereby preventing the deponent from answering relevant questions at the deposition. Further, defense counsel indicated that she would not raise a state action defense. 60 Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 35, p. 21. Therefore, as Tri-City Medical Center waived its state action defense, 61 and Plaintiffs would be prejudiced by the addition of this defense at this time, the medical center is not entitled to the protection under the state action doctrine.
Should the district court, alternatively, find that no waiver occurred, Tri-City Medical Genter should be dismissed under the state action doctrine as it was foreseeable that through exercise of its medical staff credent-ialling power the asserted antitrust effect would occur.
5. University of California Medical Centers
The University of California Medical Centers at Los Angeles, Irvine, and San Diego are entities governed by the Regents of California, which itself is created by the California state constitution, having all powers necessary and convenient for administration of the trust of the University of California. Cal. Const. art. 9, § 9.
As discussed in connection with the application of the Eleventh Amendment to the Defendant University of California medical centers, California courts have recognized that the California Board of Regents is a “branch of the state itself ... a constitutionally created arm of the state.”
City of Santa Monica,
Although the medical centers exercise powers delegated from the Regents, and the Board of Regents is recognized as the state by California courts, the related medical center hospital Defendants — Los Angeles, Irvine, San Diego — themselves cannot claim that they are, identical with the state for the purposes of a state action doctrine defense absent a showing of more direct control and oversight by the Regent. Compare Hoover, supra.
As the medical centers are not the sovereign, itself, they must demonstrate that the alleged anticompetitive conduct, the requirement of board certification for all medical staff members, was required pursuant to a clearly articulated legislative policy. Cine Jf2nd Street, supra, at 1044. The medical centers were established by the Regents and granted the power to administer their day to day operations, including the responsibility for evaluating and approving policies regarding physician credentialling. See Discussion Section 1(a)(3), supra. Because each of the medical centers was delegated authority by the Regents to develop a credentialling process, through the credentialling process the Regents likely envisioned health care and educational facilities with highly qualified medical staff. See, e.g., Plaintiffs’ Memorandum of Law, Appendix Volume 6, Exhibit 1, Doc. Nos. LL12 1257 - LL12' 1259; Exhibit 2, Doe. No. LL13 1973.
In providing the medical centers with such authority and as the decision to require board certification was incident to the exercise of the credentialling power, it was a foreseeable consequence that the medical centers would require that their respective physicians be board certified in a specialty. As any anticompetitive effects stemming from the medical centers’ credentialling policies for their physicians-including emergency physicians were foreseeable as a consequence of the delegation of power by the California Regents, a clearly articulated state policy exists as to the medical centers in this case. Therefore, the medical centers and their respective teaching hospital Defendants are entitled to an exemption, in this action, from federal antitrust laws under the state action doctrine.
6. University Hospital at State University of New York at Stony Brook
Stony Brook University Hospital as a constituent institution within the State University of New York (“SUNY”) was created pursuant to statute to provide the people of New York state with high quality educational services, health care, and programs. N.Y.Educ.L. § 351(a) (SUNY shall exercise care to develop and maintain a balance of its resources that recognizes the role of its responsibilities in undergraduate education and provides a full range of graduate and professional education), § 351(d) (SUNY shall strengthen its educational and research programs in the health scienqes through the provision of high quality health care at its hospitals, clinics, and related programs), § 355(l)(d) (SUNY trustees are responsible for the establishment of health and medical -centers, professional and graduate schools, research centers and other facilities). The SUNY trustees have delegated some authority to the University at Stony Brook, however, the University Hospital remains ultimately responsible to the SUNY trustees, who are accountable to the state legislature. See Discussion Section 1(a)(4), supra.' Given the SUNY structure and orgánization as a corporation within the State Education Department headed by the Board of Regents, its connection to the state is sufficiently removed from the executive and legislative branches to find that Stony Brook is not acting as the state itself. See Discussion Section 1(a)(4), supra. Thus, Stony Brook University Hospital must demonstrate that, in requiring that its medical staff physicians be board certified, the alleged anticompeti-tive conduct, it was acting pursuant to a clearly articulated policy of the state.
The Stony Brook Medical School and University Hospital were created to provide “educational and research programs in the health sciences through the provision of high quality health care at its hospitals.” N.Y.Educ.L. § 351(d). To accomplish the state legislature’s stated purpose, the New York legislature delegated power to the
Based on the grant of authority from the state legislature, the requirements of the applicable New York regulations, and the SUNY system’s mission to provide the highest quality education and health care services, it was reasonably foreseeable that SUNY would require its staff physicians at Stony Brook to be highly skilled in the fields in which they practice medicine, including the university hospital’s decision to require board certification as a prerequisite to hiring of medical staff members. Thus, any anti-competitive effect resulting from the establishment of the certification requirement was a foreseeable consequence of the legislature’s delegation of power to the SUNY trustees.
As the legislature intended that Stony Brook would provide the best education and health care if it was staffed with well-qualified physicians, a clearly articulated state policy for the challenge requirement exists, and Stony Brook University Hospital is entitled, in this action, to an exemption from the federal antitrust laws under the state action doctrine.
7. University Hospital at the University of New Mexico School of Medicine
The University of New Mexico is a constitutionally created entity under the New Mexico state constitution governed by the Regents of New Mexico. N.M. Const. art. XII, § 11 (creating the University of New Mexico as a state educational institution), § 13 (creating the Board of Regents to provide for the control and management of the university). The University of New Mexico is defined as a state agency pursuant to Section 2242.1 of the New Mexico state statutes, see Discussion Section 1(a)(5), thus, to obtain state action immunity, the hospital must identify a clearly expressed state policy authorizing its alleged anticompetitive actions. Cine 42nd Street, swpra, at 1043.
The medical staff and medical director at the University of New Mexico propose, review, and evaluate, and the trustees of the University approve the standards for cre-dentialling physicians. Plaintiffs’ Memorandum of Law at VI31, Appendix Volume 10, Exhibit 29, p. 40. By authorizing the university hospital to decide, through action of the trustees of the University, what credentials would be required of its staff physicians, the New Mexico legislature could have reasonably foreseen the university hospital’s requirement that its physicians acquire and maintain board certification in a specialty, the anticompetitive activity complained of in the instant case. Therefore, as the state legislature’s broad delegation of power to the trustees of the University of New Mexico included the anticompetitive consequence of hiring only board certified physicians, New Mexico University Hospital is entitled, in this action, to an exemption from federal antitrust laws under the state action doctrine.
8. University of Massachusetts Medical Center
The University of Massachusetts Medical Center was created by the trustees
In this case, the Massachusetts legislature authorized the university trustees to create schools or colleges to meet the needs of the Commonwealth of Massachusetts in the field of public higher education, including a medical school. Mass.Gen.L. ch. 75, §§ 2, 34. Further, the legislature indicated that the medical center’s purpose was to provide “public service, research, and education programs” in professional areas which require more than an undergraduate education, such as medicine. Mass.Gen.L. ch. 75, § 2. This enabling statute is sufficiently broad to allow the medical center to set the standards required for physicians to practice and teach at the medical center. As the requirement of board certification for physicians is a reasonably foreseeable consequence of the legislature’s broad delegation of power, the legislature’s authorization constitutes a clearly articulated state policy. Thus, as the result of the legislative grant of authority to the University of Massachusetts trustees, the challenged actions of the medical center were foreseeable consequences, and the medical center is, in this action, protected by the state action doctrine.
In this case, Lincoln Medical and Mental Health Center, Ohio State University Hospital, Oregon Health Sciences University Hospital, the University of California Medical Centers, Stony Brook University Hospital, University Hospital at the University of New Mexico School of Medicine, and University of Massachusetts Medical Center all have demonstrated that a clearly articulated and affirmatively expressed state policy existed which made each respective hospital’s requirement of board certification for its medical staff members foreseeable. Therefore, the court finds that each of these hospital Defendants are exempt, in this action, from federal antitrust law by application of the state action doctrine.
c. Local Government Antitrust Act Immunity
The Local Government Antitrust Act of 1984 (“the LGAA”). 15 U.S.C. §§ 34-36, was enacted by Congress “in order to broaden the scope of antitrust immunity applicable to local governments.”
Sandcrest Outpatient Services, P.A. v. Cumberland County Hospital System, Inc.,
In determining whether an entity is entitled to immunity from damages under the LGAA, the court must first ascertain whether the entity is a “local government,” as defined by the LGAA. The LGAA defines “local government” as “a city, county, parish, town, township, village, or any other general function governmental unit established by State law, or ... a school district, sanitary district, or any other special function governmental unit established by State law in one or more States____” 15 U.S.C. § 34(1). The special'function governmental unit provision is “designed to protect those political subdivisions of the state, which though they do not have broad governmental powers, nonetheless serve a public function in the provision of a particular service.”
Capital Freight, supra,
at 1198. For example, the Massachusetts Port Authority serving the City of Boston area was determined to .be a “special function governmental unit” as the Massachusetts legislature created it as a public instrumentality and deemed the exercise of its powers to be an “essential governmental function.”
Trustees of A. J. Bremen Realty Trust v. City of Boston,
Additionally, a local government covered by the LGAA is immune from attack for any antitrust action undertaken in an official capacity, 15 U.S.C. § 35, regardless of whether it acted within its lawful regulatory authority. 63 Montaukh-Caribbean Airways, supra, at 94; Zapata Gulf Marine, supra, at 1350 (citing Palm Springs Medical Clinic, supra, at 458-64). Thus, so long as the actions of the entity “do not violate any criminal laws,” its conduct is exempted from federal antitrust law by the LGAA Capital Freight, supra, at 1200 (citing Montauk-Caribbean Airways, supra, at 94-95).
Several hospital Defendants, Lincoln Medical and mental Health Center, Oregon Health Sciences University Hospital, TriCity Medical Center, the University of California Medical Centers, University Hospital at the University of New Mexico School of Medicine, and University of Massachusetts Medical Center, assert that they are protected from paying damage awards under federal antitrust laws under the LGAA and are therefore entitled to have, to that extent, Plaintiffs’ claims dismissed as to them.
1. Lincoln Medical and Mental Health Center
The HHC is a “body corporate and politic constituting a public benefit corpora
Lincoln Medical and Mental Health Center is a municipal hospital operated by the HHC, which provides medical services to the inhabitants of New York City, including those who cannot afford medical care. N.Y.Unconsol.L. ch. 5, § 7382. The center itself does not have broad governmental powers typical or a municipality and therefore would not qualify as a general function governmental unit, however, the HHC has powers necessary to carry out and effectuate the special health care purposes and provisions of the New York City Health and Hospital Corporation Act in providing for the efficient administration of Lincoln Health Center. See N.Y.Unconsol.L. ch. 5, § 7385. Further, the legislature has provided that the HHC’s operation of Lincoln Medical and Mental Health Center serves a “state, city and public purpose,” and in exercising its powers, the HHC performs “an essential public and governmental function.” N.Y.Unconsol.L. ch. 5, § 7382. See Zapata Gulf Marine, supra, at 135-152 (shipping authority held to be a special function governmental unit after court found the entity to be “[a] corporate and political body constituting a public corporation” whose exercise of powers “constitutes an essential governmental function,” payment of an antitrust judgment against the entity would ultimately be borne by the Commonwealth of Puerto Rico, and the entity performed a special function by maintaining the maritime transportation system for the benefit, protection and welfare of the people of Puerto Rico); Palm Springs Medical Clinic, supra, at 456-57 (court reviewed legislative history of the LGAA and the manner of creation and regulation of the hospital district before holding that it was protected by the LGAA); Trustees of A.J. Bremen, supra, at *3 (same).
Neither New York State nor New York City are liable for the HHC’s bonds, notes, or other obligations. N.Y.Unconsol.L. ch. 5, § 7396. However, the City of New York is responsible for judgments against HHC, including judgments against Lincoln Medical and Mental Health Center, which are paid from city funds. Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 48, pp. 1519; Lease Agreement, Art. VI, § 6,1. 65
2. Oregon Health Sciences University Hospital, University of California Medical Centers, University Hospital at the University of New Mexico School of Medicine, and University of Massachusetts Medical Center
The LGAA, as noted, shields municipalities and general and special function governmental units established by state law from monetary claims arising under antitrust laws. 15 U.S.C. § 35. In order for the LGAA to shield the Oregon Health and Sciences University Hospital, University of California Medical Centers, New Mexico University Hospital, and University of Massachusetts Medical Center from liability for antitrust damages, the court must determine whether the LGAA was intended to protect these entities from such damage claims.
By enacting the LGAA, Congress intended to “broaden the shield protecting municipalities from antitrust claims for damages.” Montauk-Caribbean Airways, supra, at 94 (emphasis added). The Oregon Health and Sciences University Hospital, University of California Medical Centers, New Mexico University Hospital, and the University of Massachusetts Medical Center are not municipalities, rather, they are arms of their respective states which serve state purposes and functions, and receive state funding. See Discussion Sections I(a)(2)(3), (5), (6), supra. As the LGAA was clearly intended to protect the interests of municipalities or political subdivisions of a state such as cities, counties, and other general special function governmental units, rather than the interests of the state and its agencies and instrumen-talities such as state universities and their related hospitals, or medical centers, its protections do not apply to Oregon Health and Sciences University Hospital, the University of California Medical Centers, New Mexico University Hospital, or University of Massachusetts Medical Center. See, e.g., Capital Freight, supra, at 1197-1201 (discussing applicability of the LGAA to local government units, including special function governmental units); Palm Springs Medical Clinic, supra, at 456-64 (discussing Congress’ motivations and intentions in enacting the LGAA.) Here, Oregon Health and Sciences University Hospital, the California Medical Centers, New Mexico University Hospital, and the University of Massachusetts Medical Center are all instrumentalities of the state, serving state-wide needs and concerns, and are funded by state funds. The fact that these medical centers may receive a predominant portion of revenue to support their university hospitals’ operations from fees paid by local or regional patients, does not outweigh then-essential character as instrumentalities of state government.
Although both
Trustees of A. J. Bremen, supra,
and
Capital Freight, supra,
found the state-created authorities in those cases to be special function governmental units within the scope of the LGAA, the court does not read Section 34(a) so expansively. Under the
ejusdem generis
principle
Thus, unless the entity in question is charged with providing public services of an essentially local or regional, as opposed to state-wide, nature, and is funded directly or indirectly by locally generated revenues such as in
Sandcrest, supra
and
Palm Springs Medical Clinic, supra,
application of the LGAA to state-created agencies or authorities with essentially state-wide service obligations would extend the exemption granted beyond the purposes of Congress. Such a result would blur the well-established distinctions between the state action doctrine antitrust exemption which is limited to actions taken by the sovereign, state agencies, or municipalities pursuant to a clearly articulated and expressed state policy,
Town of Hallie,
Moreover, Congress did not specifically indicate that the LGAA was intended to exempt states and state agencies; if Congress’ aim was to ' provide the states and their agencies or instrumentalities with protection under the LGAA, it would have explicitly included the states and state agencies or in-strumentalities within the Act. 66 Indeed, the very words of the LGAA itself, as chosen by Congress, belie the suggestion that such broad relief was intended.
Therefore, Oregon Health and Sciences University Hospital, the University of California Medical Centers, New Mexico University Hospital, and University of Massachusetts Medical Center being neither municipalities nor political subdivisions of their respective states, are not, for the reasons discussed, general or special function governmental units as defined by the
3. Tri-City Medical Center
Tri-City Medical Center is a public not-for-profit corporation created by the California legislature to provide hospital and health care services. See Discussion Section 1(b)(4), supra. In determining whether the medical center Tri-City qualifies as a “local government,” under the LGAA the court notes that a hospital district, like Tri-City Medical Center, established by the California Health and Safety Code has been held to be a “special function governmental unit” for purposes of the LGAA. 67 Palm Springs Medical Clinic, supra, at 456-57. Likewise, the medical center has asserted that, as such a hospital district, it comes within the LGAA’s definition of “local government” and is thus entitled to the protections of the LGAA. TriCity Medical Center’s Memorandum of Law, filed March 21, 1994, at pp. 3-7. Plaintiffs have not seriously disputed this contention in their opposing papers. Plaintiffs’ Memorandum of Law at VIII-1 - VIII-6. Plaintiffs do, however, indicate that local government immunity is unavailable against injunctive relief, and therefore Tri-City Medical Center must remain in this action. 68 Plaintiffs’ Memorandum of Law at VIII-6.
The LGAA defines “local government” as including school districts, sanitary districts,
As Tri-City Medical Center was created and is regulated by the California Health and Safety Code in its performance of a localized public function, protecting the health and welfare of individuals in California by providing medical treatment in areas with inadequate care, and the medical center is funded through the fees it receives and taxes assessed on property within the hospital district, Cal. Health & Safety Code §§ 32127, 32200, 32202, Tri-City Medical Center qualifies as a “special function governmental unit,” for purposes of the LGAA. Therefore, Tri-City Medical Center is entitled to immunity from damage awards under the LGAA, and so, to that extent, the action against the medical center should be dismissed.
II. Personal Jurisdiction
Personal jurisdiction is a question typically decided prior to a decision regarding proper venue, which is primarily a matter of choosing a convenient forum.
Leroy v. Great Western United Corp.,
In this case, Plaintiffs assert that personal jurisdiction in this district was properly obtained pursuant to Clayton Act Section 12,15 U.S.C. § 22, over those Defendants which are domestic corporations, i.e., incorporated within the United States, 69 and, alternatively, as to all Defendants, along with the domestic corporation Defendants, pursuant to Fed.R.Civ.P. 4(e)(1), (h)(1) and New York State’s personal jurisdiction statute, New York Civil Practice Law and Rules Sections 301 (doing or soliciting business) and 302 (long-arm).
All Defendants, except for ABEM, Lincoln Medical & Mental Health Center, Our Lady of Mercy Medical Center, and the University Hospital of the State University of New York at Stony Brook, move to dismiss or for summary judgment based on lack of personal jurisdiction.
a. Jurisdiction Under Clayton Act Section 12
Section 12 provides that
Any suit, action, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district Whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; and all process in such cases may be served in the -district of which it is an inhabitant, or wherever it may be found. 15 U.S.C. § 22.
Where Congress has authorized nationwide federal jurisdiction, as under Section 12
Therefore, a corporation which resides within the boundaries of the United States is “subject to personal jurisdiction under nationwide service of process without regard to state jurisdiction statutes.”
Kingsepp, supra,
at 24 (citing
Greene v. Emersons Ltd.,
Defendants which are domestic corporations argue that Section 12 of the Clayton Act must be interpreted to require Plaintiffs to comply with its special venue provisions as a precondition to invoking the statute’s nationwide service of process provision. Defendants’ Joint Reply Memorandum, filed February 1, 1995, at pp. 84-85, 91-93 (“Defendants’ Joint Reply Memorandum”). 71 Otherwise, Defendants maintain, in federal antitrust actions, any domestic corporation may be sued in any district in the United States. 72 Defendants argument fails to persuade this court.
First, although Defendants’ interpretation of Section 12 has been accepted by some courts,
see Michelson v. Merrill Lynch, Pierce, Fenner & Smith,
Second, by providing as it did in Section 12 for nationwide service of process in antitrust cases, Congress clearly intended to extend the jurisdiction of federal courts over domestic corporations and to permit antitrust actions to be venued in any district court as permitted by Section 12. See Go-Video, supra, at 1410-11; Leasco, supra, at 1340. Although the section’s legislative history is inconclusive on the issue, see Go-Video, supra, at 1410, this interpretation is more consistent with Congress’ expressed intention to substantially broaden antitrust claimants’ ability to sue in federal courts. Go-Video, supra, at 1413. For example, during final House debate, Representative Webb of North Carolina, who succeeded Representative Clayton as Chairman of the House Judiciary Committee and as floor manager of the Clayton Bill, stated that in enacting Section 12 Congress would be “liberalizing the procedure in the courts in order to give the individual who is damaged the right to get his damages” any where — anywhere you can catch the offender ---- 3 Kintner, Legislative History of the Federal Antitrust Laws and Related Statutes, at 2772 (1978) (emphasis added).
The Second Circuit’s discussion of Section 12, following
Goldlawr,
supports the view that by enacting the Clayton Act in 1914 Congress extended federal judicial power and
thus.in personam
jurisdiction over all domestic corporations in antitrust cases. In
Leasco,
the plaintiffs asserted jurisdiction over the non-resident defendants on the basis of Section 27 of the Securities Exchange Act, 15 U.S.C. § 78aa.
Leasco, supra,
at 1339. Chief Judge Friendly, noting that Section 27 of the Securities Exchange Act of 1934 was modeled after Section 12 of the Clayton Act.
Leasco, supra,
at 1340 n. 10, státed that Congress, in granting nationwide service of process to federal antitrust plaintiffs, “was doubtless thinking mainly in terms of exercising its power to ‘provide that the process of every District Court shall run into every part of the United States,’ ... arid although [Section 27] does not deal specifically with
in personam
jurisdiction, it is reasonable to infer that Congress meant to assert personal jurisdiction over foreigners not present in the United States ... [but only to the extent] permitted by the due process clause of the Fifth Amendment.”
Leasco, supra
at 1340 (quoting
Robertson v. Railroad Labor Board,
Leasco
makes clear that when Congress provides nationwide service of process in connection with a federal cause of action it also grants to district courts nationwide
in personam
jurisdiction as with respect to the
In
Mariash v. Morrill,
In Kingsepp, the court found it unnecessary to discuss whether service of process under Section 12 depended on meeting its venue rules as, based upon the analysis in Bucyrus-Erie Co., supra, at 1042, it was clear that, under a correct understanding of the structure and meaning of Section 12, service of process in antitrust cases was not conditioned on compliance with that section’s venue provision. In Bucyrus-Erie Co., the court explained that Section 12’s phrase “in such cases” must properly be read to refer to the earlier phrase in the section “ ‘any suit, action or proceeding under the antitrust laws against a corporation,’ ” and “not to anything else in section 12’s first clause.” Bucyrus-Erie Co., supra, at 1042 n. 7. Judge Friendly’s analysis, in Leasco, as discussed, also supports this conclusion. Leasco, supra at 1340. See also Go-Video, supra, at 1412 (reaching same conclusion by application of canon of statutory construction reddendo sin-gula singulis — resolve ambiguity by reference to the context and purpose of the statute as a whole).
Defendants rely on the statement in
Goldlawr, Inc. v. Heiman,
Here, as noted, several of the moving Defendants are domestic corporations, including CORD, incorporated in Michigan, Children’s Hospital (San Diego), incorporated as a non-profit organization in California, Children’s Hospital of Michigan, incorporated in Michigan as a not-for-profit organization, Detroit Receiving Hospital and University Health Center, incorporated as a not-for-profit organization in Michigan; Forsyth Memorial Hospital, a nonprofit organization in
The court notes that Oregon Health Sciences University and University Hospital were transformed into a “public corporation” by the Oregon legislature in July of 1995. 1995 Or.Laws ch. 162 §§ 1(2), 1(3). As a public corporation, Oregon Health Sciences University was intended to “participate in activities or provide services that are also provided by private enterprise.” 1995 Or. Laws ch. 162 § 1(2). As Section 12 makes no distinction between a private corporation and a public corporation. Community Blood Bank, swpra, at 1017-18. Therefore, Oregon Health Sciences University and University Hospital is also a corporation subject to jurisdiction under the Clayton Act.
In summary, as each of these Defendants is a domestic corporation, each has minimum contacts with the United States, and is subject to personal jurisdiction in this district pursuant to Section 12 of the Clayton Act. As such, each of these Defendants’ are subject to jurisdiction under Section 12. Therefore, these Defendants’ motions to dismiss and/or for summary judgment based upon lack of personal jurisdiction should be denied.
b. Jurisdiction under New York State Law
In deciding a motion to dismiss for lack of personal jurisdiction, the court has discretion to proceed either upon written submissions or through a full evidentiary hearing.
Marine Midland Bank, N.A. v. Miller,
Because nationwide service of process under Section 12 of the Clayton Act does not extend to Defendants State University of California (Los Angeles) Medical Center, State University of California (Irvine) Medical Center, State University of California (San Diego), University of Massachusetts Medical Center, New Mexico University Hospital, Ohio State Medical Center, or TriCity Medical Center, Plaintiffs must look to New York state’s statutory law to provide a basis for personal jurisdiction as to these Defendants.
75
The relevant New York law
1. New York Civil Practice Law and Rules Section 301
Section 301 of the N.Y. CPLR provides for the exercise of “such jurisdiction over such persons, property,. or status as might have been exercised heretofore.”
76
N.Y.Civ.Prac.L.
&
R. § 301 (McKinney 1990). This section has been interpreted to permit the exercise of personal jurisdiction over foreign corporations doing business in New York,
i.e.,
where a defendant is operating in New York on a continuous and systematic basis so that it would not offend fair play and substantial justice to subject defendant to jurisdiction in that forum.
Landoil Resources, supra,
at 1043.
See also Vendetti v. Fiat Auto S.p.A,
In applying Section 301, New York courts emphasize several factors, including existence of an office, solicitation of business, presence of bank accounts and other property, presence of employees of the foreign defendant, whether defendant lists a phone number, public relations and publicity work, and sales within the state.
Hoffritz for Cutlery, Inc., supra,
at 58;
Vendetti, supra,
at 890;
Rolls-Royce Motors, Inc. v. Charles Schmitt & Co.,
In this- case, Plaintiffs assert that the Defendants are subject to personal jurisdiction pursuant to the “solicitation plus” doctrine of Section 301. Plaintiffs’ Memorandum of Law at III — 1. Although, as noted, solicitation alone is insufficient to confer jurisdiction over a non-domiciliary, “once solicitation is found in any substantial degree very little more is necessary to a conclusion of ‘doing business.’ ”
Aquascutum of London, Inc. v. S.S. American Champion,
No specific formula has been devised for determining the nature or quality and quantity of contacts necessary to satisfy this test, rather, the courts look to the particular facts and circumstances of each case.
See, e.g., Landoil Resources, supra,
at 1044-46 (personal jurisdiction did not exist over a corporation whose employees took short business trips involving several different accounts, and, in some instances, concerning contacts that were not related to New York in any way, and, noting that the solicitations occurred sporadically over a period of eighteen months, the court concluded “these contacts are insufficient to establish the systematic and continuous presence within the state that New York law requires”) (citing
Aquascutum, supra,
at 211-12);
Hoffiritz for Cutlery, supra,
at 57-58 (fifty-four visits to New York to discuss business with plaintiff insufficient);
Kingsepp, supra,
at 27 (despite the fact that Dartmouth College was not licensed to do' business in New York, had no offices in New York, and did not list a phone number in New York, the court held that the college was doing business in New-York as it engaged in a systematic and continuous course of conduct within New York, including sending representatives to forty-four New York schools annually, engaging in substantial commercial activity in the state, maintaining two bank accounts, issuing four bond offerings through a New York investment banking firm, and owning a remainder interest in real property in the state);
New World Capital Corp. v. Poole Truck Line, Inc.,
Plaintiffs assert that the method by which all of the hospital Defendants have continuously and systematically solicited business in New York state is through their participation in the National Residency Match Program (“MATCH”)and the Fellowship and Residency Electronic Interactive Database • Access System (“FREIDA”). Plaintiffs Memorandum of Law at III — 8. Defendants, however, assert that these programs do not render them present in New York within the meaning of Section 301.
Plaintiffs state that the “central means through which all of the hospital Defendants have continuously and systematically solicited business in New York State is through their participation in the [MATCH] and [FREIDA].” Plaintiffs’ Memorandum of Law at III — 8. Specifically, Plaintiffs argue that each hospital purposefully and actively recruits medical students from New York for its residency programs by using the MATCH, and each hospital provides “on-line information [through FREIDA] regarding its residency programs to medical students in connection with its recruitment efforts.” Plaintiffs’ Memorandum of Law at III-8.
The MATCH, the National Residency Match Program, is an “independent, nonprofit organization located in Washington, D.C.” which “facilitates the nationwide resident selection process for students as well as residency programs.” 77 Randlett Affidavit No. 1 at ¶ 3. This service is offered, for a fee, to residency programs in the United States and prospective residents throughout the world. Randlett Affidavit No. 2 at ¶ 4.
A prospective resident must request all application materials from the residency programs in which he or she is interested.
FREIDA, the Fellowship and Residency Electronic Interactive Database Access System, is a “computerized database designed to help students, residents and' [academic or research] fellows find the graduate medical education programs ... most suited to their needs.” 78 Plaintiffs’ Memorandum of Law, Appendix Volume 1, Exhibit 3, ¶2 (“Gren-holm Affidavit”). The American Medical Association (“AMA”) created FREIDA in 1990 at the request of the student section of the AMA, and continues to produce the database today. Affidavit of Dr. Hannah Hedrick, dated January 27, 1995, at ¶4 (“Hedrick Affidavit”). FREIDA, however, is not an “on-line” information system, as characterized by the Plaintiffs, rather, FREIDA is an informational database in the medium of a computer disk, for use with an ordinary personal computer, which must be purchased by the user. Hedrick Affidavit at ¶¶ 3, 5.
The AMA performs all activities related to FREIDA in Illinois, including the collection of information, publication, marketing, and sales. Hedrick Affidavit at ¶ 7. FREIDA disks are, sold nationwide, and are currently accessible from at least twelve locations in New York. Hedrick Affidavit at ¶ 6; Grenholm Affidavit at ¶8. While FREIDA may aid participating hospitals, including most of the hospital Defendants, in disseminating information regarding their residency programs, no hospital or residency program has any control over or responsibility for FREIDA. Hedrick Affidavit at ¶ 7.
See also Maresca v. Holiday Inns. Inc.,
Even if the MATCH and FREIDA were contacts with New York, the low incidence of recruitment of residents through these mediums would be insufficient to constitute solicitation. See Randlett Affidavit Nos. 1 and 2.
Plaintiffs further assert that each hospital Defendant has solicited in New York patients
a. Johns Hopkins Hospital, Part of the Johns Hopkins Health System
The record reveals that Johns Hopkins has several contacts with this forum, including (1) a contract with a New York City radio station which provided for advertising five days a week for one year, and involved projected billings of $77,000 to $84,-500, 80 (2) advertisements in the New York Times and the Wall Street Journal, costing approximately $35,000, including an advertisement in the Sunday edition of the New York Times in August of 1993(3) advertising in a publication distributed to audiences at each performance of every play in New York City, (4) advertisements for faculty positions in the Annals of Emergency Medicine, (5) receiving, from 1988 through 1993, between $2.8 and 3.9 million from treatment of New York patients each year, and treating at least 265 New York patients, (6) mailing its own publications, including a physician’s update and a medical newsletter, to the 1,250 New York state addresses on its mailing list, (7) receiving over $10 million in charitable contributions from corporations, foundations, and organizations located in New York state in 1993, (8) establishing a letter of credit relationship with Fuji Bank in New York in 1992 to support a loan it received from the Maryland Health & Higher Education Facility Authority, (9) using New York underwriters and a New York company to manage its investments, (10) having residents in Johns Hopkins’ Department of Emergency Medicine take rotations at Bellevue Hospital in New York to obtain experience in toxicology, (11) having its vice-president for finance travel to New York twice in the last year to upgrade credit rating agencies, and to attend a meeting of the Council for Teaching Hospitals chief executive and chief financial officers, (12) having one employee travel to New York five times in the past three years, including two trips to Rochester, and (13) having Dr. Kelen, director of the Division of Emergency Medicine at Johns Hopkins Hospital, travel to New York with an emergency department administrator for a meeting of eight emergency departments in 1992, and to the Long Island Jewish Hospital in New York in 1991 or 1992. Plaintiffs’ Memorandum of Law at III-15 - III — 19.
Additionally, Johns Hopkins Hospital has, as noted, maintained a development office in New York City for the past twenty years which employs two individuals. Sekulow Affidavit at ¶¶ 2-3, 6. The development office
In
Zucker v. Baker,
Based on Johns Hopkins Hospital’s contacts with this state, it is clear that Johns Hopkins Hospital is doing business for purposes of Section 301. Johns Hopkins Hospital maintains an office, a bank account, and employs two people in New York, as well as soliciting millions of dollars of contributions from New York donors through the development office. See Johns Hopkins Hospital’s Memorandum of Law, filed January 30,1995, Exhibit D (listing New York donors and the amounts of donations from fiscal 1989 through fiscal 1994). These contacts, in themselves, ■ are sufficient to demonstrate that the hospital engages in a continuous and systematic course of doing business in New York sufficient to warrant a finding of presence in the jurisdiction. See Landoil Resources, supra, at 1043; Vendetti, supra, at 889; Tauza, supra, at 917. Therefore, Johns Hopkins Hospital is subject to personal jurisdiction pursuant to Section 301. 81
b. Children’s Hospital (San Diego)
The Children’s Hospital’s (San Diego) contacts with this state include (1) advertising for medical and non-medical positions and patients in nationally distributed publications, (2) treatment of 111 patients from New York from October of 1991 through July of 1994, which produced approximately $370,000 in revenues from New York sources, (3) that fact that since 1991, fifteen graduates of New York medical schools have been granted staff privileges at Children’s Hospital, (4) the fact that thirty-six physicians who graduated from New York medical schools currently enjoy privileges at the hospital, and (5) in 1990 and 1993, issuance of bond offerings by the hospital which raised $92,285,000 and $13,650,000, respectively. 82 Plaintiffs’ Memorandum of Law at III — 79 - III-80.
c. Children’s Hospital of Michigan
The Children’s Hospital of Michigan’s contacts with New York include (1) the receipt of $35 million of the proceeds from the sale of bonds, offered in 1988 and 1993 by Detroit Medical Center, Children’s Hospital of Michigan’s parent corporation, offered through Goldman Sachs & Co., a New York City investment house, which served as underwriter for these offerings, and with the assistance of the Depository Trust Company, also located in New York, which served as the securities depository for the 1993 offering, (2) treatment, between 1988 and 1993, by the hóspital of 102 patients from New York, and deriving approximately $98,966 in revenue from these patients, (3) its possible acceptance of payments from New York state governmental programs, (4) sending correspondence and promotional materials to residency program applicants and medical schools in New York, including a copy of the hospital’s
d. Detroit Receiving Hospital and University Health Center
Detroit Receiving Hospital and University Health Center’s contacts with New York include (1) participation of Dr. Brooks Bock, its emergency department chairman, on the Residency Review Committee for Emergency Medicine for a six year period which ended in June of 1994, Dr. Bock participated in the review of every New York emergency medicine residency program at least once during that period, (2) attendance by Dr. Brock at continuing medical education courses in New York, (3) Dr. Bock’s indication that he believed that other physicians employed by the Medical Center Emergency Services, P.C. (“MCES”), the physicians contract group that staffs and maintains the hospital and health center’s emergency department, have travelled to New York for business or professional purposes, (4) the fact that twenty-six physicians who practice at Detroit Receiving graduated from a New York medical school, some of which may have been recruited through advertisements, (5) issuance of bonds in 1993 by the Detroit Medical Center, of which both Detroit Receiving Hospital and University Health Center and the Children’s Hospital of Michigan are wholly owned subsidiaries, $6,300,000 of the proceeds of which were used to finance the acquisition of patient beds, furniture, equipment, and for the renovation of facilities, (6) advertising in national publications which may be distributed in New York, (7) the fact that since 1991, two of the residents in the hospital’s emergency medicine residency program were from New York, 83 and (8) its treatment of New York patients and receipt of from such treatment, however, the hospital believes that such revenues were “immaterial.” Plaintiffs’ Memorandum of Law at III-48 - III-50.
e. Forsyth Memorial Hospital
Forsyth Memorial Hospital’s contacts with New York include (1) treatment of 329 New York patients between 1990 and 1994, which generated $322,497 for the hospital, (2) receipt of payments from a New York governmental agency, and at least seven insurers with central offices in New York, with respect to services rendered for New York patients, (3) raising, in 1991, by the North Carolina Medical Care Commission, $31 million through the issuance of tax-exempt revenue bonds for Carolina Medicorp, Inc., For-syth Memorial’s parent corporation, to fund the acquisition and improvement of real property at the hospital,
84
(4) attendance by hospital employees at clinical education seminars in New York, (5) its participation in a pension fund established by Carolina Medi-corp, Inc., in connection with which Carolina Medicorp, Inc. engaged investment advisors in New York, (6) engaging by Carolina Medi-corp of New York investment bankers to manage the combined reserves of the hospital and Carolina Medicorp, (7) advertising since 1991 for physician or non-physician job opportunities in five New York specific or eastern regional publications, including the
Buffalo News,
the
Rochester Democrat &
f. Kettering Medical Center
Kettering Medical Center’s contacts with New York include (1) a New York bank investment account valued at twelve million dollars, (2) the issuance of bonds in 1984 and 1989, where a portion of the 1984 offering was purchased by Merrill Lynch Capital Markets, an investment banking firm located in New York which provided service to the medical center in connection with the 1984 offering, 85 (3) contracting, in 1994, with Physicians International, a physician placement firm located in Buffalo, in order to recruit physicians for the hospital, 86 (4) use of a New York recruiting firm, Howe-Lewis, to recruit an executive director for the hospital’s physician hospital organization, Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 54, at pp. 27-28, (5) services performed by New York consultants, lawyers, or accountants on behalf of the medical center, (6) utilizing the services of a New York architecture firm in connection with a hospital capital improvement project in 1991 or 1992, 87 (7) receipt of charitable contributions from New York sources between 1987 and 1994, total-ling over $11,000, (8) generating revenue from the treatment of New York patients, (9) the fact that several medical center staff members have attended professional meetings in New York, (10) advertising in publications, which may have been distributed in New York, for employment, including positions as internal medicine residents, and (11) use of a mailing list from the American Medical Student Association to send recruitment materials to medical students. Plaintiffs’ Memorandum of Law at III — 13 - III-15.
g. Loma Linda University Medical Center
Loma Linda University Medical Center’s contacts with New York include (1) treatment of 293 New York residents from 1987 to 1994, resulting in gross revenues of $2,834,192, (2) receipt of $334,198 in charitable contributions from 147 New York donors between 1988 and 1994,
88
(3) listing its residency programs in the Green Book,
89
(4) advertising job opportunities in the Nursing 1994 Directory, as well as advertising for faculty positions and a medical director in nationally circulated publications and distributing a national flyer listing faculty openings, (5) maintaining an “800 number” in connection with its physician referral program, and which “800 number” is assumed to be accessible throughout the country, (6) the fact that eighty-seven of the hospital’s medical residents between 1988 and 1994 attended New York medical schools, (7) the fact that forty-seven of the physicians on its medical staff attended New York medical schools or listed their residence as New York prior to practicing at the hospital, (8) receipt, from 1991 to 1994, of thirty-four applications from medical
h. Lutheran General Hospital
Lutheran General Hospital’s contacts with New York include (1) the 1993 issuance of over $100 million in revenue bonds by the Illinois Health Facilities Authority on behalf of Lutheran General Health System, 90 Lutheran General Hospital’s parent, in part for the benefit of Lutheran General Hospital, 91 (2) deriving revenues of $543,713 for the treatment of New York patients from 1987 to 1994, (3) possible receipt of funding for research projects and charitable contributions from New York sources, (4) purchasing x-ray film from the Eastman Kodak ■ Company, whose principal place of business is located in Rochester, New York, (5) leasing equipment and supplies from the Xerox Corporation, also a New York corporation, 92 (6) the fact that some of the companies who sell supplies to Lutheran General through the Voluntary Hospitals of America, a group to which the hospital belongs, may be located in New York, (7) an application with Lutheran General Parkside Lodge of New York, a New York not-for-profit corporation, (8) sending medical personnel and other professionals to New York for continuing education meetings, (9) soliciting physicians, residents, employees, including emergency department positions, and patients from New York through sevéral nationally distributed journals and other publications which may be distributed in New York, (10) listing its programs in the Green Book, (11) the fact that thirteen physicians currently practicing at the hospital attended New York medical schools, and (12) that since 1991, seventeen residents who practiced at Lutheran General attended New York medical schools. Plaintiffs’ Memorandum of Law at III — 19 - III — 23.
i. Medical College of Pennsylvania and Hospital
The Medical College of Pennsylvania and Hospital contacts with New York include the fact' that (1) in 1989 and 1991 the Pennsylvania Higher Educational Facilities Authority issued $79,275,000 in revenue bonds on its behalf;
93
First Boston Corporation’s New
j. Mercy Catholic Medical Center — Mi- sericordia Division
Mercy Catholic Medical Center — Misc.i-cordia Division’s contacts with New York include (1) sending recruiting materials and informational brochures describing its residency programs to potential applicants located in New York, and Dr. Roberts’ interviews of residency applicants, some of whom may reside in New York,
94
(2) advertising in the
Wall Street Journal
and the
New York Times,
as well as several national trade publications that reach New York, (3) treatment of 474 New York patients between 1991 and 1994,
95
(4) the fact that in 1992, 3.26% of the medical center’s gross patient charges were attributable to New York patients, in 1993, this figure was 2.28%, and in 1994, 2.03% of its gross patient charges were from the treatment of New York patients, (5) the medical center received charitable donations from at least thirty-seven New York donors, (6) the hospital received third-party payments
k. Mercy Hospital and Medical Center
Mercy Hospital and Medical Center contacts in New York include (1) four bond offerings in 1983, 1985, 1986, and 1991, made to finance capital expansion and renovation projects, and to refinance existing debt, for which New York underwriters were utilized, and travel to New York by representatives of the hospital and medical center in connection with the ratings of the 1985 and 1991 offerings, (2) holding of a $1,000,000 certificate of deposit with the Bank of New York from November of 1990 to November of 1991, after which the account was closed in January of 1992, (3) possible holding of investment accounts in the 1980’s at a bank located in New York, (4) receipt of $57,825 in charitable contributions from New York sources between 1988 and 1993, (5) the likely treatment of patients from New York in its emergency department, (6) a review of the application of the University of Rochester by Dr. Gary Strange, director of the emergency medicine residency program that included the hospital, until February of 1993, in eon-nection with his duties as a member of the RRC-EM, and related travel to Rochester, New York in connection with this application, (7) travel to New York by Dr. Strange in 1990 or 1991 to lecture at the Long Island Jewish Medical Center, (8) advertising for emergency physicians and other professionals, as well as its residency programs, in national medical journals and other publications that are or may be distributed in New York, (9) listing of the hospital and medical center in' the Green Book, and (10) the fact that seven members of Mercy’s current medical staff attended medical school in New York. Plaintiffs’ Memorandum of Law at IH-57 - III — 59.
1. Methodist Hospital of Indiana
Methodist Hospital of Indiana’s contacts with New York state include (1) nearly $322 million in bonds which have been publicly issued on its behalf since 1986, either by a county or state issuing authority,
96
(2) utilizing the services of several professional organizations located in New York, including Baker, Nye Limited Partnership, a New York investment firm, B.E.A. Associates, a New York mutual fund company, and Fiduciary Trust International, New York money managers, irt connection with the foregoing bond offerings (3) generation of $574,868 in hospital charges in connection with the treatment of New York patients from fiscal 1991 to fiscal 1994, (4) receiving payments, in connection with the treatment of New York patients, from third-party payors located in New York, including Blue Cross of New York, (5) the hospital’s participation in a multi-center trial and joint research project with New York hospitals for which it makes arrangements for and administers patient
m. Ohio State University Hospital
Ohio State University Hospital’s contacts with New York include (1) use of New York’s media and advertising, involving two segments on Good Morning America a national weekday television program, a
Wall Street Journal
article, and advertisements in the
New York Times
and
Wall Street Journal
for job openings, (2) use of a local advertising agency with a New York office, for purposes of utilizing the agency’s relationship with the New York office, (3) receipt, from 1991 to 1993, of nearly $200,000 in gross .revenues from the treatment of New York patients, (4) charitable contributions received from, New York sources,
98
(5) a contract with Supplemental Health Care Services Ltd., a New York agency, from 1989 to 1993, to provide temporary registered nurse staffing,
99
(6) defense of a lawsuit pending in Richmond County, New York; in connection with this suit, the university hospital retained the services of a New York attorney, (7) participation, in 1989 to 1990, by two of
Since July of 1990, Ohio State University Hospital has treated seventy patients from New York, from over 110,000 total patients. Ohio State University Hospital’s Memorandum of Points and Authorities, filed May 2, 1994, p. 24.
n. Oregon Health Sciences University Hospital
Oregon Health Sciences University Hospital’s contacts with New York include (1) receipt of over $565,000 in charitable contributions from New York sources between 1987 and 1994, (2) gross revenues of $359,132 for the treatment of New York patients from 1987 to 1994, (3) the fact that the hospital may have received payment from third-party sources in New York for the treatment of New York patients, (4) the hospital’s participation in four clinical studies with New York organizations, including the University of Rochester, and contractual relationships with each New York entity with respect to these studies, 100 (5) travel to New York by members of its faculty to attend professional meetings, (6) advertising job opportunities for physicians and faculty members in national medical journals and other publications that may be distributed in New York, (7) the hospital’s listing in the Green Book, (8) the fact that since 1991, seventeen residents who practiced at the hospital, and ten physicians hired by it attended a New York medical school or listed a New York home address, (9) receipt by the hospital, from 1992 to 1994, of ninety-six applications to its emergency medicine residency program from medical students in New York, and (10) the fact that from academic 1991/1992 through academic 1993/1994, five physicians from New York filed applications to its emergency department. Plaintiffs’ Memorandum of Law at III — 72 - III-73.
o. Riverside Methodist Hospitals
Riverside Methodist Hospitals’ contacts include (1) raising through New York underwriters over $189 million through bond offerings issued by the County of Franklin, Ohio,
101
(2) travel by the current president/chief executive officer, chief financial officer, and chair of the finance committee of the hospitals to New York and his presence on the trading floor at the First Boston Corporation in connection with the sale of the hospitals’ 1990B bonds, (3) having a New York investment account with over $23 million in September of 1989; Oppenheimer Capital Corporation, located in New York City, served as the investment manager of the account, (4) treatment, between 1990 and 1994, of 174 outpatients who provided New York zip codes, and of seventy-four inpatients from New York, between 1988 and 1993; also, between 1988 and 1990, 193 New York patients were treated in the hospitals’ emergency room,
102
(5) billing patients treat
p. Saint Francis Medical Center
Saint Francis Medical Center’s contacts with New York include (1) its participation in a Group Purchasing Organization, of which Olean General Hospital, located in the Western District of New York, has been a member since 1989, sponsored and administered by the medical center, pursuant to an agreement with the medical center,
104
(2) between 1987 and 1993, receipt by the center of at least $298,752 in revenues from the treatment of New York patients,
105
(3) issuance of $178,175,000 in bonds through New York facilities by the Illinois Health Facilities Authority for the Illinois institutions which comprise the OSF Healthcare System, including Saint Francis Medical Center,
106
(4) the fact that from 1983 to 1989, either the medical center or OSF Healthcare System maintained a bank account at Irving Trust to secure the bonds, the balance of this account ranged from $350,000 to over $600,000, (5) advertising for faculty positions in emergency medicine in national medical journals and the annual job and fellowship listing of the Emergency Residents Association, which is nationally distributed, (6) sending a direct mailing to potential candidates for emergency department faculty positions in 1988, (7) mailing its. recruiting brochure to the deans of every medical school in the United States, (8) listing of the Saint Francis Medical Center and its residency programs in the Green Book, and (9) that fact that at least one resident who participated in a Saint Francis Medical Center residency program attended a New York medical school or was from New
q. St. Anthony Hospital
St. Anthony Hospital’s contacts include (1) advertising medical and non-medical positions in nationally distributed publications, (2) recruiting for nursing positions through advertisements in the Albany Times Union and the Buffalo News, published in Albany and Buffalo, New York, respectively, (3) the fact that from 1991 to 1994, the hospital had four residents who attended New York medical schools, (4) the fact that fifty-two members of its current medical staff graduated from New York medical schools, (5) from 1991 to 1994, treatment of 540 New York patients, and from May of 1990 to 1994 generating $1,229,364 in revenues from patients residing in New York, and (6) receiving several charitable contributions from New York sources totalling $7,895. Plaintiffs’ Memorandum of Law at III — 71 - III-72.
r. Tri-City Medical Center (San Diego)
Plaintiffs assert that Tri-City Medical Center (1) regularly advertises employment opportunities in national publications, (2) sent promotional materials regarding employment opportunities directly to New York, (3) treated seventy-three New York patients between 1987 to 1993, (4) allowed its interim chief executive officer to attend one seminar in New York, and (5)'issued revenue bonds to the public at large, including New York residents. Plaintiffs’ Memorandum of ■ Law at Ill — 81 - III — 82.
Plaintiffs advance several contacts to demonstrate that the University of California (Los Angeles) Medical Center should be subject to jurisdiction under the solicitation plus doctrine, including (1) receipt of $5,486,286 in charges for services rendered to New York residents from fiscal 1991 to 1992 through fiscal 1993 to. 1994, (2) attendance by its ■representatives at a nursing job fair in New York-City in 1991, (3) sending materials describing its residency programs to New York medical schools, (4) advertising job opportunities in the New York Times and other national medical journals and publications, (5) receipt of $108,015 in charitable contributions from New York sources since 1988, (6) issuance of $136,530,000 in bonds in 1994 to refinance outstanding debt, including bonds issued in 1986 and 1990, 107 (7) serving as a founding member of the Academic Medical Center Consortium, 108 which was incorporated in New York in 1990 or 1991, and maintains its offices in Rochester, New York; contributing approximately $65,000 in annual dues to the consortium, and an additional $20-30,000 for its participation in specific studies, 109 and (8) service by Dr. Schultze, director of the medical center, chairman of the board of, and representing the medical center on the University Hospital Consor-
s.University of California (Los Angeles) Medical Center
t. University of California (Irvine) Medical Center
Plaintiffs assert that University of California (Irvine) Medical Center (1) has treated 334 patients from New York resulting in over $900,000 in total revenues for the hospital, as well as payments by third-party sources, (2) has' placed at least eighty advertisements in nationally distributed journals and other publications to fill nurses, clinicians, technologists, and other employee positions, and (3) recruits physicians by placing advertisements in nationally distributed journals. Plaintiffs’ Memorandum of Law at III — 82 - III — 83.
u. University of California (San Dieyo) Medical Center
Plaintiffs contend that the University of California (San Diego) Medical Center (1) derives substantial revenues from providing services for New York patients, specifically, between fiscal 1990/1991 and fiscal 1993/1994, the medical center charged nearly $7 million to New York residents, (2) sends promotional materials to medical schools in New York, (3) advertised employment opportunities in the New York Times and other nationally distributed publications, (4) has two practicing physicians who are from New York or attended New York medical schools, and (5) received $67,929 in charitable contributions from New York donors between 1991 and 1994. Plaintiffs’ Memorandum of Law at III — 81.'
v. University Hospital at the University of New Mexico
Plaintiffs allege that the University Hospital at the University of New Mexico has several contacts with New York which allow personal jurisdiction under the solicitation plus doctrine, including the fact that, (1) its receipt of $4,797,792 in charitable contributions from New York sources between fiscal 1987/1988 and fiscal 1992/1993, (2) the hospital placed advertisements for physicians in nationally distributed medical journals, (3) its residency programs being listed in the Green Book, (4) since 1990, at least seventeen residents in the hospital’s residency programs attended New York medical schools or resided in New York prior to participating in the program, (5) three physicians hired by the hospital in 1993 and 1994 resided in New York at the time they were hired, (6) forty-one individuals from New York or New York medical schools applied to its emergency medicine residency program or emergency department between 1991 and 1994, (7) the hospital’s Board of Regents issued bonds to raise, among other projects, money for the construction of an ambulatory care facility and a parking structure at the hospital, 111 (8) the hospital’s vice-president traveled to New York to meet with Moody’s representatives in connection with rating the capital bonds, 112 (9) its faculty members have traveled to New York since January of 1991 to attend conferences, meetings, and for research purposes. Plaintiffs’ Memorandum of Law at III-63 - III-66.
w. University of Massachusetts Medical Center
Plaintiffs maintain that the University of Massachusetts Medical Center has significant contacts with New York, including the
x. University Medical Center, Tucson, Arizona 115
The University Medical Center’s contacts with New York include the fact that (1) it is affiliated with D’Youville and Daeman colleges, located in Western New York, in the areas of physical and occupational therapy,
116
(2) an indication by Gregory Pivirotto, the medical center’s current president and chief executive officer, that it obtains supplies from suppliers and vendors located in New York, (3) maintaining a pollution insurance policy with a New York company, (4) issuance, between 1991 and 1993, of $133,810,000 in public bond offerings,
117
(5) opening two
In determining whether any of these contacts with New York, alone or in combination, will satisfy the solicitation plus doctrine, the court must decide whether each Defendant has sufficient contacts with the jurisdiction to reach the level of substantial ' solicitation, which requires that the solicitation be carried on with a considerable measure of continuity.
Landoil Resources,
Plaintiffs assert that each hospital Defendant, has advertised to recruit physicians, residents, and other medical staff in publications which are distributed nationally, including the
Wall Street Journal,
the
New York Times,
the Green Book, and other nationally distributed medical journals and materials. However, advertisements placed in “nationally distributed newspapers such as
Plaintiffs also claim that some advertising was intended to solicit patients from New York, and the hospital Defendants received revenue from treating New York patients.
118
Even if the court assumes that all of the revenues' derived from the treatment of New York patients by the hospital Defendants was solicited, such revenues do not amount to substantial solicitation. Generally, when New York, courts have focused on revenues derived from solicitation of business in New York to determine if the solicitation was substantial, they have considered the' amount spent on in-state advertising and the degree of business generated by this advertising.
Lane v. Vacation Charters, Ltd,.,
Children’s Hospital (San Diego) derived over $370,000 from the treatment of 111 New York patients between October 1991 and October 1994. Plaintiffs’ Memorandum of Law at III — 80, Appendix Volume 4, Exhibit 4, Doc. No. LL04 429. The hospital received approximately $400,768,500 in net patient revenues for the same period, therefore, .09% of the hospital’s revenues were generated from the treatment of New York patients.
The Children’s Hospital of Michigan treated 102 New York residents between 1988 and 1993, thus, the Plaintiffs' estimated that the hospital derived $98,966 from New York patients. Plaintiffs’ Memorandum of Law at III — 51 - III — 52. The hospital’s total gross revenue for the same period of time exceeds one billion dollars, thus, even using the Plaintiffs’ figure of $98,966, Children’s Hospital of Michigan received less than .01% of its revenues from New York patients.
From 1987 through June of 1994, Loma Linda University Medical Center received $2,834,192 in gross revenues from New York patients. Plaintiffs’ Memorandum of Law at III — 77, Appendix Volume 12, Exhibit 8, Response to Interrogatory No. 7. The medical center’s gross revenues for the period from 1987 through 1993 totalled over three billion dollars. Id. Thus, the medical center derives approximately .08% of its revenues from the treatment of New York patients.
Lutheran General Hospital received $543,-713 in revenues for the treatment of New York residents from 1987 to 1994. Plaintiffs’ Memorandum of Law at III-21. However, the net patient revenue of the hospital from fiscal 1990-1991 through fiscal 1991-1992 was nearly $526,000,000. Plaintiffs’ Memorandum of Law, Appendix Volume 4, Exhibit 7, Doc. Nos. LL05 885, LL05 890. Thus, the revenue Lutheran General received from providing services to New York patients amounted to less than .1% of its income.
Plaintiffs assert that from fiscal 1991 through fiscal 1994, Medical College of Pennsylvania and Hospital received $1,915,560 in revenues from the treatment of New York patients. Plaintiffs’ Memorandum of Law at III — 33. The hospital’s gross patient revenues, including hospital charges and professional fees, from fiscal 1991-1992 and fiscal 1992-1993 total $752,049,000. Plaintiffs’ Memorandum of Law, Appendix Volume 5, Exhibit 1, Doe. Nos. LL06 790, LL06 806. Thus, the revenue the medical college and hospital received for services provided to patients from New York was less than .25% of its revenues.
Mercy Catholic Medical Center — Misc.i-cordia Division indicates that in 1992, 3.26% of its gross patient charges were attributable to the treatment of New York patients, in 1993, the figure was 2.28%, and in 1994, 2.03%. Plaintiffs’ Memorandum of Law at III — 37; Appendix Volume 12, Exhibit 11, Response to Interrogatory No. 7.
Methodist Hospital of Indiana charged nearly $575,000 for services rendered to New York patients for the period from fiscal 1991 through fiscal 1994. Plaintiffs’ Memorandum of Law at III-41. The hospital’s total patient charges from fiscal 1991 through fiscal 1994 total $52,591,051. Plaintiffs’ Memorandum of Law, Appendix Volume 5, Exhibit 3, Doc. Nos. LL08 617, LL08 657. Therefore, the revenue received from New York patients amounts to 1.09% of the hospital’s total patient charges for that period.
In this case, Ohio State University Hospital received nearly $200,000 in gross revenues from 1991 to 1993 from treating New York patients, however, the net patient revenue of the hospital for the same period of time exceeded $500 million. Plaintiffs’ Memorandum of Law, Appendix Volume 8, Exhibit 3, Doc. No. 85. Therefore, the revenues received from patients from New York amount to .04% of the hospital’s net revenues. Additionally, of the over 110,000 total patients treated at the university hospital since July of 1990, only seventy patients were from New York. Ohio State University Hospital’s Memorandum of Points and Authorities, filed May 2,1994, p. 24.
Oregon Health Sciences University Hospital generated $359,132 in gross revenues from New York patients between 1987 and 1994. Plaintiffs’ Memorandum of Law at III — 72, Appendix Volume 13, Exhibit 15, Response to Interrogatory No. 6. For the same period of time, the hospital received $1,759,-
Plaintiffs assert that Saint Francis Medical Center derived at least $298,752 in revenues from the treatment of patients from New York. Plaintiffs’ Memorandum of Law at HI-60. As the hospital’s total gross revenue for the same period, not including the outpatient revenues for the years 1987 through 1989, is over $1.8 billion, the hospital’s revenues from New York patients amount to less than .02%. Plaintiffs’ Memorandum of Law, Appendix Volume 13, Exhibit 18, Exhibit A to Interrogatory Answers.
St. Anthony Hospital received $1,229,365 from May of 1990 to June of 1994 for treating patients from New York. Plaintiffs’ Memorandum of Law at III — 71, Appendix Volume 13, Exhibit 17, Response to Interrogatory No. 7. For the period from fiscal 1990 through fiscal 1993, the hospital received $755,799,000 in gross revenues, which means that .16% of the hospital’s revenues were derived from the treatment of New York patients. Id..
University of California (Los Angeles) Medical Center charged nearly $5.5 million for services rendered to New York patients for the period from fiscal 1991-1992 through fiscal 1993-1994. Plaintiffs’ Memorandum of Law at III-74. However, the net patient revenue of the hospital from fiscal 1991-1992 through fiscal 1992-1993 exceeded $750,000,-000. Plaintiffs’ Memorandum of Law, Appendix Volume 6, Exhibit 2, Doc. No. LL13 00379. Thus, the revenue the medical center received from providing services to New York patients amounted to .73%, of its income.
Plaintiffs assert that since 1991, University of California (Irvine) Medical Center treated 334 New York patients which resültéd in over $900,000 in total revenues for the hospital. Plaintiffs’ Memorandum of Law at IH-82. The medical center’s net patient revenue for the fiscal 1992-1993 period was $181,300,-000; limiting the revenue figure for one year, the revenue received for services provided by the medical center to New York patients is only .5%. Plaintiffs’ Memorandum of Law, Appendix Volume 5, Exhibit 6, Doc. No. LL111115.
University of California (San Diego) Medical Center charged nearly $7 million to New York patients between fiscal 1990-1991 and fiscal 1993-1994. Plaintiffs’ Memorandum of Law at III — 81. However, over the same period, the medical center’s total gross revenues amounted to nearly two billion dollars, Plaintiffs’ Memorandum of Law, Appendix Volume 13, Exhibit 23, Supplemental Answers at p. 3, indicating that only .36% of the medical center’s' revenue was from New York.
Between 1990 and 1993, University of Massachusetts Medical Center generated $4,135,-000 in revenues for treatment of New York patients. Plaintiffs’ Memorandum of Law at III-54. However, for the same period, the medical center received over one billion dollars in total patient revenues, Plaintiffs’ Memorandum, of Law, Appendix Volume 13, Exhibit 24, Response to Interrogatory No. 7, hence, only .39% of the medical center’s revenue was generated from the treatment of New York patients.
. Between 1988 and 1993, University Medical Center (Tucson) generated $1,951,516 in revenues for treatment of New York patients. Plaintiffs’ Memorandum of Law at III-69, Appendix Volume 7, Exhibit 1, Doc. Nos. LL1512 - LL15 17. However, the net patient revenues for the period from 1988 through 1992 total $615,291,000, which represents less than .32% of the hospital’s total ■revenues being derived from charges to New York patients. Id. at LL15 228, LL15 596.
Thus, even if the court assumes that each of these hospital Defendants successfully solicited patients from New York state, this argument fails to establish the threshold requirement for application of the solicitation plus rule, as none of the Defendants discussed above received over 3.26%, and most less than one percent, of their gross revenues from the treatment of patients from New York. Therefore, the court is not persuaded that these Defendants engaged in substantial solicitation of patients from New York,
see Rolls-Royce Motors,
Further, Plaintiffs’ assertion, without evidence, that these Defendant hospitals treated New York residents which they solicited is irrelevant, as here the services rendered were performed outside of New York state, after the New York resident voluntarily traveled elsewhere to benefit from the services offered or were treated on an emergency basis.
See Wolf v. Richmond County Hospital Authority,
In arguing that the hospital Defendants meet the solicitation plus requirement under Section 301, Plaintiffs also urge that several of the physicians, residents, and medical staff at various hospitals came from New York or attended medical school in New York, and may have been recruited. Plaintiffs’ Memorandum of Law at III-55 - HI-56, III — 65, III — 81. To hold that these hospital Defendants have subjected themselves to the jurisdiction of New York by the simple act of employing New York residents to perform services outside the state would be totally inconsistent with Fourteenth Amendment due process requirements as it fails to demonstrate a purposeful availing of the benefits and protections of New York state.
See Hanson, supra,
at 253,
Plaintiffs also rely upon the fact that other persons from New York applied to the hospital Defendants’ emergency medicine residency programs. Plaintiffs’ Memorandum of Law at III-55 - III-56, III-65. While some hospital Defendants have mailed promotional materials to medical schools located in New York, Plaintiffs’ Memorandum of Law at HI-55, III-76, III-81, III-82, and advertised in nationally distributed publications, these contacts fail to create substantial and continuous activity in New York. Johnston, supra, at 420 (an advertisement in a state newspaper offering employment opportunities outside the state, or sending an individual to interview the resident does not satisfy due process considerations for purposes of personal jurisdiction); Schenck v. Walt Disney Co., 142, F.Supp. 838, 841 (S.D.N.Y.1990) (defendant not subject to jurisdiction under Section 301 on the basis of its solicitation of business through New York representatives by way of advertisements, sending promotional materials, maintaining a contract with a New York advertising firm, and paying commissions to travel agents where all reservations had to be confirmed by the corporation in Florida).
Additionally, the filing of applications for admission to Defendants’ emergency medicine residency programs is often the result of unilateral activity initiated by the prospective resident, rather than the residency program.
Further, as New York is the second most populated state in the country and has several medical schools located within it, it is reasonable to infer that hospital residency programs operated in other states will receive a significant number of New York applicants, and that numerous New York educated physicians or previous residents of New York are practicing in hospitals throughout the country. Thus, the number of physicians who graduated from New York medical schools or were New York residents before practicing at one of the hospital Defendants is irrelevant in the determination of whether these hospitals are subject to personal jurisdiction as it fails to demonstrate the purposeful availing of benefits of New York state essential to a properly based finding of doing business.
See Hanson, supra,
at 253,
Plaintiffs rely on the issuance of bonds through New York financial markets to raise capital as a contact with New York sufficient to find jurisdiction under Section 301. Plaintiffs’ Memorandum of Law at HI-13 - III-80. However, the location in New York of service organizations, such as law firms or investment banking companies, which perform financial and related legal services for the hospital Defendants in connection with such offerings, does not represent activity in New York by the hospital Defendants for jurisdictional purposes.
Bush v. Stern Brothers & Co.,
As with most businesses, borrowing money for capital or operating purposes is an activity incidental to the hospital Defendants’ primary business, thus, the Defendants’ issuance of bonds to obtain capital, and visits by each Defendant to help consummate the bond sales do not amount to the continuous business necessary to support jurisdiction under Section 301.
See Crucible Ventures, supra,
(the solicitation and execution of business loans, where defendant’s president visited the state twenty-five times over a three year period to obtain the business loans, did not constitute doing business with the requisite measure of permanence and continuity to confer jurisdiction pursuant to Section 301).
See also PaineWebber Inc. v. Westgate Group, Inc.,
Therefore, each hospital Defendant’s use of New York companies in issuing bonds to raise capital, the use of investment advisors or other New York professional organizations, and the hiring of New York attorneys by Defendants Ohio State University Hospital and the University of Massachusetts Medical Center in connection with defending against suit, are not sufficient contacts with New York to provide for jurisdiction under the solicitation plus doctrine. Additionally, the business trips taken by Defendants’ executives to negotiate and conclude the bond offerings are also insufficient to establish jurisdiction over the hospital Defendants.
PHLCORP, Inc. v. Wichita Mortgage Corporation,
Plaintiffs also contend that charitable contributions received by the hospital Defendants from residents of New York support subjecting the hospitals to jurisdiction in New York. Plaintiffs’ Memorandum of Law at III — 31, III — 63, III — 74 n. 28, III-81. However, there is no indication or evidence presented in this record that explains how or whether such contributions were solicited or were received.
121
Although the court must draw all reasonable inferences in favor of the Plaintiffs, the court cannot infer conclusions that do not have any reasonable basis in fact.
See Hoffritz for Cutlery, Inc.,
Under the solicitation plus test, presence is established when substantial solicitation is coupled with other New York contacts of a continuous nature, such as' a New York certificate of incorporation, bárik account, or phone number.
Gonzalez v. Press Parts, Inc.,
As the contacts listed by Plaintiffs have failed to demonstrate substantial solicitation by any of the Defendants, except for Johns Hopkins Hospital, the court need not address the remaining contacts alleged to satisfy the “plus” portion of the New York solicitation plus doctrine. However, for purposes of completeness, the court will briefly address the “plus” contacts alleged by Plaintiffs.
The remaining contacts asserted by the Plaintiffs for the “plus” portion of the Section 301 solicitation plus test include contracting for temporary nursing services, contracting for local advertising services with an agency that has a New York office, participating in multi-center trials or a study with a New York site, participating in a consortium, purchasing supplies from New York companies, affiliations with New York entities, participating in “online” national databases, sporadically printing advertisements in local publications, maintaining New York bank accounts, or maintaining a toll-free number which may be accessible from New York. Plaintiffs’ Memorandum of Law at III — 13 - HI-80. Although these activities, except participating in the MATCH and FREIDA database services, constitute contacts with New York, to predicate jurisdiction pursuant to Section, 301 on these facts would ascribe undue significance to essentially tenuous and intermittent contacts.
See Landoil,
Plaintiffs also assert that Dr. Bock, Dr, Chisholm, Dr. Strange, and Dr. Wagner’s activities in connection with the RRC-EM and its review of the emergency medicine residency programs is another contact which supports jurisdiction over Detroit Receiving Hospital and University Health Center, Medical College of Pennsylvania and Hospital, Mercy Hospital and Medical Center, and Methodist Hospital of Indiana in this district. Plaintiffs’ Memorandum of Law at III — 35 - III — 36, III-42, III-48, III-58. However, Plaintiffs have not shown that any action by these physicians with respect to RRC-EM was undertaken on behalf of their respective hospitals.
Chrysler Capital Corp.,
As Plaintiffs have failed to demonstrate that the hospital Defendants, except for Johns Hopkins Hospital, systematically and continuously solicited business in New York as required under the solicitation plus test, personal jurisdiction is not established over these Defendants pursuant to Section 301.
Council of Emergency Medicine Residency Directors
The Council of Emergency Medicine Residency Directors (“CORD”) is an organization whose membership consists solely of emergency medicine residency training programs. Plaintiffs’ Memorandum of Law, Appendix Volume 2, Exhibit 3, Doc. No. C3. Each member program may have two representatives consisting of thé residency director and a designee- of the program. Id. The purposes of CORD include the improvement of the quality of emergency medical care, establishing and maintaining high standards in emergency medicine training programs, enhancing the quality of instruction in emergency medicine residency programs, and improving communications between faculty members of various emergency medicine training prograips. Id.
In demonstrating that CORD is subject to personal jurisdiction pursuant to Section 301, Plaintiffs assert several contacts that CORD has with New York, including the fact that (1) Dr. Peter Viccellio of Defendant SUNY at Stony Brook University Hospital, located in New York, has been a member of CORD’s Board of Directors since May of 1994, and is currently the liaison to the CORD program committee,-which plans the programs for all national CORD meetings,
124
(2) CORD conducts its business through its directors, committees and members by telephone conference calls and sending out materials to members, including New York residents, (3) Dr. Viccellio has participated in at least one, and perhaps several conference calls as a member of the CORD board of directors, (4) the CORD Task Force on Overcrowding in 1990 and 1991 was headed by Dr. Nina Mazur, of the Brooklyn Hospital Center, with participating members from Bellevue Hospital in New York City and
Although Plaintiffs have enumerated several contacts with New York, they have failed to demonstrate a continuous course of conduct by CORD upon which to predicate personal jurisdiction. The only solicitation in New York alleged by the Plaintiffs is that CORD solicited its members by sending them each materials after the emergency medicine residency program received accreditation from the RRC-EM. However, merely sending an application and information through the mail on a sporadic basis is not a sufficient contact for personal jurisdiction.
Landoil Resources,
CORD does have a few members in New York, receives dues from these members, and sends materials to its members in the district. However, these contacts are not sufficient under Section 301 to support a finding of jurisdiction.
Selman,
2. Jurisdiction for Transacting Business under Section 302(a)(1)
A defendant not “doing business” in New York within the meaning of Section 301
Demonstrating that a defendant “transacted business” in New York and is suable on a cause of action arising from that transaction requires considerably less contact with New York than is necessary to establish that a defendant is doing business, which renders the defendant subject to suit on unrelated causes of action.
Beacon Enterprises, Inc., supra,
at 763. Section 302(a)(1) is a “single act statute” and “proof of one transaction in New York is sufficient to invoke jurisdiction, even [if] the [defendant] never enters the state, so long as the [defendant’s] activities [in New York] were purposeful and there is a substantial relationship between the transaction and the elaim asserted.”
Kreutter v. McFadden Oil Corp.,
In making the determination of whether a defendant is transacting business under Section 302(a)(1), the court must examine the totality of defendant’s activities with the forum state.
Eck v. United Arab Airlines, Inc.,
Plaintiffs assert that each of the hospital Defendants “have purposeful, systematic, and routine contacts with New York medical students and medical schools” through FREIDA and the MATCH, Plaintiffs’ Memorandum of Law at IV-1 - IY-3, and their claims are sufficiently related to the Defendants’ participation in these programs so that it is “not unfair” to find that Plaintiffs’ claims arise out of such participation. Plaintiffs’ Memorandum of Law at IV-2. Defendants maintain that FREIDA and the MATCH do not grant them access to residents, and thus do not constitute the transaction of business in New York. Defendants’ Joint Reply Memorandum at p. 39. Defendants further argue that “ABEM’s closure of the practice track-— the source of Plaintiffs’ injury — bears no ‘direct relation’ to the administrative services afforded by FREIDA and the Match.” Defendants’ Joint Reply Memorandum at p. 39.
The present controversy arose as the result of ABEM’s closure of the practice track, thereby denying Plaintiffs eligibility to sit for ABEM’s emergency medicine certification examination, and from working for hospitals which-require physicians practicing emergency medicine to be ABEM certified or eligible. Second Amended Complaint at ¶¶ 3-12. While Plaintiffs argue that the hospital Defendants participated in ABEM’s conspiracy by accepting only ABEM certified or eligible physicians to practice in their emergency departments, and used services such as FREIDA and the MATCH to recruit residents for their residency programs, such conduct is not the transacting of business in New York and, hence, is insufficient to per
Plaintiffs’ cause of action, moreover, did not arise as the result of any of the Defendants’ participation in FREIDA or the MATCH. As discussed, Discussion Section 11(b)(1),
supra,
FREIDA is an informational database. Hedrick Affidavit at ¶¶3, 5. All activities related to FREIDA are performed in Illinois by the AMA, including collection of information, publication and marketing, and sales. Hedrick Affidavit at ¶ 7. The MATCH is an independent nonprofit organization located in Washington D.C. Randlett Affidavit No. 1 at ¶ 3. The MATCH service is offered, for a fee, to residency programs in the United States, and prospective resident physicians worldwide. Randlett Affidavit No. 2 at ¶ 4. The service performed by the MATCH occurs at the close of the residency application process, and the MATCH only sorts the ranking preferences of the programs and the applicants. Randlett Affidavit No. 1 at ¶ 3; Randlett Affidavit No. 2 at ¶ 5. Moreover, no hospital or residency program has any control or responsibility for either FREIDA or the MATCH. Hedrick Affidavit at ¶ 7; Randlett Affidavit No. 2 at ¶ 3. Significantly, as relevant to jurisdictional considerations, utilization of these services must first be initiated by the individual medical student applicant. Randlett Affidavit No. 1 at ¶ 3; Randlett Affidavit No. 2 at ¶¶ 5, 7; Grenholm Affidavit at ¶ 2. None of the remaining contacts alleged by the Plaintiffs for jurisdiction under Section 301 are sufficiently related to the cause of action to sustain jurisdiction under Section 302(a)(1). For example, advertising campaigns, intermittent recruiting activity, travel to New York for professional meetings or seminars, participation in multi-center research trials, receipt of charitable donations, the treatment of New York residents, the issuance of bonds or use of professional services in New York, and the employment of physicians or residents who attended New York medical schools or resided in New York are insufficiently related to Plaintiffs’ cause of action to allow jurisdiction pursuant to Section 302(a)(1).
See Muollo v. Crestwood Village, Inc.,
Accordingly, the court finds no identifiable nexus or substantial relationship between the hospital Defendants’ contacts with New York and Plaintiffs’ cause of action sufficient to predicate jurisdiction under Section 302(a)(1).
3. Conspiracy Jurisdiction under Section 302(a)(2)
Having concluded that the hospital Defendants and CORD are not transacting business in New York thereby warranting exercise of personal jurisdiction under Section 302(a)(1), the court must next consider Plaintiffs’ contention that these Defendants are subject to New York jurisdiction under Section 302(a)(2), providing for jurisdiction over a non-domiciliary who commits a tortious act within the state. N.Y.Civ.Prac.L. & R. § 302(a)(2) (McKinney 1990).
“[I]t is basic that the burden of proving jurisdiction is upon the party who asserts it and that he must show by the complaint and supporting affidavits the essential requirements of the jurisdictional statute.”
Lehigh Valley Industries v. Birenbaum,
It is well established that acts committed in New York by a co-conspirator of an out-of-state defendant pursuant to a conspiracy may subject the defendant to jurisdiction under Section 302(a)(2).
Chrysler Capital Corp., supra,
at 1266. However, it is also settled that existence of a civil conspiracy alone does not qualify as an independent tort in New York for jurisdictional purposes under New York law.
Durante Brothers and Sons, Inc. v. Flushing National Bank,
a. Tortious Act Within New York
Plaintiffs urge that ABEM’s denial of the opportunity to Plaintiffs to gain ABEM certification is “the heart of plaintiffs’ claims for violations of the antitrust laws, which the Court determined were ‘in the nature of a tort,’ ” and therefore that Defendant ABEM committed a tortious act in New York,
127
Plaintiffs’ Memorandum of Law at V-2, forming the legal predicate for Section 302(a)(2) jurisdiction. It is contended that ABEM committed a tort within New York by corresponding with Dr. Daniel and other New York based Plaintiffs, by mail and telephone, regarding their applications for certification as ABEM Diplomates. Plaintiffs’ Memorandum of Law at V-2; Appendix Volume 1, Exhibits 4, 5. To sustain Section 302(a)(2) jurisdiction, a defendant need not be physically present in New York in order to commit the required tortious act.
See Pilates, Inc. v. Pilates Institute, Inc.,
In this case, Plaintiffs’ have claimed that ABEM’s denial of several of the individual Plaintiffs’ applications to sit for ABEM’s certification examination, while they resided in New York, and the denial of their appeals, caused injuries in New York state. Plaintiffs’ Memorandum of Law . at V-2 - V-3; Appendix Volume 1, Exhibits 4, 5; Appendix Volume 2, Exhibit 3; Appendix Volume 3. Plaintiffs claim that they have received less remuneration than ABEM-certified physicians, have been unable to apply for or denied positions, promotions, or professionally related directorships based on lack of ABEM certification, and that a manpower shortage in the medical specialty of emergency medicine has been created as the result of the alleged conspiracy. Id. As these injuries flow from the alleged conspiracy and are factually supported by the Plaintiffs’ declarations, Plaintiffs’ Memorandum of Law, Appendix Volume 1, Exhibits 4 and 5, Plaintiffs have demonstrated that they have suffered injuries within New York.
Plaintiffs also assert that a tortious act was committed by ABEM in New York because ABEM’s current president, Dr. G. Richard Braen, is a residency director at the State University of New York at Buffalo. Plaintiffs’ Memorandum of Law at V-3. However, the fact that the president of ABEM, a Michigan corporation, is a New York resident does not demonstrate that any tortious acts by ABEM took place in New York.
See Allstate Life Insurance Co. v. Linter Group, Ltd.,
Further, the Plaintiffs’ conspiracy claim is, in itself, insufficient to support jurisdiction under Section 302(a)(2) as “conspiracy is merely the string which serves to connect defendants to the actionable wrong and the overt acts which caused injury.”
Chrysler Corp., supra,
at
1267
n.
8
(citing
Kajtazi, v. Kajtazi
b. Factual Showing of a Conspiracy in Restraint of Trade
The antitrust conspiracy alleged in Plaintiffs’ Second Amended Complaint grows out of a scheme conducted by physicians and the hospitals with which they are affiliated to unreasonably restrict competition in emergency medicine by denying other practicing, experienced, and qualified physicians eligibility to obtain ABEM certification.
When ABEM was established in 1976, the two available roads for achieving eligibility to become certified for ABEM’s Diplómate status were the “residency” path, whereby the applicant physician was required to complete an approved three-year residency training program in emergency medicine, and the “practice track,” which required the applicant to complete seven thousand hours and sixty months of practice in emergency room medicine, with twenty-four months of continuing emergency medicine practice. In accordance with its original .charter provisions, ABEM discontinued the “practice track” on June 30, 1988 and now relies exclusively on the residency path for eligibility to sit for ABEM’s examination. To become ABEM certified, upon completion of the initial qualification, following either the former “practice track” or the current residency path, physicians must also pass a certification examination. Plaintiffs allege that by promoting ABEM certification as the benchmark of quality and fitness to practice emergency medicine within the national health market- . place and then closing the practice track, ABEM and its co-conspirators ensured, a high demand for the emergency medicine resident training programs now required by ABEM and offered by the hospital Defendants. 130
Plaintiffs’ conspiracy theory, upon which they seek to predicate jurisdiction in conformance with their burden, posits that the hospital Defendants, acting through their individual physician “agents,” as alleged by Plaintiffs, control several emergency medicine standard setting organizations, including ABEM, CORD, the American College of Emergency Physicians (“ACEP”),
131
and the
Plaintiffs argue that each hospital Defendant is both a principal and beneficiary of the conspiracy, as each hospital has created and implemented policies to employ only ABEM certified physicians, thereby excluding many emergency physicians who have more experience, knowledge, and skill than those with ABEM certification. Second Amended Complaint at ¶¶ 78-82, 89,108-110.
Plaintiffs also assert that ABEM has a monopoly over the market for board certified emergency medicine physicians, and that the exclusion of other qualified emergency medicine physicians from the market for board certified emergency medicine physicians is an unreasonable restraint on trade. Second Amended Complaint at ¶¶ 122-135. In Plaintiffs’ view, this exclusion results in the suppression of competition with ABEM Dip-lomates. Plaintiffs also maintain that the resultant diminished supply of emergency medicine Diplomates has inflated the cost and thus price for emergency medical services, and created a manpower shortage in the field of emergency medicine. Plaintiffs’ Memorandum of Law at V-60 - V-68. To find jurisdiction based upon Section 302(a)(2) in this case, it is therefore necessary to determine Whether Plaintiffs have established by a preponderance of the evidence that the alleged conspiracy among ABEM, CORD, and the other non-defendant professional emergency medicine organizations and the hospital Defendants was in violation of the antitrust laws, an overt act was committed in its furtherance, and that each Defendant over whom jurisdiction under Section 302(a)(2) is sought intentionally participated in furtherance of the plan. See Chrysler Capital Corp., supra, at 1267.
i. Corrupt Agreement
The Sherman Act prohibits unlawful or corrupt agreements, meaning every contract, combination, or conspiracy “in restraint of trade or commerce among the several
To prove a violation of Section 1 of the Sherman Act, a plaintiff must establish the existence of a contract, combination or conspiracy which constitutes a restraint of trade and has an impact on interstate commerce.
See Standard Oil of New Jersey v. United States,
According to Plaintiffs, the conspiracy involves an agreement among ABEM, CORD, and the hospital Defendants which included the elimination of the practice track by ABEM, 138 the rejection by various professional organizations of “alternative pathways” to residency programs to attain ABEM certification, RRC-EM’s setting of special requirements including ABEM certification for faculty in emergency medicine residency programs, ACEP and ABEM’s encouragement of hospitals to hire ABEM certified emergency physicians, and the refusal of each hospital Defendant to hire emergency physicians who are not ABEM certified or eligible. Plaintiffs’ Memorandum of Law at V-8 - V-11; V-102 - V-103.
Plaintiffs contend that each of these actions was effected by one or more of the emergency medicine professional organizations which Plaintiffs claim are co-eonspira-tors of Defendants although not named as parties in this action. However, none of the hospital Defendants are members or participants in any of these organizations except for CORD, whose membership consists of individual hospital residency programs accredited by RRC-EM. Each of the other Co-conspirator emergency medicine professional organizations, as described by Plaintiffs, including ABEM, ACEP, SAEM, UA/EM, STEM, AACEM, the AMA Section on Emergency Medicine, and the RRC-EM, are physicians’ professional associations, whose memberships consist of several individual emergency physicians, some of whom are currently, or were previously, privileged to practice in the emergency department of various hospital Defendants.
Plaintiffs assert that these individual physicians, associated with the various co-conspirator organizations and the hospital Defendants, had “leadership roles in the organizations which collectively control emergency medicine,” and have participated in the conspiracy by restricting the supply of ABEM certified physicians, while simultaneously tightening the requirements for employment in a hospital emergency department. . Plaintiffs’ Memorandum of Law at V-73; Exhibit C. In arguing that hospital Defendants are liable under their con
However, as noted, CORD is the only organization to which any of the emergency medicine residency programs of the hospital Defendants belong. 139 Additionally, the residency directors of accredited residency training programs in emergency medicine are members of a special section of the ACEP for residency directors. Plaintiffs’ Memorandum of Law, Appendix Volume 2, Exhibit 3, Doe. Nos. C206-C207. Plaintiffs state that the hospital Defendants have also been represented in ABEM, SAEM, AACEM, the ACEP Academic Affairs Committee, and RRC-EM. Plaintiffs’ Memorandum of Law at V-99, Exhibit C (“Interlocking Individual Agents of Defendant Hospitals and Then-Participation in the Conspiracy”). In then-elaboration of how the hospital Defendants are involved in each of these organizations, the Plaintiffs rely on a list correlating certain individual physicians who practice in the emergency rooms of the hospital Defendants, and the various co-conspirator organizations with which these physicians are or have been affiliated. Plaintiffs’ Memorandum of Law, Exhibit C. Specifically, Plaintiffs, to support this branch of their case for jurisdiction, assert that the hospital Defendants are responsible for the actions of individual physicians affiliated with those hospitals and whom are also members of the described professional emergency medicine organizations, as, in Plaintiffs’ view, those Defendants condoned the conduct and involvement of the physicians in the activities and decisions of those professional organizations. Plaintiffs’ Memorandum of Law at V-96 - V-102, V-110-V-130.
When applied to the facts surrounding membership in CORD the Plaintiffs’ agency theory is correct, as the physicians attending CORD meetings are sent as representatives of the emergency medicine residency training programs of their respective hospitals, including hospital Defendants which are CORD members. However, mere membership in an independent professional organization is insufficient to establish antitrust liability against a member for the organization’s alleged wrongful acts.
See, e.g., Hunt v. Mobil Oil Corp.,
Further, the fact that alleged physician representatives of the hospitals are members of the various emergency medicine associations, described by Plaintiffs as co-eonspira-tors with Defendants, does not indicate that these persons formed an agreement to restrain competition in the field.
141
See Hunt,
The next element in Plaintiffs’ conspiracy theory involves the RRC-EM. 142 This organization, as noted, sets the ■ standards (“Special Requirements”) which emergency medicine residency programs must meet to become and remain accredited by the Accreditation Council for Graduate Medical Education (“ACGME”). 143 Plaintiffs’ Memorandum of Law at V-32. Over the last several years, the RRC-EM has required more stringent qualifications which culminated, in January of 1995, in the condition to accreditation that all emergency medicine teaching staff at each hospital involved in an emergency medicine residency training program be ABEM certified or eligible for certification. Plaintiffs’ Memorandum of Law at V-33 - V-37; Appendix Volume 2, Exhibit 1, Doe. Nos. ABEM2130-ABEM2131. Plaintiffs assert that the requirement of ABEM certification or eligibility has resulted in the loss of employment or diminished advancement opportunities for many emergency physicians having training and experience equivalent to that of ABEM certified physicians. Plaintiffs’ Memorandum of Law at V-35. Further, the hospitals’ failure to comply with REC-EME qualifications risks loss of accreditation, the consequences of which were not explained in the record. Plaintiffs’ Memorandum of Law at V-35.
Plaintiffs point out that RRC-EM submitted its Special Requirements, including the requirement that all emergency medicine teaching staff be ABEM certified or eligible, to the co-conspirator organizations, including CORD, for review and approval before submitting them to the Accreditation Council for Graduate Medical Education, 144 see Plaintiffs’ Memorandum of Law, Appendix Volume 3, Doc. Nos. C755-C779,- and that the co-conspirator professional organizations also sought to eliminate competition for emergency physician jobs at all teaching hospitals, regardless of whether they have emergency medicine residencies, by issuing reports and resolutions stating that all emergency medicine should be taught in medical schools and residency programs by ABEM certified faculty. Plaintiffs’ Memorandum of Law at V-42-V-A4.
Plaintiffs argue that ABEM and ACEP tried to persuade hospitals to require ABEM certification by announcing as their policy
Plaintiffs contend that as the result of the alleged shortage of ABEM certified or eligible physicians, there have been significant increases in ABEM certified or eligible emergency physicians’ incomes, and a high demand for board certified or eligible physicians, and for positions in emergency medicine residency programs. Plaintiffs’ Memorandum of Law, Appendix Volume 3, Doc. Nos. 1723, 1802. An ACEP Accreditation Study in August of 1991 indicated that 77% of hospitals did not require ABEM certification or eligibility of their emergency physicians, however, according to this study, many physicians believed that within a few years, ABEM certification would be a requirement at 50% of the hospitals. Plaintiffs’ Memorandum of Law, Appendix Volume 3, Doc. Nos. 1803, 1820, 1833-1836. After the survey, ACEP investigated the feasibility of creating a graduate medical education track in order to allow those physicians who were not eligible to take the ABEM examination another route to ABEM certification. Plaintiffs’ Memorandum of Law, Appendix Volume 3, Doc. Nos. 1803, 1820, 1833-1836. However, the members of ACEP ultimately were unwilling to endorse any such alternative proposals. See, e.g., Plaintiffs’ Memorandum of Law, Appendix Volume 3, Doe. Nos. 1884-1886. Additionally, as noted, CORD voted unanimously to oppose alternative methods of residency training that would ultimately lead to ABEM certification. Plaintiffs’ Memorandum of Law, Appendix Volume 3, Doe. No. 1909. CORD so voted because the program directors “believe training that is not equivalent [to emergency medicine residency training] undermines the legitimacy and credibility of the residency training programs.” Plaintiffs’ Memorandum of Law, Appendix Volume 3, Doc. No. 1909.
Despite Plaintiffs’ contentions, and the factual support presented, the Plaintiffs have failed to demonstrate by a preponderance of the evidence' that the hospital Defendants and CORD had a “conscious commitment to a common scheme designed to achieve an unlawful objective.”
Monsanto,
Apart from the Plaintiffs’ contention that the hospital Defendants enforced or adhered to ABEM’s primacy as the nation’s sole emergency medicine credentialer, discussed below, there is no evidence that any hospital Defendant’s objective was to maintain such éxclusivity at the expense of Plaintiffs. Rather, the record more reasonably supports the inference that in order to maintain both their accredited status and high quality care
Plaintiffs must also demonstrate factual support for their assertion that each hospital Defendant refused to hire emergency physicians unless they were ABEM certified or eligible. Plaintiffs’ Memorandum of Law at V-53 - V-59. To support this contention, Plaintiffs list each hospital Defendant and describe the policy or practice which they contend forbids the employment of emergency physicians who are not ABEM certified or eligible. Plaintiffs’ Memorandum of Law at V-54 - V-5. This evidence is summarized as follows:
Children’s Hospital (San Diego) requires its faculty and staff to be board certified in either pediatries or emergency medicine. ' Plaintiffs’ Memorandum of Law, Appendix Volume 4, Exhibit 4, Doc Nos. LL02 347-348.
Forsyth Memorial Hospital requires its emergency department physicians to be “board certified by the American College of Emergency Physicians or be residency trained in Emergency Medicine.” 146 Plaintiffs’ Memorándum of Law, Appendix Volume 4, Exhibit 1, Doc. No. FMH27; Affirmation of Denise M. Jennings, filed January 27, 1995, Exhibit A, Doc. No. FMH44 (each new applicant for privileges at Forsyth Memorial must be board certified or qualified by training in the specialty for which he is applying for privileges).
Johns Hopkins Hospital, Part of Johns Hopkins Health System’s Medical Staff Bylaws provide that specialty board certification or eligibility, or the equivalent is required to become a member of the hospital’s active, courtesy, or associate staff. Johns Hopkins’ Medical Staff Bylaws, §§ 3.01, 3.02, 3.03.
Loma Linda University Medical Center contracts with the Loma Linda Emergency Medical Group, Inc. to staff the emergency department. Plaintiffs’ Memorandum of Law, Appendix Volume 4, Exhibit 6, Doc. Nos. LL04 867-LL04 886. The agreement between the medical center and the Emergency Medical Group provides that the medical director is responsible for the recruitment of ABEM certified or eligible physicians for faculty appointments. Plaintiffs’ Memorandum of Law, Appendix Volume 4, Exhibit 6, Doc. No. LL04 870. Additionally, Plaintiffs have identified several job advertisements for positions at Loma Linda University Medical Center which require board certified emergency physicians. See, e.g., Plaintiffs’ Memorandum of Law, Appendix Volume 3, Doc. Nos. 2350, 2392, 2437, 2457. However, the medical center has not followed this policy in all eases, as the “practice has been to hire both board certified and non-board certified physicians who are qualified to practice emergency medicine.” Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 44,. pp. 18, 21-22, 34.
Lutheran General Hospital’s Medical . Staff Bylaws provide that physicians must .be certified by the appropriate board, or eligible to take the board examination. Plaintiffs’ Memorandum of Law, Appendix Volume 4, Exhibit 7, Doc. Nos. LL05 1182-LL05 1183; Volume 11, Exhibit 57, pp. 33-'34. However, board certification, or its equivalent, can be waived by the credentialing committee for good cause shown. Id. at LL05 1182. Plaintiffs have alsoshown that when Lutheran General has advertised job opportunities for emergency physicians, it has required that the applicants be board certified or eligible. Plaintiffs’ Memorandum of Law, Appendix Volume 3, Doe. Nos. 3395,3400, 3403.
Mercy Hospital and Medical Center’s Criteria for Physicians in the Department of Emergency Medicine requires all attending and adjunct staff physicians to be board certified or eligible, and to become certified within four years of eligibility. Plaintiffs’ Memorandum of Law, Appendix Volume 5, Exhibit 2, Doc. No. LL07 223; Volume 10, Exhibit 10, pp. 53-59; Volume 11, Exhibit 68, pp. 55-56. Additionally, various advertisements for emergency physician faculty positions at Mercy Hospital require board certification or eligibility. Plaintiffs’ Memorandum of Law, Appendix Volume 3, Doc. Nos. 3396, 3398, 3408.
The Methodist Hospital of Indiana requires all members of its medical staff to be board certified or eligible in their respective specialties. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 9, p. 50. Further, as of 1994, all eighteen full-time emergency medicine faculty physicians in the emergency department were ABEM Diplomates. Plaintiffs’ Memorandum of Law, Appendix Volume 5, Exhibit 3, Doc. No. LL08 481.
Ohio State University Hospital’s Medical Staff Bylaws provide that all applicants for membership must be board certified in their specialty. Ohio State University Hospital’s Memorandum of Points and Authorities, filed May 2, 1994, Exhibit B, Chapter 3335-43-04(A)(4) Plaintiff’s Memorandum of Law, Appendix Volume 11, Exhibit 43, pp. 40-44. Applicants who are board eligible have three years from the date of eligibility to become certified. Id. However, upon the recommendation of the credentials committee or the medical director, the medical staff administrative committee may waive the certification requirement, although no such exception has been made. Ohio State University Hospital’s Memorandum of Points and Authorities, filed May 2, 1994, Exhibit B, Chapter 3335-43-04(A)(4) Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 43, pp. 42-44.
Riverside Methodist Hospitals’ Department of Emergency Medicine Rules and Regulations require emergency physicians seeking clinical privileges to be ABEM certified or eligible. Plaintiffs’ Memorandum of Law, Appendix Volume 9, Exhibit 1, Doc. Nos. R1279, R1283. See also Plaintiffs’ Memorandum of Law, Appendix Volume 9, Exhibit 1, Doc. Nos. R895-R896.
Saint Francis Medical Center’s director of emergency services stated that St. Francis Medical Center requires a person to be ABEM certified or eligible, however, the hospital has practicing physicians who are not board certified. Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 45, pp. 50-51. Further, the medical center’s emergency department has approved exceptions to the ABEM certification requirement and allowed physicians certified by the American Board of Family Practice and the American Board of Internal Medicine to practice in the emergency department. Id. When Saint Francis Medical Center has advertised opportunities for emergency physicians, the advertisements have indicated that board certified physicians are sought. Plaintiffs’ Memorandum of Law, Appendix Volume 3, Doc. Nos. 3370, 3372, 3374, 3399, 3405, 3407.
Tri-City Medical Center’s Department of Emergency Medicine Rules and Regulations indicate that the medical center’s contracts with the Tri-City Emergency Medical Group for emergency medicine physicians. Plaintiffs’ Memorandum of Law, Appendix Volume 9, Exhibit 4, p. 1. Tri-City Medical Center requires the physicians who practice in its emergency department to be ABEM certified or eligible. Id. at pp. 1,3.
University of California (Los Angeles) Medical Center’s medical staff bylaws require physicians to have board certification or its equivalent, which includes, but is not limited to, the satisfactory completion of a training program. Plaintiffs’ Memorandum of Law, Appendix Volume 6, Exhibit 2, Doc. Nos. LL13 469,LL13 1974.
University of California (San Diego) Medical Center’s bylaws, rules, and regulations also require its medical staff to be board certified. Plaintiffs’ Memorandum of Law, Appendix Volume 6, Exhibit 1, Doc. No. LL12 1421. Further,.all of the medical center’s emergency department faculty are either board certified or eligible. Id. at LL12 1257-LL12 1259.
Plaintiffs agree that, unlike those hospital Defendants listed above, Kettering Medical Center, Oregon Health Sciences University Hospital, and University of California (Irvine) Medical Center have no certification requirement, however, in fact they only employ ABEM certified or eligible physicians. Plaintiffs’ Memorandum of Law at V-56. These practices are summarized below:
Kettering Medical Center requires its emergency physicians to be eligible to take the ABEM examination or have at least two years of post-graduate training in a specialty relevant to emergency medicine, or two years of experience through the full time practice of emergency medicine. Plaintiffs’ Memorandum of Law, Appendix Volume 4, Exhibit 2, Doe. No. K405993.
Oregon Health Sciences University Hospital’s emergency services department physicians are all ABEM certified or have completed emergency medicine residencies. Plaintiffs’ Memorandum of Law, Appendix Volume 5, Exhibit 4, Doc. Nos. LL09 597-LL09 601. Further, advertisements for fellowship positions provide that the persons will work “under the supervision of ACMT or ABEM certified faculty.” Plaintiffs’ Memorandum of Law, Appendix Volume 3, Doc. Nos. 2455, 2513, 2808, 3387.
University of California (Irvine) Medical Center, in August of 1994, had seven full time faculty members in emergency medicine; five of the seven were ABEM certified, and the remaining two were board eligible. Plaintiffs’ Memorandum of Law, Appendix volume 10, Exhibit 36, pp. 25-26. Further, the medical center has placed several advertisements for board certified or eligible physicians in emergency medicine journals. Plaintiffs’ Memorandum of Law, Appendix Volume 3, Doc. Nos. 2113, 2307, 3095, 3377, 3381. These advertisements indicate that all applicants must be ABEM certified or eligible. Id. The medical center also has twelve part time attending emergency physicians, however, there is no indication whether or not these physicians were board certified or eligible.
Finally, Plaintiffs assert that although the Children’s Hospital of Michigan, Detroit Receiving and University Health Center, Medical College of Pennsylvania and Hospital, Mercy Catholic Medical Center — Misc.icor-dia Division, St. Anthony Hospital, University Hospital at the University of New Mexico School of Medicine, University of Massachusetts Medical Center, and University Medical Center (Tucson) employ emergency physicians who are not ABEM certified or eligible, the hospitals discriminate against these physicians by granting preferences to certified physicians. Plaintiffs’ Memorandum of Law at V-57. The asserted exclusionary practices of these hospital Defendants are as -follows:
Children’s Hospital of Michigan’s medical staff membership qualifications provide that board certification in a specialty is evidence that a practitioner has assimilated knowledge essential to practice. Plaintiffs’ Memorandum of Law, Appendix Volume 4, Exhibit 3, Doc. Nos. LL01 913-LL01 914. However, appointment to the medical staff at the hospital is not dependent solely on certification by a medical specialty board, or the completion of an approved training program; rather, experience, background, training, skills and ability, among several other factors, are the basis of granting privileges to a physician at the hospital. Id. However, the hospital’s chief of staff stated that board certification is a factor which may be utilized in determining compensation and “favorably looked upon by promotion committees” and is “often a requirement for admission to the medical staff.” Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 17, pp. 24-25,35.
Detroit Receiving Hospital and University Health Center’s Criteria for Admission to the Medical Staff requires active staff members to be ABEM certified, or have completed an accredited residency program in emergency medicine, or have three or more years of postgraduate training with demonstrated advanced ability in the management of emergency patients, cardiac and trauma resuscitation. Plaintiffs’ Memorandum of Law, Appendix Volume 4, Exhibit 5, Doc. Nos. LL03 475 - LL03 476. Although initial appointment to the staff does not require certification, the physician must, within six years, be certified in his primary discipline or he will not be eligible for reappointment. Id. at LL03 476. Further, the Chairman of the Department of Emergency Medicine at the hospital, stated that the hourly compensation for emergency physicians varies depending on certification and experience. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 5, p. 46. However, the hospital’s response to Interrogatory 31 of Plaintiffs’ Interrogatories to Hospital Defendants Asserting Personal Jurisdiction Defenses indicates that only -five of the hospital’s emergency physicians are ABEM certified. Plaintiffs’ Memorandum of Law, Appendix Volume 12, Exhibit 3, Doc. No. LL03 568.
The Medical College of Pennsylvania and Hospital’s Faculty Bylaws provide that qualifications for the position of professor, associate professor, or assistant professor should include certification by the appropriate specialty board. Plaintiffs’ Memorandum of Law, Appendix Volume 5, Exhibit 1, Doc. No. LL06 922.
All appointments of faculty to Mercy Catholic Medical Center, Misc.icordia Division “shall be effected pursuant to [the Medical College of Pennsylvania’s] Bylaws.” Plaintiffs’ Memorandum of Law, Appendix Volume 5, Exhibit 1, Doe. No. LL06 100. Thus, Mercy Catholic Medical Center — Misc.icordia Division’s professors, associate professors, and assistant professors qualifications should include certification by the appropriate specialty board, as discussed in the Medical College of Pennsylvania’s bylaws. Id. at LL06 922. 147
St. Anthony Hospital’s Medical Staff Rules & Regulations establish three classes of emergency physicians. Plaintiffs’ Memorandum of Law, Appendix Volume 5, Exhibit 5, Doc. Nos. LL10 1035-LL10 1036. Class I and II physicians need not be board certified, but they work under the direct supervision of a Class III physician, who must be board certified in emergency medicine, family practice, surgery, or internal medicine, or have three years of postgraduate training in one of these specialties, or one year of training and three years of full-time primary care. Id. In 1992, a proposal for changing this requirement was suggested, which limited the practice of emergency medicine at St. Anthony’s to physicians who are ABEM or family practice certified or eligible. Id. at LL10 1272-LL10 1273.
The University Hospital at the University of New Mexico School of Medicine requires that the physicians practicing in the emergency department be board certified in either emergency medicine or another specialty, such as internal medicine, family medicine, or pediatrics. Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 66, pp. 61-62. Additionally, in advertising for a faculty position in emergency medicine, the school of medicine required ABEM certification or eligibility. Plaintiffs’ Memorandum of Law, Appendix Volume 3, Doc. No. 3379.
University of Massachusetts Medical Center’s Bylaws do not require emergency physicians to be ABEM certified or eligible. Plaintiffs’ Memorandum of Law, Appendix Volume 6, Exhibit 3, Doc. Nos. LL14 205-LL14 209. However, advertisements for fellowship positions provide that the medical center’s emergency department is staffed with “three ABMT/ABÉM diplomates.” Plaintiffs’ Memorandum of Law, Appendix Volume 3, Doe. Nos. 2455, 3100. Further, when advertising for opportunities in emergency medicine, the medical center sought a board certified or prepared emergency physician to fill the vacancy. Id. at Doc. Nos. 2113, 2354, 2395.
University Medical Center (Tucson) has ten emergency medicine faculty members, only one of which is not ABEM certified or eligible. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 33, pp. 21-22. Additionally, when advertising for faculty positions, the hospital requires ABEM certification or eligibility. Plaintiffs’ Memorandum of Law, Appendix Volume 3, Doc. Nos. 2351, 2393, 2438, 2457.
Plaintiffs argue that each of the hospital Defendant’s refusal to hire or discrimination against physicians who are not ABEM certified or eligible constitutes “[a] pattern of uniform conduct or parallel behavior where it would be improbable that the conduct would be uniform, in the absence [sic] of an illegal agreement, [and that this] factor [is] weighed heavily, along with other facts and circumstances, to support an inference of concerted action.” Plaintiffs’ Memorandum of Law at V-53 (citing
American Tobacco Co. v. United States,
However, such “parallel” conduct even if entered upon with awareness that other competitors were acting -simultaneously, sometimes referred to as “conscious parallelism,”
148
by competitors alone does not demonstrate that a conspiracy is present, rather, courts need some basis, beyond mere parallel conduct, to suggest that an independent actor would otherwise not have acted as the putative conspirators did.
Theatre Enterprises, Inc. v. Paramount Film Distrib. Corp.,
For example, in- the
Interstate Circuit
case, eight film distributors acceded to the demands of Interstate, a movie theater chain with first-run theatre monopolies in major Texas cities, that the distributors impose certain price restrictions on other second run exhibitors of high demand films to be shown by Interstate.
Interstate Circuit, supra.
Each of the distributors was aware that Interstate had made identical demands to the others. The Court accepted an inference of a conspiracy from the fact that “without substantially unanimous action with respect to the restrictions ... there was risk of a substantial loss of the business and goodwill of [other] exhibitors, but that with it there was the prospect of increased profits.”
Id.
at 222,
As to the hospital Defendants’ decisions regarding any emergency medicine certification requirements, however, Plaintiffs have not demonstrated that any of these “plus factors” exist. For example, the record contains no indication that any hospital Defendant would, but for its knowledge of the fact that other hospital Defendants were choosing to require ABEM certification for their emergency medicine staff, have chosen not to do so. Nor does it show that any hospital Defendant has any motive to join the purported conspiracy. The absence of evidence of such motive can readily be explained by the fact that none of the hospital Defendants have been shown to be in competition with each other. The provision of emergency medical services by its nature is constrained by the need for immediate treatment and the proximity of an emergency treatment facility; the record is simply devoid of any evidence of competition among these Defendants (although some Defendants are located in the same area, e.g. Children’s Hospital (San Diego), Tri-City Medical Center (San Diego), University of California (San Diego) Medical Center) for such services. Compare Interstate Circuit, supra. Moreover, it does not follow, as Plaintiffs strongly argue, that the hospital Defendants support the conspiracy to assure a steady supply of cheaper labor to staff their emergency medicine residency programs, as there is also no evidence in the record suggesting that without the disputed ABEM based requirements the supply of candidates to these programs would be reduced or that the wages of those selected would necessarily be higher. Further, although each of the hospital Defendants may have decided to require ABEM or other certification as prerequisites to practice emergency medicine, there is no indication that this requirement was imposed for any anti-competitive reason, rather, the hospital Defendants could reasonably believe that ABEM certification demonstrates that a physician so certified is well-trained and less likely to make mistakes leading to liability of the hospital. See Todorov, supra.
Further, as discussed, Discussion Section 11(b)(3),
supra,
to hold a defendant as a participant in a conspiracy, the defendant “must by word, deed or conduct intentionally join the illicit enterprise; mere association with conspirators and presence at the scene of a conspiracy, even coupled with knowledge that wrongful conduct by others is being engaged in, are not by themselves sufficient to support the inference of knowing and intentional attachment to an illegal enterprise.”
Hunt,
While Plaintiffs’ allegations initially appear to suggest that a corrupt agreement or conspiracy may exist, upon closer scrutiny, the Plaintiffs have failed to demonstrate and provide factual support that ABEM, CORD, and the hospital Defendants, as discussed, have a knowing and intentional attachment to some illegal agreement. As the Plaintiffs have not met their burden of proof in demonstrating that the hospital Defendants are involved in any corrupt agreement, combination, or conspiracy, having a common illegal purpose, they have failed to demonstrate even a prima facie case of conspiracy sufficient to form a predicate for personal jurisdiction under Section 302(a)(2) as to all of the Defendants,
ii. Overt Act in Furtherance ■ of Agreement 149
As an additional prerequisite to personal jurisdiction under Section 302(a)(2), there must have been at least one overt act by one of the co-conspirators in furtherance of the uhlawful plan. ' Chrysler Capital Corp., 778 F.Supp, at 1267 (any act by a conspirator in furtherance of the unlawful plan is an overt act). Plaintiffs assert that the primary corrupt agreements and overt acts in which the hospital Defendants’ agents participated are the closure of the practice track, the refusal to extend the cutoff date or reopen the practice track, the creation of new practice tracks for internal medicine physicians only, imposing the RRC-EM’s requirements for faculty and staff of emergency medicine residency training programs, the rejection of alternative residency programs, establishing policies encouraging the public to seek services of board certified physicians and hospitals to employ only board certified physicians, and the refusal of the hospitals to hire qualified, experienced emergency physicians solely because they are not ABEM certified or eligible. Plaintiffs’ Memorandum of Law at V-102 - V-103. Plaintiffs allege that each of these overt acts “was committed for the purpose of protecting the residency programs, ensuring a high demand for the defendant hospitals’ residency training program and protecting the graduating residents from competition in the marketplace, in order to ensure continuing demand for the defendants’ programs in the future.” Plaintiffs’ Memorandum of Law at V-103. Assuming that a corrupt conspiracy or combination, in which Defendants participate, exists, the acts alleged by the Plaintiffs should be considered overt acts in furtherance of this agreement. However, as discussed, the Plaintiffs have failed to present facts demonstrating that the hospital Defendants agreed among themselves, or through the various co-conspirator professional emergency medicine organizations, to impose certification requirements for positions or privileges within each individual institution directly affecting Plaintiffs.
iii. Parties’ Intentional Participation in Furtherance of Plan or Purpose
Plaintiffs must also show that for each Defendant, against whom personal jurisdiction is sought, based upon Section 302(a)(2), such Defendant intentionally participated in the common plan for purposes of advancing their illegal goal. However, rather than alleging and discussing specific facts pertinent to each Defendant, the Plaintiffs attempt to meet this requirement by pointing out that the hospital Defendants became members of the conspiracy through the participation of their respective staff or faculty physicians in the co-conspirator professional organizations. Plaintiffs’ Memorandum of Law at V-95. But, again as discussed, Discussion Section II(3)(b)(i), it cannot reasonably be inferred that with the exception of the physicians sent to CORD meetings, the individual physicians affiliated with the hospital Defendants participated in these professional organizations as representatives or agents of the hospitals or, even assuming antitrust misconduct by the various professional organizations, that such
Plaintiffs advance agency theories to illustrate why the hospital Defendants are liable for the acts of the individual physicians affiliated with them. Specifically, Plaintiffs contend that the physicians had apparent authority from the hospitals to participate in professional organizations which set the standards for training, practice, and accreditation of emergency physicians and residency programs. However, under' New York law, to recover on a theory of apparent authority, a third party must establish that the principal was responsible for the appearance of authority in an putative agent to conduct a transaction on behalf of the principal to be bound, and the third party must reasonably rely on the representations of the agent.
Herbert Construction Co. v. Continental Ins. Co.,
In this ease, there is no indication that, except as to CORD, the hospital Defendants granted individual staff or faculty physicians authority to participate in professional organizations on behalf of the hospitals. Further, even if the hospitals had granted the physicians authority, or made it appear to a third party that these physicians had authority to participate in professional organizations on behalf of their respective hospitals, there is no evidence in the record that anyone reasonably relied on any representations to this effect made by any of the individual physicians named by Plaintiffs. Significantly, for example, Plaintiffs have not established that the co-conspirator professional organizations would not have taken the -actions, in the form of policies, requirements, and the like, which Plaintiffs rely upon to demonstrate concerted action and overt acts, unless the individual physician members also spoke for and could vouch for the concurrence of their institutions in such actions.
Plaintiffs offer
Seligson v. New York Produce Exchange,
Seligson
involved an action filed against the New York Produce Exchange, its officers and board of managers and the clearing association, its officers and board of managers, to recover for the alleged failure of the exchange and association to maintain an orderly market, failure to regulate the member-
This case, unlike
Vandervelde
and
Selig-son,
involves physicians who work or are granted privileges to practice in the emergency departments of the hospital Defendants. Regardless of the fact that the hospitals allow and support affiliations with professional organizations which relate to the professional activities of the physicians and whose activities also have professional significance to the operation of the hospital, such membership does not impute liability to the hospitals for any actions taken by these professional organizations.
Hunt,
Thus, the Plaintiffs’ agency theories — to establish the required degree of participation in the conspiracy — cannot prevail in this case, as the relationship between the hospital Defendants and the co-conspirator professional organizations, other than CORD, is too attenuated to permit the conduct of individual physicians, as members, to be imputed to the hospital Defendants. Additionally, as noted, the Plaintiffs have not presented evidence showing how each hospital Defendant induced these organizations to believe that staff physicians affiliated with the hospitals had authority to act on behalf of their respective hospitals, and that the Plaintiffs were injured by representations made by - the emergency physicians because they acted on those representations.
With respect to the hospital Defendants’ affiliation with CORD, whose members are
iv. Resulting Damage or Injury
Plaintiffs have the burden of demonstrating that the Defendants’ action interfered with competition.
Jefferson Parish Hospital District No. 2 v. Hyde,
In this case, the relevant market is the market for ABEM certified and ABEM eligible emergency physicians. Second Amended Complaint at ¶¶ 91-92; Plaintiffs’ Memorandum of Law at V-60 - V-73. Plaintiffs assert that the Defendants’ and co-conspirators’ unlawful actions restricted output and reduced competition in the market for ABEM certified or eligible physicians, thereby artificially raising the price of ABEM certified or eligible physicians and reducing competition by restricting the supply of emergency physicians eligible to sit for the certification examination. Second Amended Complaint at ¶92. Further, -by restricting the supply of ABEM certified and eligible physicians, while the demand for emergency medical services continues to rise, hospital emergency departments have, according to Plaintiffs, become overcrowded. Second Amended Complaint at ¶¶ 97-102. Thus, Plaintiffs allege that the professional organization co-conspirators and Defendants possess market power within the relevant market and have unlawfully exercised that market power. Id. at ¶ 93. 151
To establish this antitrust injury, the Plaintiffs have presented data indicating that there are, in the United States, approximately 25,000 non-certified emergency physicians whereas there are only 8,000 practice track certified emergency physicians, and 4,400 residency trained and certified emergency physicians. Plaintiffs’ Memorandum of Law at V-61; Appendix Volume 3, Doc. Nos.
c. Speciñc Facts Alleged Warranting Inference that Each Defendant is a Member of the Conspiracy
Plaintiffs must not only establish for purposes of these motions them claim of conspiracy by a preponderance of the evidence, but they must show a sufficient relationship between each Defendant and the conspiracy to warrant the inference that each hospital Defendant was a member of the conspiracy and set forth evidentiary facts to connect the Defendants with transactions related to the conspiracy.
Chrysler Capital Corp., supra,
d. Imputing Conduct to Out-of-State Co-conspirators
The Second Circuit has held that an antitrust plaintiff need not demonstrate a formal agency relationship between the defendant and its co-conspirators to impute activity of a co-conspirator in New York, whether the co-conspirator is then physically within the state or not, to the non-resident defendant provided the plaintiff shows that (i) the defendant had an awareness of the effects of the conspiracy in New York, (ii) the activity of the co-conspirators in New York was to benefit the out-of-state co-eonspira-tors, and (iii) the co-conspirators who acted in New York acted at the direction, under the control, at the request of, or on behalf of the out-of-state defendants.
Lehigh Valley Industries,
i. Defendants’ Awareness that its Activity had Effects in New York
As indicated by the Defendants, Plaintiffs have incorrectly stated the first section of the test for determining the required quality of awareness by suggesting that Plaintiffs only need to show that the “hospital defendants and CORD had an awareness of the effects of the conspiracy in New York.” Plaintiffs’ Memorandum of Law at V-133; Defendants’ Joint Reply Memorandum at p. 47. The test, however, requires that Plaintiffs demonstrate that each Defendant over whom jurisdiction is sought “have an awareness of the effects in New York of
its activity.” Chrysler Capital Corp., supra,
at 1269;
Dixon, supra,
at 350 (emphasis added).
See Chrysler Capital Corp., supra,
at 1269 (where defendant in California was familiar enough with a sale and leaseback transaction to know that a New York-based investor was involved in the transaction or that the negotiations and closing were to take place in New York, its activities with
In this case, Plaintiffs identified only two activities in New York connecting the hospital Defendants and CORD to the conspiracy: such Defendants knew that requiring ABEM eligibility affected physicians in every state, and physicians practicing at some of the hospital Defendants are affiliated with various emergency medicine professional organizations. However, as none of the hospital Defendants pertinent to this issue, are located in New York, 152 it is reasonable to find that the non-resident hospital Defendants would not perceive that their hiring requirements would affect physicians outside the state in which each such hospital Defendant is located. Plaintiffs, moreover, have adduced no evidence to support an inference that each non-resident hospital Defendant had any awareness that its credentialing policies for emergency medicine physicians would involve New York resident physicians. Further, it is even more speculative to assert that the hospital Defendants would believe or have any reason to believe that their faculty members’ memberships in the various professional organizations discussed would have an effect on employment of emergency physicians in New York, including any of the Plaintiffs. The court therefore finds that Plaintiffs have not shown that any of the Defendants asserting personal jurisdiction defenses have participated in an activity in connection with the described conspiracy which would lead these Defendants to have an awareness of the effects .of their actions in New York.
ii. Benefit of the Activity in New York
Plaintiffs assert that ABEM’s activities in New York, including wrongfully rejecting applications and denying the appeals of New York resident Plaintiffs, benefitted the co-conspirator Defendants by increasing the demand for emergency medicine residency programs, the benefits received by those programs, and the competitive advantages provided to board certified emergency physicians by ABEM certification. Plaintiffs’ Memorandum of Law at V-134. However, as discussed, Discussion Section II(3)(a), supra, ABEM’s actions did not take place in New York as required by the caselaw interpreting Section 302(a)(2), compare Chrysler Capital Corp., supra, (defendant’s co-conspirators delivered warranties and representations and participated in closing, therefore financial transaction in New York), rather, the injuries resulting from ABEM’s denials of some of the Plaintiffs’ applications occurred in New York. See Discussion Section II(3)(a). Even assuming ABEM’s application denials do constitute activities within New York for jurisdictional purposes, any relationship between these denials and the increasing demand for emergency medicine residency training programs which may be of some benefit to a hospital Defendant and ABEM certified physicians is tenuous at best. Plaintiffs’ Memorandum of Law at V-134 - V-135. The evidence presented strongly points to a finding that the vast majority of available emergency medicine training residencies for any of the hospital Defendants are filled by persons from places other than New York. Plaintiffs’ Memorandum of Law at III—13 - III—80. There is, moreover, no evidence to suggest that the hospital Defendants are enjoying a higher rate of applications, that the applicants are of better quality or that they are paid lower wages by hospital Defendants than had been the case prior to ABEM’s closing the practice track.
Thus, the. Plaintiffs have failed to show that the activity of the co-conspirator ABEM in New York was to the benefit of any of the out-of-state hospital Defendant conspirators,
iii. Exercise of Discretion or Control
Plaintiffs allege that ABEM was a co-conspirator which closed the practice track, and subsequently rejected applicants who did not meet the practice track requirements by June 30, 1988. Plaintiffs’ Memorandum of Law at V-135. Plaintiffs further assert that RRC-EM and ACEP policies ap
As Plaintiffs have not presented proof sufficient to demonstrate that the hospital Defendants and their co-conspirators were acting as the result of a “conscious commitment to a common scheme designed to achieve an unlawful objective,” they have failed to establish an antitrust conspiracy justifying a finding of personal jurisdiction in New York pursuant to Section 302(a)(2) by a preponderance of evidence.
Monsanto,
Assuming that a corrupt conspiracy or agreement did exist, Plaintiffs have demonstrated that several acts of the Defendants could be considered overt acts in furtherance of the illegal agreement and that an antitrust injury exists. However, the Plaintiffs failed to establish the intentional participation of the parties in furtherance of the antitrust conspiracy, and specific facts warranting the inference that each Defendant is a member of the conspiracy. For these reasons, the court finds that personal jurisdiction, under Plaintiffs’ conspiracy theory, should not exist over any of the hospital Defendants or CORD.
4. Jurisdiction Based on Tortious Acts under Sections 302(a)(3)(i) and 302(a)(3)(H)
Plaintiffs also argue that the Defendants are subject to personal jurisdiction under Section 302(a)(3) of the New York Civil Practice Law and Rules, which provides jurisdiction over a nondomiciliary if such nondomieil-iary (1) commits a tortious act outside the state of New York that causes injury to a person or property inside the state, and (2) either (a) regularly does or solicits business or engages in any other persistent course of conduct, or derives substantial revenue from goods used or services rendered in the state, or (b) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce. N.Y.Civ.Prac.L. & R. § 302(a)(3) (McKinney 1990).
The occurrence of a tortious injury in New York by itself is insufficient to provide the basis for personal jurisdiction under Section 302(a)(3). N.Y.Civ.Prac.L. & R. § 302(a)(3) (McKinney 1990) (Practice Commentaries C302.19, McLaughlin). The purpose of the additional requirements of Sections 302(a)(3)© and (ii) is to ensure that a defendant has sufficient contacts with New York that the defendant could reasonably anticipate being haled into a New York court.
Montalbano v. Easco Hand Tools, Inc.,
However, as discussed,
see
Discussion Section II(3)(b)(i),
supra,
the acts
Further, even if Plaintiffs demonstrated an injury in New York, they have failed to show that the Defendants solicit or aré doing business in New York, 154 or that any of the Defendants receive substantial revenues from services rendered in New York, therefore, they must show that each of the Defendants should reasonably expect that their acts would have consequences in New York and that they derive substantial revenue from interstate commerce. N.Y.Civ.Prac.L. & R. § 302(a)(3)(h) (McKinney 1990).
Plaintiffs contend that the Defendants should expect that their acts committed in furtherance of the conspiracy would have consequences in New York. Plaintiffs’ Memorandum, of Law at V-137-V-138. However, the only acts which are attributed to the hospital Defendants are requiring physicians to be ABEM certified or eligible and having staff physicians who participate in the professional organizations discussed.
155
As the test of whether a defendant expects or should reasonably expect his act to have consequences within the state is an objective one,
Allen v. Auto Specialties Mfg. Co.,
Finally, whether a defendant derived substantial revenue from interstate commerce is determined by using both quantitative and qualitative approaches.
Allen v. Canadian General Electric Company, Ltd., 65
A.D.2d 39,
In this particular case, each of the hospital Defendants is an entity which produces millions of dollars in revenue each year. Plaintiffs’ Memorandum of Law, Exhibit F. Therefore, each of these Defendants collects a great deal of money for services provided in the state in which its respective hospital is located, although some of this money also derives from patients residing outside of the state. Id. Based on the documents and exhibits presented by Plaintiffs, each hospital Defendant appears to receive sufficient out-of-state revenues to meet the requirement of Section 302(a)(3)®. 156 See e.g., Plaintiffs’ Memorandum of Law, Exhibit F; Appendix Volumes 12 and 13, Responses to Interrogatory 7. However, as the Plaintiffs have failed to demonstrate sufficient facts to establish the remaining jurisdictional prerequisites under Section 302(a)(3), personal jurisdiction over the Defendants does not exist under that section.
Under Section 12 of the Clayton Act, each of the Defendants which is a domestic corporation is subject to personal jurisdiction in this district, including the Council of Emergency Medicine Residency Directors, Children’s Hospital (San Diego), Children’s Hospital of Michigan, Detroit Receiving Hospital and University Health Center, Forsyth Memorial Hospital, Johns Hopkins Hospital, Part of the Johns Hopkins Health System, Kettering Medical Center, Loma Linda University Medical Center, Lutheran General Hospital, Medical College of Pennsylvania and Hospital, Mercy Catholic Medical Center — Misc.icordia Division, Mercy Hospital and Medical Center, Methodist Hospital of Indiana, Oregon Health Sciences University Hospital, Riverside Methodist Hospitals, Saint Francis Medical Center, St. Anthony Hospital, and University Medical Center (Tucson). Thus, the motions to dismiss for lack of personal jurisdiction as to these Defendants should be denied.
Alternatively, pursuant to Section 301 of the New York Civil Practice Law and Rules, Johns Hopkins Hospital, Part of the Johns Hopkins Health System, is subject to personal jurisdiction as doing or soliciting business in New York. Plaintiffs failed to demonstrate that the remaining Defendants who have moved to dismiss for lack of personal jurisdiction are doing or soliciting business so as to subject them to jurisdiction under this statute.
Section 302(a)(1) does not provide a basis for personal jurisdiction over any of the Defendants objecting to jurisdiction as none of them is transacting business in New York within the meaning of the section. Plaintiffs also failed to demonstrate conspiracy jurisdiction over CORD and the hospital Defendants pursuant to Section 302(a)(2) of the New York CPLR. Finally, none of the Defendants is subject to personal jurisdiction under Section 302(a)(3) as Plaintiffs did not show that a tortious act outside New York caused injury withi’n-the state as required by the statute.
Therefore, the motions to dismiss for lack of personal jurisdiction as to Ohio State University Hospital, Tri-City- Medical Center, University of California (Los Angeles) Medical Center, University of California (Irvine) Medical Center, University of California (San Diego) Medical Center, University Hospital at the University of New Mexico School of Medicine, and University of Massachusetts Medical Center should be granted as personal jurisdiction does not exist over these Defendants.
III. Venue
Venue requirements serve to protect a defendant from the inconvenience of defending an action in a court that is either remote from the defendant’s residence or from the place where the acts underlying the controversy occurred.
157
VE Holding Corporation v. Johnson Gas Appliance Company,
In considering motions challenging venue under Fed.R.Civ.P. 12(b)(3), the plaintiff has the burden of establishing venue for each claim set forth in the complaint.
French Transit, Ltd. v. Modern Coupon Systems, Inc.,
Several Defendants have moved to dismiss for improper venue, including ABEM, CORD, Children’s Hospital (San Diego), Children’s Hospital of Michigan, Detroit Receiving Hospital and University Health Center, Johns Hopkins Hospital, Loma Linda University Medical Center, Lutheran General, Medical College of Pennsylvania and Hospital, Mercy Catholic Medical Center — Mi-sericordia Division, Mercy Hospital and Medical Center, Methodist Hospital of Indiana, Oregon Health Sciences University Hospital, St. Anthony Hospital, University Hospital at the University of New Mexico School of Medicine, University of Massachusetts Medical Center and University Medical Center (Tucson). 158
a. Venue in Antitrust Actions
Section 12 of the Clayton Act provides that:
Any suit, action or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; and all process in such cases may be served in the district of which it is an inhabitant, or wherever it may be found.
15 U.S.C. § 22 (1988).
Although this provision sets out three distinct bases for venue of an action against a corporate defendant, including the ability to sue in any district in which the defendant is an inhabitant, is found, or transacts business, the Plaintiffs only contend that venue is proper here as the Defendants transact business in this district. Plaintiffs’ Memorandum of Law at II — 1 - 11-29. In determining whether venue is proper under the Clayton Act, the court performs an analysis similar to that required for personal jurisdiction.
See Grosser v. Commodity Exchange, Inc.,
The term “transacts business” in the venue provision of Section 12 of the Clayton Act was designed to broaden the jurisdiction of federal district courts in adjudicating antitrust cases.
159
United States v. Scophony Corp.,
For a corporation to transact business under Section 12 of the Clayton Act, only a finding that the defendant is “engaging in any substantial business operations” within the jurisdiction is required.
Scophony, supra,
at 807,
In Discussion ■ Section 11(b)(1),
supra,
it was explained that FREIDA and ' the MATCH were electronic information systems based in Illinois and Washington D.C., respectively. FREIDA is exclusively an informational database which provides students, residents and fellows with information about hospital residency programs. The MATCH is solely a service available to students and residency programs which sorts preferences after the recruitment process, in which neither FREIDA nor the MATCH is directly involved, is complete. Although both programs are utilized by students and residency programs throughout the country, no hospital or residency program has control over or responsibility for the programs. Thus, even when students are ranked and matched with respect to a particular residency program, this contact does not occur in the state in which the student or program is located, rather, the contact occurs in Washington D.C., where the sorting process takes place.
See Selman,
Plaintiffs also assert that many of the Defendants have placed advertisements in nationally distributed journals and publications, however, for purposes of Section 12, “ ‘[n]a-tional advertising which finds its way into a particular jurisdiction is insufficient to support a finding of transaction of business.’”
San Antonio Telephone Co., Inc. v. American Telephone and Telegraph Company,
Plaintiffs argue that the Defendants which are corporations can be regarded as transacting business in this district as the effects of the conspiracy in violation of antitrust laws impacted upon emergency medicine physicians and on consumers in this district. Plaintiffs’ Memorandum of Law at II-7 - II-8. However, even if the Plaintiffs established their conspiracy theory, this is an insufficient contact to support venue, as such a theory has been specifically rejected for establishing venue.
San Antonio Telephone, supra,
at 351 n. 3;
Albert Levine, supra,
at 461 (citing
Bertha Building Corp. v. National Theatres Corp.,
As none of these contacts, proffered by Plaintiffs, cumulatively provide a sufficient basis to support a finding of venue, based upon the transaction of business in- this district, the court will review the remaining contacts asserted with respect to each Defendant to determine whether venue is proper here.
1. American Board of Emergency Medicine
Plaintiffs, at the outset, contend that ABEM failed to assert the affirmative defense of improper venue in its response to the First Amended Complaint, participated in this action for several years, and then, for the first time, asserted improper venue in its Answer to the Second Amended Complaint, filed February 28, 1994. Plaintiffs’ Memorandum of Law at 11-26 n. 7. Plaintiffs further argue that even after ABEM asserted improper venue, ABEM failed to timely move to dismiss on this ground. Id.
ABEM demurs that it did not contest venue with respect to the First Amended Complaint as, at that time, “it was arguable that a substantial part of the events giving rise to the claim occurred in this District;” the case was then a suit between one Western District of New York resident and ABEM. ABEM’s Memorandum of Law in Support of Motion to Dismiss, filed July 22, 1994, at p. 2 n. 2. Now, however, the case involves nearly two hundred individual Plaintiffs from thirty-four states and the District of Columbia, and ABEM believes that this district is no longer a dominant or even significant locus of relevant events. Id.
Although generally a' defense of improper venue is waived if it is neither made by motion under Fed.R.Civ.P. 12, nor included in a responsive pleading, the Second Circuit has stated that “a party cannot be deemed to have waived objections or-defenses which are not known to be available at the time they could first have been made.”
Holzsager v. Valley Hospital,
However, Plaintiffs also argue that ABEM ■filed an untimely motion to dismiss for improper venue, as the motion was not filed until July 22, 1994, two months after this court’s deadline for the fifing of motions to dismiss based on lack of jurisdiction. Plaintiffs’ Memorandum of Law at 11-26 n. 7. In
ABEM is a not-for-profit corporation organized under the laws of Michigan, with its principal place of business in East Lansing, Michigan. 165 ABEM’s Motion to Dismiss, filed July 22,1994, Affidavit of Benson S. Munger, Ph.D., in Support of Motion to Dismiss at ¶ 3 (“Munger Affidavit”). ABEM does not own, rent, or lease any real estate located in New York, maintains no offices, places of business, mailing addresses, telephone listings or bank accounts in New York, and has no employees or registered agent in the state. Munger Affidavit at ¶ 7. Further, ABEM pays no taxes, carries on no operations, and does not engage in public relations activities in New York. Munger Affidavit at ¶ 7.
ABEM is not a membership organization which provides services to its members, rather, it primarily administers written and oral examinations in the field of emergency medicine and issues its certification which recognizes the special training, knowledge and skill of certain physicians who are able to qualify for this distinction. Munger Affidavit at ¶ 3. ABEM has never administered any of its required written or oral examinations in this district, or anywhere else in New York state. Munger Affidavit at ¶ 4.
Plaintiffs argue that ABEM mailed applications to this district and otherwise corresponded with Dr. Daniel and other Plaintiffs by mail and telephone, 166 and that Defendant Thiede, a former director of ABEM, and Dr. G. Richard Braen, the president of ABEM as of July of 1994, reside in this district and perform ABEM related activities here. Plaintiffs’ Memorandum of Law at 11-28 - 11-29.
The test for venue under Clayton Act Section 12 as reiterated in
Scophony, supra,
and as stated
Eastman, supra,
“mandates a case by ease factual inquiry to determine whether, from a practical business standpoint, some amount of business continuity, more than a few isolated and peripheral contacts with this district exist [ ].”
Bogus v. American Speech & Hearing Association,
An examination of the facts surrounding ABEM demonstrates that through its application and certification process, ABEM maintains continuous contacts which amount to business continuity within this district. As
ABEM, as noted, is an organization whose solé function is to certify physicians in the specialty of emergency medicine. In carrying out its goal of maintaining high standards for the profession, ABEM entertains the applications for its certification, and appeals of its denials of certification, of physicians who wish to become certified in emergency medicine by ABEM. ABEM performs its essential function by reviewing applications and determining whether or not a candidate is qualified for certification and thus eligible to sit for its examination, the second step in its certification process.
See Myers v. American Dental Association,
In
Bogus v. American Speech & Hearing Association,
The- fact that the current president of ABEM, and a former director of the corporation presently reside in this district does not demonstrate that these individuals are engaging in any substantial business operations on behalf of ABEM in this district. Although ABEM’s current president resides in this district, Dr. Braen did not become the president until July of 1994, six months after the Second Amended Complaint was filed. As contacts which occur after the complaint is filed are not relevant for purposes of determining venue, the fact that ABEM’s current president resides in this district is of no significance in this determination:
See Greene v. Sha-Na-Na,
Plaintiffs also assert that this court previously determined, in its Report and Recommendation dated' February 25, 1992, that ABEM transacts business in New York as ABEM mailed an application to Dr. Daniel in New York and corresponded with him by mail and telephone in New York with respect tó his request for certification.
See Daniel, supra,
at 919.
See also Lanier v. American
“Transacting business under the New York long-arm statute has been interpreted to require a certain quality, rather than a specific quantity, of contacts with the forum.”
United States Theatre Corp. v. Gunwyn/Lansburgh, Ltd. Partnership,
In this case, ABEM corresponds with physicians through the mail and by telephone. All New York emergency physicians who are interested in becoming certified must send an application and fee to ABEM. 168 As New York is the second most populated state in the country, The World Almanac and Book of Facts: 1995, p. 379 (M. Hoffman ed.1995); U.S. Bureau of the Census, Statistical Abstract of the United States: 1993 p. 28 (113th edition) Washington, D.C., 1993, it is reasonable to infer that ABEM receives a significant number of applications and a substantial amount in related fees from New York applicants. 169 There is no indication that these applications and fees are isolated or sporadic events, rather, the original application and recertification processes result in continuous business contacts with New York, from which ABEM derives substantial revenue.
In
Fontanetta v. American Board of Internal Medicine,
Fontanetta does not support Defendants’ position. A careful reading of Fontanetta shows that the Second Circuit held only that plaintiffs claim arose from events outside of New York state and not from the transaction of business within the state. The court assumed, but did not decide, that had plaintiffs claim arisen from the written examination that was conducted in New York, defendant may well have been found to have transacted business in New York State. Fontanetta, supra, at 358. Thus, Fontanetta is a holding limited to its facts and does not require acceptance of Defendants’ position that ABEM’s application procedures relating to Plaintiffs cannot constitute venue in New York under Section 12.
On the other hand, the Supreme Court has made clear that in deciding whether Clayton Act Section 12’s venue provision is met, depends upon a careful evaluation of the facts, applying a “practical everyday business or commercial concept of doing or carrying of business.”
Scophony, supra
at 807,
For the reasons discussed, under the flexible test for venue based upon transacting business laid down in Eastman Kodak and Scophony, the court finds ABEM’s contacts with this forum are sufficient for venue under Clayton Act Section 12.
2. Council of Emergency Medicine Residency Directors
CORD is a not-for-profit corporation incorporated in Michigan. CORD’s Motion to Dismiss, filed May 12, 1994, Affidavit of Steven Dronen, M.D., at ¶2 (“Dronen Affidavit”). CORD does not own, lease, or occupy any real or personal property located in the state of New York, it does not authorize any representatives or agents to act on its behalf in the state, and it has never held any meetings in New York. Dronen Affidavit at ¶ 3. Further, CORD does not pay taxes, employ anyone, maintain a mailing address or telephone listing, have a license to do business, or have a registered agent in New York nor does it engage in goodwill or public relations activities or carry on business operations in New York. Dronen Affidavit at ¶ 3.
Plaintiffs assert that CORD has at least one member in this district from which CORD received membership dues, the State University of New York at Buffalo’s emergency medicine residency program, and that CORD has sent material to the district, including membership applications, newsletters, monthly president’s messages, reports, notices of meetings, educational materials, slides, and other information.
170
Plaintiffs’ Memorandum of Law at 11-25. However, a national membership organization such as CORD does not transact business in this district simply because it has members in the district and mails journals and other materials to those members.
Golf City, supra,
Plaintiffs also allege that CORD acts as a unified voice for the hospital Defendants through which unlawful anticompetitive agreements and acts are committed. Plaintiffs’ Memorandum of Law 'at 11-25 - 11-26. Continuing this argument, Plaintiffs claim that the co-conspirators’ membership and participation in CORD is the means by which the conspiracy is accomplished, and that CORD knew or reasonably should have known that its acts would cause anticompeti-tive effects in this district. Plaintiffs’ Memorandum of Law at 11-26. However, the mere allegation of participation by a foreign corporation in a conspiracy within the district does not necessitate the finding that the conspirator was transacting business within the district under the venue provisions of Section 12.
Albert Levine,
309 F.Supp: at 460-61. Further, the allegation that CORD should reasonably have known that its acts would have anticompetitive effects in this district is of no ■ significance, as, even if Plaintiffs proved that such a conspiracy existed, this theory is unavailable as a basis for establishing venue. Discussion Section 111(a),
supra; San Antonio Telephone,
Thus, as the contacts Plaintiffs have discussed related to CORD do not amount to the transaction of business in this district, venue as to it is not proper under Section 12.
3. Children’s Hospital (San Diego)
The Children’s Hospital (San Diego) is a non-profit pediatric hospital incorporated in California, with its sole place of business in San Diego, California. Children’s Hospital’s Motion to Dismiss, filed May 19, 1994, Affidavit of Emanuel Kauder, M.D. in Support of Motion to Dismiss at ¶ 3 (“Kauder Affidavit”). The hospital does not maintain any offices, places of business, employees, or mailing or telephone listings in New York. Kauder Affidavit at ¶ 4. The hospital owns no real estate, bank accounts, or other assets in the state, and does not pay taxes, treat patients, carry on operations, or maintain a registered agent in the state. Id. Additionally, the hospital does not engage in any goodwill or public relations activities here. Id.
The only remaining contact to sustain venue in this district advanced by Plaintiff, is the hospital’s national advertising efforts. Plaintiffs’ Memorandum of Law at II — 9 - II — 10. However, this court has determined that advertising on a national level is insufficient as a basis for venue in any particular district. Discussion Section 111(a), supra. Accordingly, the action as to this defendant is not within Section 12’s venue requirements.
4. Children’s Hospital of Michigan
Children’s Hospital of Michigan is incorporated in Michigan, and has its principal place of business in Detroit with additional places of business for out-patient care in Wayne County and Oakland County, Michigan. Children’s Hospital of Michigan’s Motion to Dismiss, filed May 19,1994, Affidavit of Norman Rosenberg, D.O., at ¶ 3 (“Rosenberg Affidavit”). The hospital has no office, no telephone listing, no places of business, no real estate, no bank accounts, no mailing address, no employees, and no registered agent in this district. Rosenberg Affidavit at ¶ 5. Further, the hospital pays no taxes and treats no patients in New York. Rosenberg Affidavit at ¶ 5.
The remaining contacts Plaintiffs present to demonstrate that Children’s Hospital of Michigan is transacting business in this district include mailing correspondence, promotional materials, and applications to residency applicants and medical schools throughout the country, including New York, sending notices to medical school chairs, and
5. Detroit Receiving Hospital and University Health Center
Detroit Receiving Hospital and. University Health Center is incorporated in Michigan and has its sole place of business in Detroit. Detroit Receiving Hospital’s Motion to Dismiss, filed May 19, 1994, Affidavit of Edward S. Thomas in Support of Motion to Dismiss at ¶ 3 (“Thomas Affidavit”). The hospital does not, own real estate, maintain bank accounts, offices, mailing or telephone listings, or have any employees in New York. Thomas Affidavit at ¶ 6. Further, the hospital pays no taxes in New York, has no registered agent in the state, and does not engage in any goodwill or public relations activities here. Thomas Affidavit at ¶ 6.
Plaintiffs allege that the hospital transacted business in New York through the activities of Dr. Brooks Bock, professor and chairman of the department of emergency medicine of Wayne State University, which is affiliated with the hospital. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 5, pp. 9-10. Plaintiffs assert that Dr. Bock’s activities in connection with his review of emergency medicine residency programs through RRC-EM is another contact which supports venue over the hospital in this district. 171 Plaintiffs’ Memorandum of Law at II — 10; Appendix Volume 10, Exhibit 5, pp. 23-25. However, Plaintiffs have not demonstrated that any action by Dr. Bock with -respect to RRC-EM was undertaken on behalf of the hospital.
Plaintiffs also argue that the physician contract group through which Detroit Receiving Hospital staffs its emergency department “may have transacted business in this district with physicians recruited from New York medical schools ... through advertisements.” Plaintiffs’ Memorandum of Law at II — 10. In support of this argument, Plaintiffs cite the deposition of Dr. Bock, however, in his deposition, Dr. Bock testified that the physicians group only used national advertising, and stated that the physicians group “never advertised in a paper in New York.” Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 5,. at pp. 52-53. Further, Plaintiffs again advance as a contact the hospital’s utilization of advertising in national publications. Plaintiffs’ Memorandum of Law at li-li.- However,. advertising in a nationally distributed journal or publication is not sufficient to support a finding of venue in a particular district. Discussion 111(a), supra. Therefore, even when viewed cumulatively, these asserted contacts fail to demonstrate any substantial business activities by Detroit Receiving Hospital sufficient to support venue in this district under Section 12.
6. The Johns Hopkins Hospital, Part of the Johns Hopkins Health System
Johns Hopkins Hospital maintains an office in New York City called the Devél-opment Office, which leases property currently located at 420 Lexington Avenue in New York City. Affidavit of Erwin M. Seku-low, filed March 15, 1995, at ¶¶ 2, 9 (“Seku-low'Affidavit”). This office has been maintained by Johns Hopkins at various locations in New York City for the last twenty years. Sekulow Affidavit at ¶ 3. The Development Office is part of the Johns Hopkins Institutions, which also include the Johns Hopkins Hospital, as part of the Johns Hopkins Health Care Systems Corporation, and the Johns Hopkins University. Sekulow Affidavit at ¶ 4. The annual budget of the Development Office is between $250,000 and $300,-000, of which 15 to 20% is paid by the Johns Hopkins Hospital. Sekulow Affidavit at ¶ 5. The Development Office employs two individuals, and its purpose is to manage fundrais-
7. Loma Linda University Medical Center
Loma Linda University Medical Center is a non-profit corporation with its place of business in California. Plaintiffs’ Memorandum of Law at 1-3. The hospital owns no assets, maintains no offices, mailing addresses or telephone listings, treats no patients, has no employees, and does not engage in any goodwill or public relations activities in New York. Loma Linda University Medical Center’s Motion to Dismiss, filed May 19, 1994, Affidavit of Larry B. Mellick, M.D. in Support of Motion to Dismiss at ¶ 5 (“Mellick Affidavit”). The medical center pays no taxes in New York, and has no registered agent in the state to accept service of process. Mellick Affidavit at ¶ 5.
The remaining contact which the medical center allegedly has with this forum is that it maintains an “800 number” in connection with its physician referral program, which may be accessible throughout the country. Plaintiffs’ Memorandum of Law at 11-14; Appendix Volume 11, Exhibit 74, at p. 40. Even if this phone number is in fact accessible from this district, Plaintiffs have failed to demonstrate that the medical center’s course of conduct with respect to the “800 number” constitutes substantial business operations in this district.
See, e.g., King v. Best Western Country Inn,
8. Lutheran General Hospital
Lutheran General Hospital is incorporated and maintains its sole place of business in Park Ridge, Illinois. Lutheran General Hospital’s Motion to Dismiss, filed May 19, 1994, Affidavit of Kevin S. Wardell in Support of Motion to Dismiss at ¶ 3 (‘War-dell Affidavit”). The hospital does not own any real estate, maintain offices, telephone listings, mailing addresses, bank accounts, or employees in New York. Wardell Affidavit at ¶ 5. It pays no taxes, treats no patients, and does not carry on operations or meetings, or engage in any goodwill or public relations activities in New York. Wardell Affidavit at ¶ 5. Further, Lutheran has no registered agent to accept service of process in the state. Wardell Affidavit at ¶ 5.
Plaintiffs nevertheless emphasize Lutheran General’s “continuing business relationship” with companies that are located in this district, namely the Eastman Kodak Company (“Kodak”) and the Xerox Corporation (“Xerox”), both headquartered in Rochester, New York. Plaintiffs, Memorandum of Law at Ills. The administrator for trauma and emergency services indicated that the hospital purchases x-ray film from Kodak, however, she stated that she was not aware of whether the film was purchased -through Kodak’s headquarters in Rochester, or a separate Kodak office located elsewhere. Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 65, at pp. 14-15. Kenneth Rojek, the
The law is clear that substantial purchasing activity in a district can be the basis of a determination that, for both venue and jurisdictional purposes, a defendant transacts business there, even if those purchases were not related to the claim for relief.
Expoconsul International, Inc. v. A/E Systems, Inc.,
Despite the fact that direct annual purchases by a defendant of $100,000 from Kodak in Rochester would be sufficient for purposes of venue under Section 12, Mr. Rojek stated that. he was unsure of the actual amount Lutheran General expends buying x-ray film from Kodak, and that the hospital purchases supplies from companies predominantly located in the midwest who may have offices in New York. Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 60, pp. 10-11. Plaintiffs have not submitted evidence or otherwise demonstrating that the hospital engaged in substantial purchasing activities in this district.
Considering all of the hospital’s contacts with New York as a whole, the Plaintiffs have failed to make a sufficient showing of any substantial business operations which would allow this court to find under Section 12 that venue as to Lutheran General is proper in this district.
9. Medical College of Pennsylvania and Hospital
The Medical College of Pennsylvania and Hospital is a nonprofit medical school and hospital incorporated in Pennsylvania, with its sole place of business in Philadelphia. Medical College of Pennsylvania and Hospital’s Motion to Dismiss, filed May 19, 1994, Affidavit of David K. Wagner, M.D., in Support of Motion to Dismiss at ¶ 2 (“Wagner Affidavit”). The hospital does not own real estate or other assets in New York, maintains no offices, places of business, mailing addresses or telephone listings in the state. Wagner Affidavit at ¶ 4. It has no employees, pays no taxes, carries on no business and holds no meetings, has no registered agent, and engages in no goodwill or public relations activities in New York. Wagner Affidavit at ¶ 4.
Plaintiffs assert that the hospital sent recruiting materials to individuals on a SAEM mailing list and medical schools nationally, and disséminated information about its program in the Green Book and other nationally distributed publications. Plaintiffs’ Memorandum of Law at 11-16. However, as discussed above, neither contacts with the MATCH or FREIDA, nor advertising or recruiting on a national level are sufficient to form the basis for finding venue in this district. Discussion Section 111(a), supra.
In 1993, the Medical College of Pennsylvania and Hospital also sent representatives to a job fair in Buffalo, New York, to recruit nurses. Plaintiffs’ Memorandum of Law at 11-16. However, in order for a corporation to be transacting business under Section 12, the Plaintiff must demonstrate
10. Mercy Catholic Medical Center— Misc.icordia Division
Mercy Catholic Medical Center— Misc.icordia Division is a non-profit Pennsylvania corporation with its principal place of business in Philadelphia, Pennsylvania. Mercy Catholic Medical Center — Misc.icor-dia Division’s Memorandum of Law in Support of Motion to Dismiss, filed May 12,1994, at p. 2. The hospital does not maintain any offices or places of business, telephone listings or mailing addresses in New York, and does not pay taxes, treat patients, own property or other assets, carry on operations, engage in goodwill or public relations activities, or have a registered agent in the state. Mercy Catholic Medical Center — Misc.icor-dia Division’s Memorandum of Law in Support of Motion to Dismiss, filed May 12,1994, at p. 3.
In addition to the hospital’s asserted contacts with this district through national advertising, FREIDA and the MATCH, Plaintiffs also state that the hospital mailed informational brochures regarding its emergency medicine residency program to potential applicants. Plaintiffs’ Memorandum of Law at 11-17. However, these informational mailings were sent out by Defendant Medical College of Pennsylvania, 173 not Mercy Catholic Medical Center — Misc.icor-dia Division, Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 59, at p. 49, and therefore cannot be considered a contact with respect to the medical center. Thus, Plaintiffs have failed to demonstrate any substantial business activity in this district by Mercy Catholic Medical Center-— Misc.icordia Division which constitutes the transaction of business for Section 12 venue purposes.
11. Mercy Hospital and Medical Center
Mercy Hospital and Medical Center is incorporated in Illinois and maintains its sole place of business in Chicago. Mercy Hospital’s Motion to Dismiss, filed May 19, 1994, Affidavit of Barbara E. Townsend in Support of Mercy’s Motion, at ¶ 3 (“Townsend Affidavit”). The hospital has no office, telephone listing, mailing address, or place of business in New York; further, it is not licensed to do business, and does not have a registered agent in the state. Townsend Affidavit at ¶ 5. The hospital holds no assets, and pays no taxes here. Townsend Affidavit at ¶ 5. The hospital has no employees, treats no patients, holds no meetings, carries on no operations, nor engages in any goodwill or public relations in New York. Townsend Affidavit at ¶ 5.
Plaintiffs contend that Mercy Hospital and Medical Center also transacted business in New York through the activities of Dr. Gray Strange,
174
the emergency medicine residency director of the University of Illinois until February 1993. Plaintiffs’ Memo
All of Mercy Hospital’s contacts with this district viewed together remain insubstantial and demonstrate the irregularity of Mercy Hospital and Medical Center’s dealings in this forum, thus, venue has not been established as to the hospital under Section, 12.
12. Methodist Hospital of Indiana
Methodist Hospital of Indiana is a not-for-profit hospital which is incorporated in Indiana and maintains its sole place of business in Indianapolis. Methodist Hospital of Indiana’s Motion to Dismiss, filed May 19, 1994, Affidavit of Stephen J. Jay in Support of Motion to Dismiss at ¶ 3 (“Jay Affidavit”). The hospital does not own any real estate, nor does it maintain any offices, bank accounts, telephone listings or mailing addresses in New York. Jay Affidavit at ¶ 6. It pays no taxes in the state, does not treat patients, carry on operations, hold meetings, or engage in any goodwill or public relations activities in New York. Jay Affidavit at ¶ 6. Further, the hospital has no license to do business in New York, and does not have a registered agent here. Jay Affidavit at ¶ 6.
Methodist Hospital has participated in a multi-center clinical trial, a medical research project, sponsored by the University of Rochester, located within this district. Plaintiffs’ Memorandum of Law at 11-19. In order to participate in this multi-center trial, the hospital arranges for and administers patient tests to provide data for the project. Plaintiffs’ Memorandum of Law, Appendix Volume 12, Exhibit 13, Supplementary Interrogatory Response No. 21. The hospital’s participation in this clinical trial since 1992 does not demonstrate that it is transacting business in this district. At best, the activity is incidental to the hospital’s main business purpose and nothing in the record supports the contrary. Further, although members of the Methodist Hospital of Indiana’s medical staff attended, a professional education meeting in Buffalo in October of 1991, Plaintiffs’ Memorandum of Law at 11-19, this contact with the district is too remote in time.to be of significance, and fails to demonstrate, even with the remaining contacts, that the hospital was engaged in any substantial business operations in this district.
13. Oregon Health Sciences University Hospital
Oregon Health Sciences University Hospital is a public benefit corporation incorporated by legislation in the state of Oregon. 1995 Or.Laws ch. 162 §§ 1(2) (a public corporation is an entity created by the state to carry out public purposes); Id. § 2 (Oregon Health Sciences University is established as a public corporation). Oregon Health Sciences University has no real estate or other assets in New York, it maintains no offices, places of business, telephone listings, or mailing addresses, engages in no goodwill or public relations activities, and pays no taxes in New York. Oregon Health Sciences University Hospital’s Motion to Dismiss, filed May 19,1994, Affidavit of John C. Moorhead, M.D. in Support of Motion to Dismiss at ¶ 7 (“Moorhead Affidavit”). Further, the university hospital treats no patients, has no employees, does not carry on operations or hold meetings, and has no registered agent in New York. Moorhead Affidavit at ¶ 7.
Plaintiffs have provided no additional facts upon which to find venue as to the university hospital pursuant to Section 12 of the Clayton Act and those facts previously asserted are, as discussed in Section 111(a) supra, insufficient. Plaintiffs’ Memorandum of Law at II-l -11-29.
St. Anthony Hospital is incorporated in Colorado and its sole place of business is located in Denver. The hospital owns no real estate or other assets, does not maintain any offices, places of business, or telephone listings in New York. St. Anthony Hospital’s Motion to Dismiss, filed May 19,1994, Affida-. vit of Peter Donald in Support of Motion to Dismiss at ¶ 4 (“Donald Affidavit”). St. Anthony Hospital pays no taxes, has no employees, treats no patients, has no meetings and carries on no operations, has no registered agent, and does not engage in any goodwill or public relations activities in New York. Donald Affidavit at ¶ 4..
Plaintiffs assert that St. Anthony Hospital places advertisements in several national publications, as well as advertising for nursing positions in the
Buffalo News,
the only local general circulation newspaper in Buffalo, the largest city in this district, on July 25, 1993. Plaintiffs’ Memorandum of Law at'II-23; Appendix Volume 5, Exhibit 5, Doc. No. LL10 58; Appendix Volume 11, Exhibit 61, pp. 24-25, 32; Appendix Volume 13, Exhibit 17, Responses to Interrogatories 8 and 13. However, for the hospital to transact business under Section 12, it must engage in substantial business operations, rather than isolated or sporadic contacts.
Scophony, supra,
at 807, 817,
As Plaintiffs have failed to demonstrate that St. Anthony Hospital is transacting business as required under Section 12, venue is not proper in this district.
15. University Medical Center (Tucson)
The University Medical Center is a not-for-profit hospital incorporated in Arizona which maintains its sole place of business in Tucson, Arizona. University Medical Center’s Motion to Dismiss, filed May 19, 1994, Affidavit of James W. Richardson in Support of University Medical Center’s Motion, at ¶3 (“Richardson Affidavit”). The medical center does not maintain any offices, telephone listings, bank accounts, mailing addresses, or places of business in New York, is not licensed to do business in New York, and has no registered agent in the state. Richardson Affidavit at ¶ 6. Further, the hospital owns no real estate, has no employees, does not carry on operations, hold meetings, or treat patients in New York. Id. Nor does the medical center pay taxes in New York, or engage in any goodwill or public relations activities in the state. Id.
The medical center maintains an affiliation with D’Youville and Daemen Colleges, both located in this district, in the colleges’ physical and occupational therapy programs. Plaintiffs’ Memorandum of Law at 11-24. In connection with their training requirements in these professional programs, students from the colleges perform clinical rotations at the hospital.
Id.
However, for purposes of determining whether venue is proper under
The University Medical Center also sent representatives to job fairs for each of the last four years to recruit physical and occupational therapists from several colleges located in this district. Plaintiffs’ Memorandum of Law at 11-24. However, four trips to New York over four years are not sufficient to. demonstrate that the center is transacting any substantial business in New York.
Last, Plaintiffs argue that the medical center has used direct mailings to recruit employees. Plaintiffs’ Memorandum of Law at 11-25. However, the mailings were sent based on a national list, and the market in western New York was not the target. Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 52, pp. 19-22. 175 This activity, therefore, is casual and remote.
Thus, although the medical center does have some contacts with this district, they cannot be viewed individually or cumulatively as establishing venue here as the center’s course of conduct with respect to New York at the time the Second Amended Complaint was served does not demonstrate that the corporation was involved in any substantial business activity in this district.
b. Venue under the General Venue Provisions
1. Section 1391
The general federal venue statute, 28 U.S.C. § 1391(b), permits an action not based on diversity of citizenship to be brought in
(1) a judicial district where any defendant resides, if all defendants reside in the same state, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of the property that is the subject of the action is situated, or (3) a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought.
28 U.S.C. § 1391(b) (1990).
176
For purposes of venue; a defendant which is a corporation is deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.
177
28 U.S.C. § 1391(e) (1988). Section 1391(e) is intended to determine the residence of a corporation for purposes of applying Section 1391(b).
Sterling Television Presentations, Inc. v. Shintron Company, Inc.,
Section 1391(c) states that a corporate defendant “shall be deemed, to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.” 28 U.S.C. § 1391(c) (1990). Thus, for a defendant to be subject to Section 1391(c), it must first be shown to be a corporation. The definition of a corporation under Section 1391(c) is broader than that contained in Section 12 of the Clayton Act.
178
See Kingsepp,
Further, if the district court accepts this court’s Report and Recommendation, see Discussion Sections I and II, supra, those Defendants which are not corporations including Ohio State University Hospital, Oregon Health Sciences University Hospital, TriCity Medical Center, the University of California Medical Centers at Los Angeles, Irvine, and San Diego, University Hospital at the University of New Mexico School of Medicine, and University of Massachusetts Medical Center, would all be dismissed as parties on grounds of Eleventh Amendment immunity, the state action doctrine, Local Government Antitrust Act immunity (as to money damages claimed against Tri-City Medical Center), or lack of personal jurisdiction, and so would be irrelevant to any decision under. Section 1391(b)(1) in determining whether all Defendants reside in the same state. 28 U.S.C. § 1391(b)(1) (1990). Thus, as all of the remaining Defendants, as corporations, would be deemed to reside in this district pursuant to Section 1391(c), venue would be proper under Section 1391(b)(1), which provides for venue in a judicial district where any defendant resides, if all defendants reside in the same state. 28 U.S.C. § 1391(b)(1) (1990).
Alternatively, if any of the governmentally sponsored or created Defendants — Ohio State University Hospital, Oregon Health Sciences University Hospital, 179 Tri-City Medical Center, the University of California Medical Centers at Los Angeles, Irvine, or San Diego, University Hospital at the University of New Mexico School of Medicine, or the University of Massachusetts Medical Center, are not dismissed as recommended, this court must determine whether venue is proper in this district. 180
For purposes of Section 1391(e), a corporation has been held .to include a public trust,
Kingsepp, supra,
at 28, a voluntary association,
see Denver and Rio Grande Western Railroad Co. v. Brotherhood of Railroad Trainmen,
However, if any of these Defendants, the University of California Medical Centers at Los Angeles, Irvine and San Diego, the University Hospital at the University of New Mexico School of Medicine, or University of Massachusetts Médical Center, remain as parties to this action, and venue is not proper in this district under Section 1391(b)(1), as not all Defendants can be found to reside, pursuant to 28 U.S.C. § 1391(c), in the same state. 28 U.S.C. § 1391(b)(1) (1990);
Lightfoot v. Union Carbide Corp.,
Plaintiffs also argue that venue is proper in this district pursuant to Section 1391(b)(2), which provides that an action may be brought in any judicial district in which a substantial part of the events or omissions giving rise to the claim occurred. Plaintiffs’ Memorandum of Law at 11-32 - 11-38. In demonstrating that a substantial part of the events took place in this district, Plaintiffs assert that ABEM denied the applications and appeals of at least six Plaintiffs residing in this district, deterred four others from even applying to take the ABEM examination, and that the anticompetitive effects of the alleged conspiracy caused economic harm in this district. Plaintiffs’ Memorandum of Law at 11-34 -11-35.
ABEM’s denial of the applications and appeals of Dr. Daniel and five other individual Plaintiffs and the official communication of this action to Plaintiffs in New York is sufficient to constitute a substantial part of the events giving rise to Plaintiffs’ claims.
181
See Monument Builders of Greater Kansas City, Inc. v. American Cemetery Assoc’n.,
Plaintiffs also argue that the current president of ABEM, Dr. G. Richard Braen, resides and practices medicine in this district, and Dr. Henry A. Thiede, a former member of the board of directors of ABEM is also a resident of the district. Plaintiffs’ Memorandum of Law at 11-35. However, the Plaintiffs have not identified any specific activities by either Dr. Braen or Dr. Thiede giving rise to their claims. Moreover, Dr. Braen did not become the -president of ABEM until 1994, after the suit was filed, therefore, none of his actions could have contributed to the acts of which Plaintiffs complain.
See Greene,
Thus, as a substantial part of the events with respect to ABEM and Dr. Daniel, as well as five other Plaintiffs, occurred in New York, venue over ABEM is proper in this district.
Finally, in support of finding venue under Section 1391(b)(2), Plaintiffs assert the activities of CORD and the various hospital Defendants in this district, including their participation in FREIDA and the MATCH, and other aspects of the selection process by which medical students are offered residency positions. Plaintiffs’ Memorandum of Law at 11-36. However, as discussed in Sections II and III, supra, finding that no hospital Defendant challenging venue or CORD took any action in New York with respect to Plaintiffs’ claims, these activities have no material connection to this district, and cannot support a finding of venue, as these contacts are not substantial events giving rise to Plaintiffs’ conspiracy claims.
Although the most substantial events forming the basis for a cause of action need not
2. Section 1406
ABEM and the University of California Medical Centers at Los Angeles, Irvine, and San Diego maintain that this action should be dismissed pursuant to 28 U.S.C. § 1406(a) (1988). 183 ABEM’s Motion to Dismiss, filed July 22, 1994; University of California Medical Centers’ Motions to Dismiss, filed May 19, 1994. Section 1406(a) provides that
The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.
28 U.S.C. § 1406(a) (1988). ABEM and the University of California Medical Centers at Los Angeles, Irvine, and San Diego maintain that this district has no relationship to the events underlying this suit, and, therefore, the suit must be dismissed. University of California (Los Angeles) Medical Center’s Memorandum of Law in Support of Motion to Dismiss, filed Máy 19, 1994, at p. 32; University of California (Irvine) Medical Center’s Memorandum of Law in Support of Motion to Dismiss, filed May 19, 1994, at p. 31; University of California (San Diego) Medical Center’s Memorandum of Law in Support of Motion to Dismiss, filed May 19, 1994, at p. 32; ABEM’s Memorandum of Law in Support of Motion to Dismiss, filed July 22,1994, at p. 5.
Plaintiffs retort that the court must consider whether judicial economy will be served if any of the defendants were dismissed for improper venue. Plaintiffs, Memorandum of Law at 11-38. In demonstrating that venue should be proper in this district, Plaintiffs assert that 28 U.S.C. § 1407 provides that multi-district litigation of common questions of law and fact is contrary to the concept of judicial economy and should be avoided in complex litigation. 184 Plaintiffs’ Memorandum of Law at 11-38 - 11-39. Further, Plaintiffs contend that, as this action has been pending in this district for over four years, and the court is intimately familiar with the claims presented in this case, that it should remain in this district rather than being dismissed for lack of improper venue. Plaintiffs,. Memorandum of Law at 11-39.
As discussed above; Discussion Section III, supra, this court finds that ABEM is subject to personal jurisdiction and venue in this district, therefore, ABEM’s motion to dismiss pursuant to 28 U.S.C. § 1406(a) should be denied. However, neither personal jurisdiction nor proper venue has been established as to the Defendant University of California medical centers, therefore, if these parties are not dismissed on grounds of immunity or lack of personal jurisdiction, their motions to dismiss pursuant to 28 U.S.C. § 1406(a) must be examined.
It is in the sound discretion of the district court to determine whether dismissal or transfer of a case is appropriate.
Minnette v. Time Warner,
IY. Service of Process
An action is commenced upon the filing of a complaint with the clerk of the court who forthwith issues a summons to the plaintiff or the plaintiffs counsel who is responsible for service upon the defendant. Fed.R.Civ.P. 4(a) & (b). Fed.R.Civ.P. 4(h) sets forth the manner upon which service may be made on a corporation. Further, pursuant to Fed.R.Civ.P. 4(m), if service of the summons and complaint is not made upon a defendant within 120 days after the filing of the complaint, and the party on whose behalf such service was required cannot show good cause why such service was not made within the 120 day period, the action shall be dismissed, without prejudice.
Both CORD and Mercy Catholic Medical Center — Misc.icordia Division contend that they were not served with the Second Amended Complaint until February or March of 1994, well beyond the 120 days from the date that this action was originally removed to federal court. CORD Memorandum of Law in Support of Motion to Dismiss, filed May 12, 1994, at p. 5; Mercy. Catholic Medical Center — Misc.icordia Division Memorandum of Law in Support of Motion to Dismiss, filed May 12,1994, at p. 5. However, as the Second Amended Complaint was filed on January 13, 1994, Plaintiffs had until May 12, 1994 to serve each of these Defendants. Therefore, as CORD’s waiver of service was returned executed on February 22,1994, and Mercy Catholic Medical Center — Misc.icor-dia Division’s acknowledgement of service was filed on March 30,1994, both well before the 120 day time limitation expired, CORD and Mercy Catholic Medical Center’s motions to dismiss for insufficient service of process should be denied.
Further, CORD filed an answer to the Second Amended Complaint on March 22, 1994. In the answer, CORD asserted the defenses of improper venue and lack of personal jurisdiction, CORD Answer, filed March 22, 1994, ¶¶ 136-141, but did not assert the defense of insufficiency of service of process. These- defenses, while related, are not identical.
See Santos v. State Farm Fire and Casualty Co.,
Further, the later filing of CORD’s motion to dismiss, directed toward the Second Amended Complaint, pursuant to Fed.R.Civ.P. 12(b)(5), was untimely. CORD was entitled to raise its service of process defense by motion, however, Rule 12(b) requires that any such motion be made before any responsive pleading is filed. Fed.R.Civ.P. 12(b). If
CORD waived its right to make a motion to dismiss based on improper service by its failure to raise insufficiency of service of process as an affirmative defense in its Answer, filed March 22, 1994. Accordingly, CORD’s motion to dismiss based on insufficiency of service of process should denied.
CONCLUSION
Based on the foregoing, Defendants Ohio State University Hospital, Oregon Health Sciences University Hospital, University of California (Los Angeles) Medical Center, University of California (Irvine) Medical Center, University of California (San Diego) Medical Center, University Hospital of the State University of New York at Stony Brook, University Hospital at the University of New Mexico School of Medicine, and University of Massachusetts Medical Center should be dismissed on grounds of Eleventh Amendment immunity. Alternatively, Defendants Lincoln Medical and Mental Health Center, Ohio State University Hospital, Oregon Health Sciences University Hospital, University of California (Los Angeles) Medical Center, University of California (Irvine) Medical Center, University of California (San Diego) Medical Center, University Hospital of the State University of New York at Stony Brook, University Hospital at the University of New Mexico School of Medicine, and University of Massachusetts Medical Center, should be dismissed from the suit as they are exempt from federal antitrust laws under the state action doctrine. The action against Lincoln medical and Mental Health Center and Tri-City Medical Center should be dismissed insofar as money damages are requested, under the Local Government Antitrust Act.
This court finds that under Section 12 of the Clayton Act, each of the Defendants which are domestic corporations-are subject to personal jurisdiction in this district, namely CORD, Children’s Hospital (San Diego), Children’s Hospital of Michigan, Detroit Receiving Hospital and University Health Center, Forsyth Memorial Hospital, Johns Hopkins Hospital, Part of the Johns Hopkins Health System, Kettering Medical Center, Loma Linda University Medical Center, Lutheran General Hospital, Medical College of Pennsylvania and Hospital, Mercy Catholic Medical Center-Misc.icordia Division, Mercy Hospital and, Medical. Center, Methodist Hospital of Indiana, Oregon Health Sciences University Hospital, 185 Riverside Methodist Hospitals, Saint Francis Medical Center, St. Anthony Hospital, and University Medical Center (Tucson). Therefore, as to these Defendants the motions to dismiss for lack of personal jurisdiction should be denied.
Alternatively, Johns Hopkins Hospital, Part of the Johns Hopkins Health System, is subject to personal jurisdiction, pursuant to Section 301 of the New York Civil Practice Law and Rules, as the court finds it is doing or soliciting business in New York. However, Plaintiffs failed to demonstrate that the other Defendants which have moved to dismiss for lack of personal jurisdiction are soliciting business pursuant to Section 301, or that they are subject to personal jurisdiction, pursuant to New York’s long-arm statute, Section 302(a)(1), (2) or (3), for transacting business, committing a tortious act within the state, or. committing a tortious act outside the state causing injury within the state.
Therefore, even if, based on the District Court’s determination of the asserted immunity claims, remaining as parties to this action,' the motions to dismiss for lack of personal jurisdiction for Ohio State University Hospital, Tri-City Medical Center, University of- California (Los Angeles) Medical Center, University of California (Irvine) Medical Center, University of California (San Diego) Medical Center, University Hospital at the University of New Mexico School of Medicine, and University of Massachusetts Medical Center, should be granted as the court finds personal jurisdiction does not exist over these Defendants.
However, the motions to dismiss pursuant to 28 U.S.C. § 1406(a) should, nevertheless, be granted with respect to University of California (Los Angeles) Medical Center, University of California (Irvine) Medical Center and University of California (San Diego) Medical Center, but denied as to ABEM. CORD’s and Mercy Catholic Medical Center-Misc.ieordia Division’s motions to dismiss for improper service of process should be denied.
Pursuant to 28 U.S.C. § 636(b)(1), it is hereby
ORDERED that this Report and Recommendation be filed with the Clerk of the Court.
ANY OBJECTIONS to this Report and Recommendation must be filed with the Clerk of the Court within ten (10) days of receipt of this Report and Recommendation in accordance with the above statute, Rules 72(b), 6(a) and 6(e) of the Federal Rules of Civil Procedure and Local Rule 72.3.
Failure to file objections within the specified time or to request an extension of such time waives the right to appeal the District Court’s Order. Thomas v. Arn,
Let the Clerk send a copy of this Report and Recommendation to the attorneys of record.
SO ORDERED.
Jan. 16,1996,
Notes
. Defendants American Board of Emergency Medicine ("ABEM”), Council of Emergency Medicine Residency Directors ("CEMRD”), Lutheran General Hospital, and Mercy Hospital and Medical Center moved before Magistrate Judge Foschio for reconsideration of his Report
. The defendants who filed objections include: ABEM; CEMRD; Forsythe Memorial Hospital (“Forsythe”); Lutheran General Hospital; Mercy Hospital and Medical Center; Mercy Catholic Medical Canter-Misc.icordia Division; Johns Hopkins Hospitals; Riverside Methodist Hospitals; Children’s Hospital-San Diego; Children’s Hospital of Michigan; Detroit Receiving Hospital and University Health Center; Loma Linda University Medical Center; Medical College of Pennsylvania/Medical College Hospitals-Main Clinical Campus; Methodist Hospital of Indiana, Inc.; Oregon Health Sciences University; The Regents of the University of California (identified in the Second Amended Complaint as UCLA Medical Center, University of California (Irvine) Medical Center, University of California (San Diego) Medical Center); St. Anthony Hospital-Central; The Regents of the University of New Mexico (identified in the Second Amended Complaint as the University Hospital at the University of New Mexico School of Medicine); University of Massachusetts Medical Center; University Medical Center Corporation (identified in the Second Amended Complaint as the University Medical Center (Tucson, Arizona)); St. Francis Medical Center; and Tri-City Hospital District d/b/a TriCity Medical Center.
. The "hospital Defendants” include Children's Hospital (San Diego), Children’s Hospital of Michigan, Detroit Receiving Hospital and University Health Center, Forsyth Memorial Hospital of North Carolina, the Johns Hopkins Hospital, Part of the Johns Hopkins Health System of Maryland, Kettering Medical Center of Ohio, Lincoln Medical and Mental Health Center of New York, Loma Linda University Medical Center of California, Lutheran General Hospital of Illinois, the Medical College of Pennsylvania and Hospital, Mercy Catholic Medical Center-Misc.icordia Division of Pennsylvania, Mercy Hospital and Medical Center of Illinois, Methodist Hospital of Indiana, Ohio State University Hospital, Oregon Health Sciences University Hospital, Riverside Methodist Hospitals of Ohio, Saint Francis Medical Center of Illinois, St. Anthony Hospital of Colorado, Tri-City Medical Center of San Diego, the University of California Medical Centers at Los Angeles, Irvine and San Diego, the University Hospital of the State University of New York at Stony Brook, the University Hospital at the University of New Mexico School of Medicine, the University of Massachusetts Medical Center, and the University Medical Center at Tucson, Arizona.
. Defendants American Board of Emergency Medicine, Council of Emergency Medicine Residency Directors, Johns Hopkins Hospital, Part of the Johns Hopkins Health System, Lincoln Medical and Mental Health Center, Mercy Catholic Medical Center — Misc.icordia Division, Ohio State University Hospital, Our Lady of Mercy Medical Center, Riverside Methodist Hospitals, Saint Francis Medical Center, Tri-City Medical Center, and University Hospital at the State University of New York at Stony Brook, have filed motions to dismiss the Second Amended Complaint under Rule 12(b)(6), however, as the Decision and Order, filed April 29, 1994, indicates, these motions are not before the court at this time. These motions will be addressed, as will the motion for certification of the class, in accordance with the scheduling order issued simultaneously with this Report and Recommendation.
. As the court may consider material outside'the pleadings in ruling on a motion to dismiss, including affidavits, depositions, and other documentary proof,
see Bruan, Gordon & Co. v. Hellmers,
. Defendants Our Lady of Mercy, Henry A. Thie-de, and Frank A. Disney, did not move to dismiss on jurisdictional grounds, therefore these Defendants will not be discussed in this Report and Recommendation. Additionally, as Porter Memorial Hospital’s settlement with the Plaintiffs, under which the action was dismissed as to Porter, was approved by Judge Arcara on September 21, 1994, Porter is no longer a party to this action. As will be discussed, various Defendants, which are governmenlally sponsored hospitals, assert immunity under the Eleventh Amendment, the state action doctrine, and the Local Government Antitrust Act, 15 U.S.C. §§ 34-36.
. By Order entered April 29, 1994, this court stayed general merit-based discovery but permitted discovery limited to jurisdiction and immunity to be completed by August 12, 1994. On July 26, 1994, the court ordered, upon Plaintiffs’ motion to compel, the scope of permitted discovery was modified to permit Plaintiffs discovery related to its conspiracy based jurisdictional theory. On August 8, 1994, the overall period for jurisdiction discovery was extended to September 16, 1994.
. Should the District Judge not find, as recommended, see Discussion Sections 1(a)(2) and 1(b)(3), that Oregon Health Sciences University Hospital is immune from suit under the Eleventh Amendment or the state action doctrine, then it is subject to personal jurisdiction pursuant to Section 12 of the Clayton Act.
. Eleventh Amendment immunity can be waived,
see Port Authority Trans-Hudson Corp. v. Feeney,
. Public higher education is a purpose of state government of each of the states sponsoring the public hospital Defendants as established by state constitutional or legislative mandate, thus, each of the entities involved in the immunity analysis is carrying out an incident of the state’s sovereign power, as opposed to the functions carried out in Hess, supra (a local transportation facility) and Lake Country Estates, supra (regional land use controls), where the functions were municipal or local in nature.
. The. Shpreme Court has indicated that political subdivisions of the state, such as cities, towns, and counties, are distinct legal entities which, although territorially within the state, function as independent governmental units and are not entitled to Eleventh Amendment immunity.
See Hess, supra,
at 42-44,
. Several courts have taken the position that protection of the state's treasury is the most important element in deciding whether Eleventh Amendment immunity should be afforded to a defendant,
see, e.g., Baxter, supra,
at 732-33 (most significant factor is whether entity has the power to raise its own funds);
Hutsell v. Sayre,
.These hospital Defendants include Ohio State University Hospital Medical Center, Oregon Health Sciences University Hospital, University of California (Los Angeles) Medical Center, University of California (Irvine) Medical Center, University of California (San Diego) Medical Center, University Hospital at the State University of New York at Stony Brook, University Hospital at the University of New Mexico School of Medicine, and University of Massachusetts Medical Center.
. The court notes that Eleventh Amendment immunity protects a state or the arm or instrumentality of a state where a plaintiff seeks damages and/or injunctive relief.
Alabama v. Pugh,
.
Bank of United States v. Planters' Bank of Georgia,
. Unless otherwise indicated, all Ohio Revised Code references are to the 1995 edition of the Baldwin Ohio Revised Code Annotated.
.
University of Rhode Island v. A.W. Chesterton Company,
. Two of the eleven trustees are students at the Ohio State University. These members have no voting power and are not considered as members of the board in determining whether a quorum is present. The two student members are also appointed for two year terms by Ohio's governor, with the advice and consent of the state's senate, from a group of five candidates selected by the student government and approved by the OSU Trustees. Ohio Rev.Code Ann. § 3335.02(B).
.The bare power to sue or the capacity to be sued is unlikely to control the threshold determination in Eleventh Amendment immunity cases. See Kashani, supra, at 847 (power to sue and to be sued is not conclusive of autonomy). However, the power to sue or be sued in the entity’s own name, when combined with other powers such as the power to contract, buy, sell, or hold property, undeniably afford the entity some additional independence from the state. University of Rhode Island, supra, at 1207 n. 11.
Additionally, a statute granting a state university the power to "sue and be sued” has been held insufficient to waive Eleventh Amendment immunity, and is interpreted as permitting only suits in state court.
Ferguson v. Greater Pocatello Chamber of Commerce, Inc.,
. Construction, supply and service, and renovation contracts are all signed by the appropriate authority within the Ohio State University. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 19, pp. 79-80. inter-hospital based education contracts are initially signed by the executive director of the University Hospital, along with other appropriate officials within the university, on behalf of the University Hospital. Id. at 80-81.
. The state of Ohio has not waived, as to the Ohio State University, the protection of the Eleventh Amendment by subjecting itself to suit in the state’s court of claims. A waiver of Eleventh Amendment immunity by a state or state agency must be clear and unequivocal.
Pennhurst State School & Hospital v. Halderman,
. A state agency is any organized body, agency, institution, or other entity established by thé laws of the state for the exercise of any .function of state government. Ohio Rev.Code Ann. §' 117.01.
. The court notes that no restrictions are placed on the use of funds appropriated by the state of Ohio. Plaintiffs' Memorandum of Law, Appendix Volume 10, Exhibit 19, p. 90.
. Oregon Health Sciences University Hospital is a unit within the Oregon Health Sciences University. Or.Admin.R. § 580-30-005 (1993) ("[t]he function of the University Hospital of the Oregon Health Sciences University is to augment the teaching, research, and health care programs of the institution.... In carrying out all of its functions, [the University Hospital] will operate as an integral part of the Oregon Health Sciences University.”).
. The separate incorporation of a state university does not detract from its status as an alter ego of the state for Eleventh Amendment purposes where the university was incorporated to pursue "the ends of higher education.”
Ciba-Geigy Corporation v. Alza Corporation,
. One member of the State Board of Higher Education, one student representative, and the president of the University constitute three of the Board members. 1995 Or.Laws ch. 162 § 4(3)(a)-(d).
.
See
Footnote 14,
supra,
explaining that appointments effected in this manner are viewed as evidence of an entity’s lack of independence from state control.
University of Rhode Island,
. The title to real property acquired prior to July 1, 1995 will remain in the state of Oregon, however, the university has exclusive care, custody, and control of the property and facilities.
. See Footnote 16, supra, explaining that the power to sue is not conclusive of autonomy, and does not waive Eleventh Amendment immunity.
. All rights and obligations pertaining to Oregon Health Sciences University entered into by the Oregon State Board of Higher Education before July 1, 1995, were transferred to the Board of Directors of Oregon Health Sciences University. 1995 Or.Laws ch. 162 §§ 44, 46.
.Prior to the July 1, 1995 effective date of Oregon's amendments to Or.Rev.Code § 352.002, the State Board of Higher Education was responsible for programs conducted by the • Oregon Health Sciences University.
. The California Supreme Court determined that the property of the Regents is the property of the state.
Estate of Royer,
.
See
Footnote 16,
supra,
explaining that such a general waiver of sovereign immunity is insufficiently particular to support an Eleventh Amendment waiver.
See also Genentech, Inc. v. Eli Lilly & Co.,
. The medical centers may enter into limited monetary contracts in the name of the Regents for hospital purchases. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 31, pp. 18-19, 21-22, 25-26; Exhibit 39, pp. 46, 65-67, 69-71, 75, 79, 86; Volume 11, Exhibit 63, p. 22; Exhibit 67, pp. 8-9, 23-26.
. Unless otherwise indicated, all California Education Code references are from the 1989 edition and 1995 supplement to West’s Annotated California Education Codes.
. Despite the broad language of the statute, all bonds issued by the Regents on behalf of the universities of California or their respective medical centers are considered to be capital bonds to create funds for the construction of buildings, Plaintiffs' Memorandum of Law, Appendix Volume 10, Exhibit 39, p. 39, therefore, it is reasonable to infer that a bond could not be issued for
. The Annual Reports of the University of California (Los Angeles) Medical Center indicate that
. The California tort claims act partially waives sovereign immunity as to claims based on state law, however, if the medical centers are entitled to the protection of the Eleventh Amendment, this partial waiver does not eliminate Eleventh Amendment immunity. For a state to waive its Eleventh Amendment immunity, it must expressly provide'that the state may be sued in federal court.
See Florida Department of Health & Rehabilitative Services v. Florida Nursing Home Association,
. Unless otherwise indicated, ali New York Education Law references are from the 1988 edition and 1995 Supplement to McKinney’s Consolidated Laws of New York.
. See Footnote 15, supra, explaining that when the governor appoints the members of the governing board of a public entity with the advice and consent of the state's senate, courts view this as being indicative of an entity's lack of independence from state control. The remaining member is the president of the student assembly of the SUNY ex-officio. N.Y.Educ.L. § 353.
. The Board of Regents is the head of the University of the State of New York, a state conslitu-tional entity, as distinct from SUNY, having plenary authority over all education matters within the state. Section 352 of the New York Education law creates SUNY as a corporation within the state Department of Education, a slate agency headed by the slate commissioner of education appointed by the Regents, and within the University of the State of New York. See McKinney's Const. Art. XI, § 2; N.Y.Educ.L. § 352.
. In 1993, the New York state approved $9.7 million in net operating transfers to Stony Brook University Hospital from the state’s general fund, which represented approximately 3.3% of the hospital’s $294 million in total revenue. Plaintiffs’ Memorandum of Law, Appendix Volume 9, Exhibit 6, Doc. No. 1098.
. As noted, several courts have recognized that the presence of insurance does not displace the immunity accorded by the Eleventh Amendment.
See, e.g., Bockes,
. All references to the 1994 edition of Michie’s New Mexico Statutes Annotated.
. See Footnote 15, supra, explaining that when the governor appoints members of the board with the advice and consent of the state's senate, court's view this legislative design as evidence that the entity lacks independence from state control.
.See Footnote 17, supra, explaining that the bare power to sue or be sued does not control the threshold determination regarding the applicability of the Eleventh Amendment.
. See Footnote 18, supra, explaining that a state statute granting a university the power to sue or be sued does not in itself waive Eleventh Amendment immunity, and is interpreted as permitting only suits in state court.
. Unless otherwise indicated, all statutory references are to West's 1994 edition of the Massachusetts General Laws.
. See Footnote 14, supra, explaining that appointment to the board by the state's governor, with the advice and consent of the state's senate, demonstrates an entity's lack of independence from state control.
. The Higher Education Coordinating Council is composed of eleven voting members, consisting of the secretary of education, ex-officio, and ten members appointed by the governor, including a student enrolled iñ a state-funded institution. Council members are appointed for five year terms, except for the student, who receives a one year term. Mass.Gen.L. ch. 15A, § 4. The Council is responsible for defining the mission of Massachusetts' system of higher education. Mass.Gen.L. ch. 15A, § 1(c);
.The trustees have complete authority with respect to the election or appointment of the president and other officers of the university. Mass.Gen.L. ch. 75, § 14.
. In 1992, commonwealth funding amounted to approximately 6%, of the medical center's budget, and in 1993, the commonwealth's appropriations constituted 5.5% of the operating budget. Plaintiffs’ Memorandum of Law at VI-25.
. The Supreme Court has also applied the
Parker
doctrine to anticompetitive actions of political subdivisions.
Town of Hallie v. City of Eau Claire,
. "The.
Parker
doctrine is not so broad as to constitute an automatic ‘status’ exemption for state agencies ... [as] [s]ome acts of state agencies are not acts of the government by the state as sovereign.”
Cowboy Book, Ltd. v. Board of Regents for Agriculture and Mechanical Colleges,
.The fact that defendant is not considered, for state action doctrine purposes, as the state itself is not inconsistent with a finding of the availability of Eleventh Amendment immunity as the state action doctrine which focuses on the question of whether the challenged activity is authorized by the state, potentially includes a broader range of governmental actions. An Eleventh Amendment analysis concentrates on the relationship of the defendant to the state, not whether a challenged action is authorized by it. Thus, for example, a local government as a political subdivision would likely not be accorded immunity but may assert a state action doctrine defense.
. Unless otherwise indicated, references to McKinney's New York Unconsolidated Laws will refer to the 1979 edition and 1995 Supplement.
. There is no dispute that Lincoln Medical and Mental Health Center is a municipal hospital.
. The Hospital Bylaws are attached as Exhibit B of Ohio State University Hospital's Memorandum of Law in Support of its Motion to Dismiss, filed May 2, 1994.
. The court notes that although the University Hospital, its clinical departments, medical director, credenlialling committee, and the hospital board are all involved in Lhe appointment of staff members, the trustees of the Ohio State University make the ultimate determination on this matter, after receiving the recommendations of the hospital board. Hospital Bylaws § 3335-43-04(E).
. It is not necessary that the Ohio legislature explicitly state that it expects Ohio State University Hospital to engage in conduct with anticom-petitive effects.
Cine 42nd Street, supra,
at 1043.
See also Southern Motor Carriers Rate Conference, Inc., supra
(the state need not describe the implementation of its program in detail in order to avoid antitrust constraints);
Porter Testing Laboratory v. Board of Regents for the Oklahoma Agriculture and Mechanical Colleges,
. Unless otherwise indicated, all references to California’s Health and Safety Code are to the 1986 edition and 1992 Supplement of Deering’s California Health and Safety Code.
. The court notes that Tri-City Medical Center's notice of joinder for the state action defense was filed on July 25, 1994, and the deposition of Ladley took place on August 8, 1994, after the medical center's request to add the state action doctrine as a defense.
. The state action doctrine confers an exemption from federal antitrust law upon the state, state agencies, and municipalities which act pursuant to a clearly articulated and affirmatively expressed state policy.
See Parker, supra.
As the state action doctrine provides an exemption for certain actions of the state, and those acting according to the state’s policy, including municipalities, the relief provided by the state action doctrine does not present the same type of limitation on the power of the federal courts that is carried by other defenses which may result in a lack of subject matter jurisdiction, and which are not waivable by the parties. Thus, as Eleventh Amendment immunity can be waived without destroying subject matter jurisdiction
see Edelman v. Jordan,
. However, Plaintiffs can be awarded attorney’s fees if the antitrust action for injunctive relief is successful, as the LGAA only precludes the recovery of damages, costs, or attorneys fees on the basis of 15 U.S.C. §§ 15, 15a, or 15c. .15 U.S.C. § 35(a). The provision which mandates that costs and attorneys fees be awarded to plaintiffs who “substantially prevail” in actions for injunctive relief is 15 U.S.C. § 26, which is unaffected by 15 U.S.C. § 35(a).
See Lancaster Community Hospital v. Antelope Valley Hospital District,
. "Congress rejected the commercial-governmental distinction, adopting a definition for eligibility for immunity based on status as a governmental instrumentality and effect on taxpayers rather than purpose.’ ”
Tarabishi v. McAlester Regional Hospital,
. Although the HHC operates and administers Lincoln Medical and Mental Health Center, the hospital is owned by the City of New York. N.Y.Unconsol.L. ch. 5, § 7406; Lincoln Medical and Mental Health Center's Motion to Dismiss, filed May 2, 1994, Exhibit B, Art. I, § 1 ("Lease Agreement”).
. Plaintiffs argue that lease Section 6.1, stating that the "City agrees to keep, save and hold harmless the [HHC] from any and all liability, loss or damage arising from or in connection with the provision and delivery of health services, including any liability under the Workmen's Compensation Law,” Lease Agreement § 6.1, provides only for indemnity from New York City in malpractice cases. Plaintiffs' Memorandum of Law at VIII-5 - VIII-6, VIII-6 n. 3. Further, Plaintiffs assert that the relevant provision appears in Section 6.2(3), which indicates that New York City is not obligated to indemnify the medical schools, hospitals, or employees associated with the HHC as a result of any act committed by them, tortious or otherwise, other than an act of malpractice or act arising out of the treatment of patients. However, Section 6.2 indicates that New York City “agrees to keep, save and hold harmless the [HHC] and its physicians and dentists, as well as the medical schools and voluntary hospitals with whom the [HHC] has an affiliation agreement ... from any and all liability, loss or damage for málpractice of the [HHC], its physicians and dentists, arising from the operation or supervision of the hospitals transferred to the [HHC]....” Lease Agreement Section 6.2. As Section 6.2 clearly provides financial protection to the HHC by New York City for malpractice by HHC physicians, Section 6.1 must be read as providing indemnity by the City of New York for other HHC liabilities arising "in connection with the provision and delivery of health services.” Thus, it is unpersuasive for the
Further, when New York City's indemnity to the HHC varies as to entities or employees "associated” with HHC as addressed in Section 6.2(3), as compared to its obligations with respect to medical schools and hospitals covered under an affiliation agreement, is not explained in the record.
. This interpretation is also consistent with the fact that some entities may be state created and gubematorially appointed yet retain an essentially local or regional focus of service or responsibility with attendant reliance on revenues generated solely or primarily from within such areas of operation. See, e.g., Trustees of A.J. Bremen, supra. Thus, although created by state law, the port authority in that case served an essentially local function, supported by revenues generated largely from within its service area.
To the extent that
Zapata Gulf Marine, supra,
may be said to have held that the Puerto Rico Maritime Shipping Authority ("PRMSA”)' is a special function governmental unit under the LGAA, such holding appears, to this court, contrary to the express purposes and definitions of the LGAA. As noted, the agencies considered in
Trustees of A.J. Bremen, supra,
and
Palm Springs Medical Clinic, supra,
although created by or pursuant to state law (as are all local units of government) served only local or regional interests, and were funded accordingly. Moreover, as the court in
Zapata
had already found the PRMSA to be immune under the Eleventh Amendment, its discussion of the LGAA applicability to the PRMSA may be fairly characterized as dicta. Further, should the Supreme Court determine in the future that, contrary to the holding in
Ramirez v. Puerto Rico Fire Service,
. Plaintiffs do not make any argument that TriCi1y Medical Center should not be considered a local government unit immune from damages for monetary relief as prescribed by the LGAA. Plaintiffs’ Memorandum of Law at VIII-1 - VIII-6.
. In Discussion Section II of this Report and Recommendation, infra, this court has determined that Tri-City Medical Center should be dismissed from this action as this court lacks personal jurisdiction over the medical center. However, if the district judge does not dismiss Tri-City Medical Center from this action, this court must address the medical center's argument that it should be dismissed from the action completely as, even if an injunction is issued against Tri-City Medical Center, the hospital cannot "unilaterally determine the credentials of its Medical Staff.” Tri-City Medical Center’s Reply Memorandum in Support of Motion to Dismiss, filed January 30, 1995, at p. 4 (emphasis in original). Tri-City Medical Center is therefore contends that it is powerless to comply with an injunction issued against it, as its medical staff is responsible for the credentialling of its physicians, but, under California law, the medical staff is not employed by the hospital and so cannot be directed by it.
Assuming that Tri-City Medical Center remains a party in this action and the court has jurisdiction over this party, the Supremacy Clause drains the medical center's contention of its force. Under the Supremacy Clause, ■ U.S. Const., art. VI, cl. 2, a state statute can be preempted or superseded by federal law. Among state statutes thus subject to displacement are those which stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.
Ray v. Atlantic Richfield Co.,
Tri-City Medical Center also states that any injunction issued will not be enforceable against its medical staff, as the medical staff is not named as a party in this action. However, Fed.R.Civ.P. 65(d) provides that an injunction may bind the "parties to the action, their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise.”
Consonant with the language and purpose of Rule 65(d), an injunction may bind a non-party who acts on behalf of, or in concert with a named party.
See Alemite Mfg. Corp. v. Staff,
Moreover, as the nature and scope of any in-junctive relief which could be issued by this court in the future is at this juncture, speculative, TriCity Medical Center’s assertion is premature and does not aid in making a determination regarding the medical center’s motions to dismiss on grounds of immunity pursuant to the LGAA or lack of personal jurisdiction. For this reason also, it may be disregarded.
. These corporate Defendants include Cord, Children's Hospital (San Diego), Children's Hospital of Michigan, Detroit Receiving Hospital and University Health Center, Forsyth Memorial Hospital, Johns Hopkins Hospital, Part of Johns Hopkins Health System, Kettering Medical Center, Loma Linda University Medical Center, Lutheran General Hospital, Medical College of Pennsylvania and Hospital, Mercy Catholic Medical Center — Misc.icordia Division, Mercy Hospital and Medical Center, Methodist Hospital of Indiana, Oregon Health Sciences University ’Hospital, Riverside Methodist Hospitals, Saint Francis Medical Center, St. Anthony Hospital and University Medical Center (Tucson).
. Fed.R.Civ.P. 4(e) allows service of process on an out-of-state party when authorized by a federal statute.
. Section 12 of the Clayton Act also applies to not-for-profit corporations. Kingsepp, supra at 25.
. This extension of Defendants' core argument assumes the application of 28 U.S.C. § 1391(c) under which a corporation is deemed to reside for venue purposes in any district in which personal jurisdiction may be obtained.
. The court notes that Defendants did not discuss
Go-Video, Inc. v. Akai Electric Company, Ltd.,
. See also Go-Video, supra, at 1411.
. The court will also discuss New York law relating to personal jurisdiction with respect to the corporate Defendants as an alternative to the Clayton Act Section 12 personal jurisdiction analysis.
. Corporate defendants, partnerships, unincorporated associations, other business entities, and non-resident individuals can be subject to jurisdiction under Section 301. Kingsepp, supra, at 26 (citations omitted).
. Several of the Defendants do not participate in MATCH, including Children's Hospital (San Diego), Forsyth Memorial Hospital, St. Anthony Hospital, and Tri-City Medical Center. Affidavit of Richard R. Randlett, dated January 25, 1995, ¶¶ 8(y), (z), (ab), (ac) ("Randlett Affidavit No. 2”). However, some of these hospitals may receive residents from affiliated hospital Defendants for rotations through their respective programs. Plaintiffs’ Memorandum of Law, Appendix Volume 1, Exhibit 2, ¶¶ 5, 6(j), (k), (m), (n), (u), (v). (w), (x) (“Randlett Affidavit No. 1”). Additionally, other hospital Defendants do not participate in MATCH with respect to residency programs in emergency medicine, including Mercy Hospital and Medical Center, Lutheran General Hospital, Our Lady of Mercy, Riverside Methodist Hospitals, Kettering Medical Center, Mercy Catholic Medical Center — -Misc.icordia, and University of Massachusetts Medical Center. Randlett Affidavit No. 2 at ¶¶ 8(e), (g), (m), (o), (p), (r), (v).
. The court notes that Lincoln Medical and Mental Health Center, Our Lady of Mercy Medical Center, and Stony Brook University Hospital do not participate in FREIDA relative to their emergency medicine programs. Grenholm Affidavit at ¶ 7. Also, several other programs, including Children's Hospital (San Diego), Forsyth Memorial Hospital, Kettering Medical Center, Lutheran General Hospital, Mercy Catholic Medical Center — Misc.icordia Division, Mercy Hospital and Medical Center, Riverside Methodist Hospitals, St. Anthony Hospital, and Tri-City Medical Center, are all listed in FREIDA as affiliates of other residency programs. Grenholm Affidavit at ¶ 7.
. The court notes that none of the Defendants arguing lack of personal jurisdiction are authorized to do business in New York, maintain offices or employees, or telephone numbers in New York; have not designated agents for service in New York, nor employed agents under their control to solicit business in New York.
The only exception to this general statement is Johns Hopkins Hospital, which, for the past twenty years, has maintained a development office, employing two individuals, in New York City to solicit donations on behalf of Johns Hopkins Hospital. Affidavit of Erwin M. Sekulow, filed March 15, 1995, at ¶¶ 2-3, 6-7 ("Sekulow Affidavit”). See also Discussion Section 11(b)(1)(a), infra. As Johns Hopkins Hospital, when contrasted with any other hospital Defendant, appears to have the most significant contacts with New York state, the court will discuss personal jurisdiction over this defendant before addressing jurisdiction as to the remaining hospital Defendants and CORD.
. The contract was to begin on January 17, 1994, and run through January 13, 1995. Plaintiffs’ Memorandum of Law, Appendix Volume 9, Exhibit 5. This contact occurred between the time the Second Amended Complaint was filed, on January 13, 1994, and the time that Johns Hopkins Hospital was served with the summons and complaint, as to which a waiver of service was returned executed on February 28, 1994. This contact with New York may therefore be considered in the determination of whether personal jurisdiction exists over Johns Hopkins Hospital.
Compare Greene v. Sha-Na-Na,
. Johns Hopkins Hospital’s remaining contacts will be discussed along with the other hospital Defendants’ contacts with New York. See Discussion Section 11(b)(1), infra.
. The Depository Trust Company served as securities depository for the 1993 bonds, a New York bank was used for the receipt of bond insurance payments, and Standard & Poor’s and Moody’s Investors Service, both New York entities, to provide bond ratings. Plaintiffs' Memorandum of Law at III — 80.
. Another resident from a New York medical school enrolled on July 1, 1994. Plaintiffs' Memorandum of Law at III-50.
. Carolina Medicorp, Inc. used First Boston Corporation, Alex, Brown & Sons, and Wachovia Bank and Trust Company as the investment bankers for the two offerings, also, John Gregory Beier, the vice-president of Forsyth Memorial Hospital and Carolina Medicorp, Inc., attended a closing in New York in connection with these bond offerings.
. The 1989 offering was for $76,900,000, and the 1984 offering was for $54,860,000. Plaintiffs’ Memorandum of Law at III — 13 - III — 14.
. In connection with this contract, five physicians were referred and applied to the medical center, none, however, were hired. Plaintiffs' Memorandum of Law at III — 14, Appendix Volume 12, Exhibit 6, Response to Interrogatory No. 12.
. The medical center's executive vice-president and former senior vice-president traveled to New York in connection with this architectural project. Plaintiffs' Memorandum of Law at III — 14.
. It is unclear whether this amount includes donations receives as the result of a national telephonic fundraising drive conducted in 1988 or 1989. Plaintiffs’ Memorandum of Law, Appendix Volume 10, Exhibit 15, at pp. 32-34.
. The Green Book is a listing of all of the residency programs in the country. Plaintiffs' Memorandum of Law, Appendix Volume 11, Exhibit 47, p. 49. The Green Book is published by the American Medical Association, and is made available to medical schools and training programs throughout the country. Id.
. The first 1993 public offering of $49,925,000, issued in two series, was underwritten by the New York office of Morgan Stanley & Co. The Depository Trust Company of New York served as the securities depository of the bonds, Cede & Co., upon the nomination of the Depository Trust Company, acted as registered owner of the securities, and Financial Security Assurance, a New York company, issued an insurance policy to guarantee the payment of obligations under the terms of the debenture for the bonds. The second 1993 public offering was for $50,695,000. This offering was underwritten by the First Boston Corporation of New York, and the Depository Trust Company acted as the securities depository. Lutheran General Health System also issued bond offerings in 1985 and 1989 in unspecified ámounts. Plaintiffs’ Memorandum of Law at III — 19; Appendix Volume 4, Exhibit 7, Doc. No. LL05 164.
The Depository Trust Company holds securities for its participants, electronically facilitates the settlements among participants of securities transactions, receives principal and interest payments from the bond trustee, and credits the accounts of its participants, who then direct the principal and interest payments to the beneficial owners. Plaintiffs’ Memorandum of Law at HI-20.
. A portion of the proceeds was used to "acquire, construct, equip or remodel” the hospital and health care facilities of the Lutheran General Health System. Plaintiffs’ Memorandum of Law at III — 20; Appendix Volume 4, Exhibit 7, Doc. Nos. LL05 580, LL05 589. The Lutheran General Health System maintains fifty-five operating companies, Plaintiffs’ Memorandum of Law at III — 19 n. 9; Appendix Volume 4, Exhibit 7, Doc. No. LL05 164, thus, the amount of funds acquired by Lutheran General Hospital as the result of the offering is unclear, however, Lutheran General Hospital is obligated with respect to the bonds issued. Plaintiffs' Memorandum of Law, Appendix Volume 4, Exhibit 7, Doc. Nos. LL05 585 - LL05 588, LL05 636 - LL05 637. '
. Kenneth Rojek, the senior vice-president of operations at Lutheran General Hospital, indicated that the hospital leased Xerox equipment from a copying supply corporation, not Xerox itself, therefore, the hospital had no direct commercial ties to Xerox. Plaintiffs' Memorandum of Law, Appendix Volume 11, Exhibit 60, pp. 11-12.
. Forty-one million dollars of this bond issue, secured by the medical college and hospital's real and personal property, was used to provide funds for capital expenditures related to the acquisition and renovation of academic and research facilities, and for renovation of certain portions of the main clinical campus. Plaintiffs’ Memorandum of Law at III — 33.
. Mercy Catholic Medical Center — Misc.icordia Division does not sponsor an emergency medicine residency program, rather, it allows residents from Medical College of Pennsylvania to rotate through its emergency department, thus, it is Medical College of Pennsylvania that sent informational brochures to potential applicants in the Western District of New York, not Mercy Catholic Medical Center — Misc.icordia Division. Plaintiffs' Memorandum of Law, Appendix Volume 11, Exhibit 59, pp. 49-50 (Dr. James R. Roberts, chairman of the medical college's department of emergency medicine, stated that it mailed informational brochures regarding its emergency medicine residency programs to applicants, including applicants from New York).
. From December 1991 to May 1994, Mercy Catholic Medical Center — Misc.icordia Division treated 392 New York inpatients, and from December 1992 to May 1994, the hospital treated eighty-two New York outpatients. Plaintiffs' Memorandum of Law at III — 37.
. The four offerings made on behalf of the hospital include (i) an offering for $80 million in 1992, part of the proceeds were earmarked for the construction of a new tower to house part of its emergency department, (ii) an offering of $90 million in 1992, (iii) an offering of $80 million in 1989, and (iv) an offering of $72 million in 1986. Plaintiffs' Memorandum of Law at III — 39.
The First Boston Corporation served as the underwriter for each of these offerings, the New York office of Credit Suisse issued a standby purchase agreement with respect to at least one of the bond offerings and a letter of credit to secure all or part of the hospital’s $322 million obligation on the bonds, the Depository Trust Company served as securities depository for the bonds, and Standard & Poor’s and Moody’s, both located in New York, have rated some of the bonds issued for Methodist Hospital of Indiana. Plaintiffs' Memorandum of Law at III — 39 - HI-40.
In connection with the bond offerings, John Fox, the executive vice president and chief financial officer of the hospital, attended three meetings in New York with Standard and Poor’s and Moody’s in 1991 and 1993. Id.
. Dr. Chisholm asserts that in connection with his membership in several professional emergency medicine organizations, he has had telephone conversations and corresponded with organization members from New York. Plaintiffs’ Memorandum of Law at III-42. Additionally, Dr. Chisholm considered the accreditation appeal of the Metropolitan Hospital of New York in March of 1994 in connection with his RRC-EM duties. Id.
. In the fiscal year ending June 30, 1993, Ohio State University Hospital received a total of $273,000 in gifts, grants, and contributions from New York sources, however, the hospital did not indicate the amount which was derived from individual sources. Plaintiffs’ Memorandum of Law at III — 31.
.Ohio State University Hospital paid between $1.2 and $3 million per year for the services of temporary nursing agencies between 1989 and 1993; thus, Plaintiffs’ assert that the hospital expended approximately $138,000 to $200,000 per year for Supplemental Health Care’s services. Plaintiffs’ Memorandum of Law at III-29 n. 12.
. The principal investigator for these studies is a physician who practices at Oregon Health Sciences University Hospital. Plaintiffs’ Memorandum of Law at III-72.
. These bonds were issued in three offerings, one in 1988 and two in 1990. Plaintiffs' Memorandum of Law at III — 23 - III-24. A fourth bond offering took place in 1993, and was apparently a refinancing of the bonds issued in 1990. Id. at III — 23 - III-24 n. 10.
First Boston Corporation, through its New York office, served as one of the joint underwriters for each bond offering, the Depository Trust Company acted as the securities depository for all of the bonds, the MBIA, which is domiciled in New York, insured the payments required on the 1988 and 1990A bonds, Moody's provided bond rating services in connection with each offering. Standard & Poor's, another investor rating service headquartered in New York, provided such services for the 1988 and 1990A offerings. Riverside Methodist Hospitals is joint and severally liable for the payment of the obligations with respect to the bonds. Plaintiffs’ Memorandum of Law at III — 23 - III-25.
.Riverside Methodist Hospitals' interrogatory responses indicate that emergency room visits are included in the outpatient records, thus, some or all of the sixty New York outpatient visits in 1990 may also be emergency room visits. Plaintiffs’ Memorandum of Law, Appendix Volume 9, Exhibit 1, Doc. Nos. 888-891; Appendix
. These events took place at the State University oí New York at Buffalo, Erie County Community College and the Niagara Frontier [sic] College. Plaintiffs’ Memorandum of Law at HI-27.
. Saint Francis Medical Center negotiates master purchase agreements with suppliers and vendors on behalf of the Group Purchasing Organization's members that set the pricing and other terms for such members’ purchases. Plaintiffs’ Memorandum of Law at III — 5 9. The members of the Group Purchasing Organization pay a fee to participate. Id.
. These revenues do not include revenues derived from the hospital’s treatment of New York outpatients between 1987 and 1989. Plaintiffs’ Memorandum of Law at III — 60.
. St. Francis Medical Center is the OSF Healthcare Systems' largest hospital. Plaintiffs’ Memorandum of Law at III — 61. In 1986 and 1993, the bonds were delivered to the underwriters in New York and the Depository Trust Company acted as the securities depository for the 1993 offering. James Moore, the associate administrator of the medical center, who functions as its chief executive officer, traveled to New York to meet with Moody's and Standard and Poor's, who performed bond rating services in connection with the offerings.
.The Depository Trust Company, a New York company, acted as securities depository and, by its nominee, registered owner of the bonds. Plaintiffs’ Memorandum of Law at III-74. The bonds were delivered to the Depository Trust Company in New York, and it facilitates electronic transfers of the bonds in New York.' Id. Municipal Bond Investors Assurance Corporation ("MBIA”) of New York issued the bonds, and Merrill Lynch, a leading New York-based stock brokerage, bought all of the 1994 medical center bonds. Id.
In connection with the 1986 bond offering, Smith Barney, another New York City brokerage firm, served as the underwriter. Id. These bonds were made available to Smith Barney in New York. Id. at III — 75. Additionally, both the 1986 and 1990 bond offerings were used to finance the construction and equipping of parts of an ambulatory care complex and operating room suites, among other projects. Id. at III — 74 - III — 75.
. The Academic Medical Center Consortium is a group of eleven academic medical centers that formed the consortium to carry out research in ■ health services. Plaintiffs’ Memorandum of Law at III-75. Dr. Raymond Schultze, the director of the University of California (Los Angeles) Medical Center, is vice chairman of the Academic Medical Center Consortium. Id.
. University of California (Los Angeles) is currently participating in four studies, and recently concluded participation in another. Plaintiffs' Memorandum of Law at III — 75. For each study, each research team selects an individual physician that participates on behalf of the institution; the members of the consortium periodically meet to discuss the results of studies. Id. at III-75 - III-76.
.Four New York hospitals are members of the University Hospital Consortium, SUNY Downstate (Brooklyn), Stony Brook University Hospital, Columbia University, and Albany Medical Center. Plaintiffs' Memorandum of Law at HI-76. The Consortium also has a subsidiary corporation through which University of California (Los Angeles) purchases supplies and equipment. Id. University of California (Los Angeles) pays annual membership fees of $55,000, as well as costs incurred with particular studies. Id.
. Moody’s Investor Service located in New York City performed the bond rating services with respect to the offering. Plaintiffs’ Memorandum of Law at III — 64.
. However, David McKinney, the vice president for business and finance at University of New Mexico, New Mexico Medical Center testified that he never traveled to New York in connection with the issuance of any bond offering. Plaintiffs' Memorandum of Law at III-64; n. 24; Appendix Volume 11, Exhibit 42, p. 38.
. The number of persons in New York state to whom these mailing were sent is not provided in the record.
. Goldman Sachs & Co., a New York based investment banking firm, served as one of the underwriters for this offering, and the Depository Trust Company served as a securities depository for the bonds. Plaintiffs' Memorandum of Láw at III — 54.
. Plaintiffs' Memorandum of Law indicates that the University Medical Center is part of the University of Arizona. See Plaintiffs' Memorandum of Law at 11-23, III-66, V-58, V-128. However, the University Medical Center merely has an affiliation agreement with the University of Arizona. Plaintiffs’ Memorandum of Law, Appendix Volume 7, Exhibit 1, Doc. Nos. LL15 18-LL15 20.
. Physical and occupational therapists from these schools perform clinical rotations at the medical center in connection with their training programs. Plaintiffs' Memorandum of Law at III-66.
.The proceeds of the 1992 offering of $28,-405,000 and the 1993 offering of $54,750,000 were used to refinance outstanding bonds, however, the proceeds of the 1991 issue were used to finance the construction of improvements in the medical center, including a relocation and expansion of the emergency department, the construction of an imaging center, and a new patient tower. Plaintiffs’ Memorandum of Law at HI-66 - III — 67.
The bonds were initially sold in New York to Dillon, Read & Co., Inc., the underwriter of the bond offerings, the Depository Trust Company acted as the securities depository, and, by its nominee, registered owner of all the bond offerings, the bond offerings were insured by the MBIA, and Moody’s and Standard & Poor’s performed rating services for each of the bond offerings. Plaintiffs’ Memorandum of Law at III — 66 - III-68.
. Plaintiffs did not make this claim with respect to Defendants Mercy Hospital and Medical Center, Riverside Methodist Hospitals, Tri-City Medical Center, or University Hospital at the University of New Mexico School of Medicine. Plaintiffs’ Memorandum of Law at III — 23 -HI-28, 111 — 57 - HI-59, III — 63 - III-66, III-81 - HI-82. Additionally, Detroit Receiving Hospital and University Health Center was unable to provide the Plaintiffs with specific information regarding revenues from New York residents, as this information was not available. Plaintiffs’ Memorandum of Law, Appendix Volume 4, Exhibit 5, Doc. No. LL03 24. Thus, neither the court nor the parties can determine the percentage of revenues derived from the treatment of New York patients with respect to Detroit Receiving Hospital and University Health Center.
. The court notes that throughout the following discussion, the years of comparison between the revenues generated from the treatment of New York patients may be slightly different than those used ■ to determine each hospital Defendant's overall revenues from the treatment of patients. When such a disparity is present, this court has used a shorter time period for the overall patient charges in determining the percentage of income derived from New York patients. Additionally, the figures provided have been rounded up or down to the nearest dollar.
. The court notes that although Plaintiffs state $322,497 in gross revenues was attributed to New York patients, when tallying the numbers presented in Forsyth Memorial Hospital's Answer to Interrogatory No. 7, the total gross revenues for New York patients is $322,767. Plaintiffs' Memorandum of Law, Appendix Volume 12, Exhibit 4, Supplemental Answer to Interrogatory No. 7.
. As discussed above, Discussion Section 11(b)(1)(a), supra, Johns Hopkins Hospital maintains a New York office through which it actively solicits contributions from patients in the northeast. Sekulow Affidavit at ¶¶ 1-10.
. With the exception of Johns Hopkins Hospital, as discussed in Section 11(b)(1)(a), supra.
. Forsyth Memorial has participated in a New York job fair for physical therapists, Medical College of Pennsylvania and Hospital sent representatives to a job fair at SUNY at Buffalo in 1993 to recruit nurses, Riverside Methodist Hospitals sent human resources personnel to job fairs in 1988, 1991, 1992, and 1993 to recruit nurses, therapists, or technologists, the University of Massachusetts Medical Center sent employees to two job fairs in New York in 1988 to recruit for research and nursing positions, and University Medical Center (Tucson) sent representatives for each of the past four years to job fairs to recruit physical and occupational therapists.
. This contact is not relevant lor purposes of determining personal jurisdiction as it occurred after service of the summons and complaint.
. This special committee considered whether to recommend to ABEM an alternative to its residency training requirement for certification.
. Defendants argue that as SUNY Buffalo did not pay its dues until February of 1994, and the receipt of dues is necessary to become a member of CORD, that SUNY Buffalo was not a member of CORD until after this suit was filed.
. The court has previously determined that ABEM is subject to jurisdiction in New York under Section 12 of the Clayton Act.
Daniel v. American Board of Emergency Medicine,
. The Sherman Act was enacted to assure competition by protecting the economic freedom of participants in the relevant market and therefore protects only against injuries sustained as the result of anticompetitive activities.
Bhan v. NME Hospitals, Inc.,
. Plaintiffs have asserted several antitrust injuries, including "the loss of jobs, the loss of promotions and directorships, the inability to apply for new positions, and discrimination in remuneration and conditions of employment in the New York hospitals in which they practice.” Plaintiffs’ Memorandum of Law at V-137; Second Amended Complaint at ¶¶ 57, 64, 66, 91-110, 124-126. Plaintiffs also contend that the alleged conspiracy has resulted in a manpower shortage in the field of emergency medicine, which affects the needs and interests of the public in New York. Plaintiffs’ Memorandum of Law, Appendix Volume 1, Exhibit 4, ¶¶ 4-5; Exhibit 5.
. Defendants Children’s Hospital (San Diego), Detroit Receiving Hospital and University Health Center, Forsyth Memorial Hospital, Lutheran General Hospital, Mercy Catholic Medical Center — Misc.icordia Division, Riverside Methodist Hospitals, St. Anthony Hospital, and Tri-City Medical Center do not operate residency programs in emergency medicine; they do, however, allow residents from other residency programs to "rotate” through their emergency departments as part of their training.
. The ACEP is an academic organization for practicing emergency physicians which sponsors continuing medical education programs and a professional journal, the Annals of Emergency Medicine.
. The RRC-EM is a committee of the Accreditation Council for Graduate Medical Education which reviews, sets standards for, and accredits emergency medicine residency programs such as those operated by the hospital Defendants, except Children's Hospital (San Diego), Detroit Receiving Hospital, Forsyth Memorial Hospital, Lutheran General Hospital, Mercy Catholic Medical Center — Misc.icordia Division, Riverside Methodist Hospitals, St. Anthony Hospital, and TriCity Medical Center.
. SAEM is a society for academic emergency physicians who are faculty members at medical schools and teaching hospitals.
. UA/EM is an organization for academic emergency physicians who are faculty members and administrators at medical schools and teaching hospitals. UA/EM merged with the Society for Teachers of Emergency Medicine in 1988 to form SAEM.
. STEM is an organization for academic emergency physicians who are faculty members at medical schools and teaching hospitals. STEM merged with UA/EM in 1988 to form SAEM.
. The AACEM is an association of individuals who hold chairmanship positions in academic departments of emergency medicine at teaching hospitals and medical schools. The AACEM was formed in 1989 by SAEM.
. In order for the specialty of emergency medicine to be officially recognized by the AMA, representatives of the AMA must establish a specialty section prior to recognition by the American Board of Medical Specialties as a primaiy specialty board.
. It is undisputed that ABEM closed the practice track on June 30, 1988, and has rejected the altemalive pathways presented.
. Several of the Defendant hospitals do not belong to CORD, as they do not maintain residency training programs in emergency medicine. See Footnote 123, supra.
. Plaintiffs argue that the RRC-EM requirement. that physicians participate in professional organizations, and the fact that hospitals often pay for the expenses of the physicians, as well as permit them to use hospital time, office space, staff, and supplies, indicates that the physicians are acting as representatives or agents of the hospital in attending these professional meetings. Plaintiffs’ Memorandum of Law at V-110 - V-130. However, hospitals support and encourage affiliation with professional organizations in order to maintain their physicians’ contact with new information and ideas in their fields, as well as participation in efforts to advance communication among physicians, resulting in the development and advancement of emergency medicine as a whole. '
Compare Menzie v. Windham Community Memorial Hospital,
Plaintiffs' agency theory is continued by arguing that because the hospital Defendants condone, if not encourage, the participation of physicians in professional organizations, such participation is "part of the job,” and therefore, within the scope of employment. Plaintiffs' Memorandum of Law at V-113. However, simply because an employer approves of a certain behavior, such permission or support does not indicate that the conduct is considered a condition of the employment, rather, a hospital's encouragement in such matters is an investment in the continuing medical education of its physicians, which will lead ultimately to better performance of their duties.
. In fact, CORD indicated that a shortage of residency trained, board certified emergency physicians exists. Plaintiffs' Memorandum of Law, Appendix Volume 2, Exhibit 3, Doc. No. C71. CORD subsequently established a task force to explore the issue of alternative training. C110, C113. The report of the committee which surveyed CORD members regarding alternative pathways to board eligibility summarized the results as follows: approximately 75% of those who responded opposed alternative pathways, 11% did not object to an alternative pathway, but did object to the specific proposal, see Plaintiffs’ Memorandum of Law, Appendix Volume 2, Exhibit 3, Doc. Nos. C255-C256, C1065, as they believed it would lead to inadequate patient care, didactics i.e. teaching, and specialty service experience. Plaintiffs' Memorandum of Law, Appendix Volume.2, Exhibit 3, Doc. Nos. C234, C247-C253, C958. CORD then adopted the position that it was not in favor of "any alternative training routes being discussed at this time.” Plaintiffs' Memorandum of Law, Appendix Volume 2, Exhibit 3, Doc. Nos. C659. CORD concluded that no emergency physician, regardless of board certification, need fear unemployment as each physician "should be judged by his dedication, performance and compassion rather than his certificates,” and that the lowering of standards for residency training and board eligibility would be unacceptable, as it would "suggest that Emergency Medicine is not a specialty and not worthy of study.” Plaintiffs’ Memorandum of Law, Appendix Volume 2, Exhibit 3, Doc. Nos. C236-C237.
Additionally, minutes from one of the CORD meetings indicate that "[rjelations between academics and practitioners, whether boarded [certified] or not, should be as equals. Evaluation of a physician should be on the basis of his performance.” Plaintiffs’ Memorandum of Law, Appendix Volume 2, Exhibit 3, Doc. No. C235. Further, CORD stated that residency training has a "format and defined curriculum that is equiva
. ABEM, ACEP, and the AMA Council on Medical Education became the sponsors of RRC-EM in 1982, and continue to nominate representatives to serve as members of RRC-EM. Plaintiffs' Memorandum of Law at V-32.
. The ACGME is sponsored by the American Board of Medical Specialties, the American Medical Association, the Association of American Medical Colleges, and the Council of Medical Special Societies. The ACGME is an organization which accredits residency training programs through the use of Residency Review Committees for each specialty. Thus, with respect to emergency medicine, the RRC-EM reviews the residency training programs of various hospitals and recommends them for accreditation to the ACGME.
.CORD assisted RRC-EM with its special requirements for emergency medicine by submitting comments on the proposed changes. CORD suggested that the RRC-EM change its requirement that all faculty be certified by ABEM by allowing physicians additional time to become ABEM certified, and that RRC-EM remove the requirement of residency training. However, this suggestion was not adopted. Plaintiffs’ Memorandum of Law, Appendix Volume 2, Exhibit 3, C757, C760, C763, C772, C777.
. The Plaintiffs have not extended the logic of their argument to postulate that the hospital Defendants' adoption of or acquiescence to RRC-EM’s Special Requirements constituted conspiratorial behavior. See Plaintiffs' Memorandum of Law at V-102 - V-l 10. However, even if such an assertion were established, there is an absence of evidence that the hospital Defendants benefitted from any monopoly power as the result of such behavior, and could not therefore be subjected to jurisdiction under such a theory. See Plaintiffs' Memorandum of Law, Section V.
. However, an exemption from the requirement of board certification exists for physicians who were practicing at the hospital at the time of • the agreement to contract emergency medicine physician services, January 15, 1993. Plaintiffs' Memorandum of Law, Appendix Volume 4, Ex- ’ hibit 1, Doc. Nos. FMH26-FMH27.
. Neither the Medical College of Pennsylvania and Hospital nor Mercy Catholic Medical Center — Misc.icordia Division provided Plaintiffs with the emergency physicians on their staff who are ABEM certified. Plaintiffs’ Memorandum of Law at V-58; Appendix Volume 12, Exhibits 10, 11.
. Conscious parallelism is uniform business conduct by competitors that permits a court to infer the existence of a conspiracy between these competitors.
See, e.g., Interstate Circuit, Inc.
v.
United States,
. If the district judge agrees that Plaintiffs have not demonstrated a conspiracy by a preponderance of the evidence, the court need not further consider whether Plaintiffs have met their burden to also show an overt act, intentional participation, resulting injuries, and the other prerequisites for jurisdiction under Section 302(a)(2) enunciated in Chrysler Capital Corp., supra, and discussed below.
. See Footnote 123, supra.
. Although Plaintiffs' definition of the relevant market, i.e . ABEM certified emergency physicians, in relation to ABEM’s asserted monopoly, may appear tautological, Plaintiff has, on these motions, nevertheless clearly established (a) a demand for physicians specializing in emergency medicine who are "board certified,” and (b) that ABEM is presently the only entity available to provide such certification.
. Lincoln Medical and Mental Health Center, Our Lady of Mercy Medical Center, and State University of New York at Stony Brook University Hospital undisputedly reside in New York and are thus irrelevant to this discussion. Further, Plaintiffs have not alleged any overt acts in New York that these in-state Defendants committed in furtherance of the alleged conspiracy.
. As the Plaintiffs failed to make a sufficient showing of an antitrust conspiracy, the antitrust violations and injuries discussed in Section II(3)(a) of this Report and Recommendation should not be treated as injuries occurring in New York for purposes of considering personal jurisdiction under Section 302(a)(3). Alternatively, should the District" Judge find that an antitrust "conspiracy for jurisdictional purposes has been made out, the antitrust injuries sustained by those Plaintiffs residing in New York at the time their application to ABEM were denied would satisfy the threshold requirement of injury for purposes of Section 302(a)(3).
. The business requirement under this provision requires a nondomiciliary to have less connection with the forum state than is required by the concept of "doing business” under N.Y. CPLR Section 301.
Tabacco v. Spray Products Corp.,
.The Plaintiffs have not alleged any tortious acts of CORD or any of the nonparty co-conspirator professional emergency medicine organizations which resulted in injury in New York.
. Forsyth Memorial Hospital received $6,618,-437 in out-of-state revenue in fiscal 1994; Johns Hopkins Hospital received $35,529,338 in out-of-state revenue in 1993; Loma Linda University Medical Center received $10,057,000 in out-of-state revenue in 1993; Lutheran General received $123,744 in revenues from New York in 1993; Medical College of Pennsylvania and Hospital received $19,912,068 in out-of-state revenue in 1993; Mercy Catholic Medical Center — Misc.-icordia Division received 7% of its total revenue from out-of-state sources in 1993; Methodist Hospital of Indiana received $1,322,294 in out-of-state patient charges in 1994; Ohio State University Hospital received $73,417 in revenues from New York in 1992-1993; Oregon Health Sciences University Hospital received $44,540,-966 in out-of-state revenue for fiscal 1994 through February 28, 1994; Saint Francis Medical Center received $4,519,903 in out-of-state revenue in 1993; St. Anthony Hospital received $21,501,811 in out-of-state revenue in 1993; University of California (Los Angeles) medical Center received $40,703,669 in out-of-state patient charges in 1993-1994; University of California (Irvine) Medical Center received $4,829,228 in out-of-state patient charges in 1993-1994; University of California (San Diego) Medical Center received $21,930,522 in out-of-state revenue in 1993-1994; University of Massachusetts Medical Center received $30,083,205 in out-of-state revenue in 1993; University Medical Center (Tucson) received $14,573,231 in out-of-state revenue in 1992-1993. The remaining hospital Defendants, Children's Hospital (San Diego), Children’s Hospital of Michigan, Detroit Receiving Hospital, Kettering Medical Center, Mercy Hospital and Medical Center, Riverside Methodist Hospitals, Tri-City Medical Center, and University Hospital at the University of New Mexico School of Medicine did not provide information regarding out-of-state revenues as opposed to total revenues, however, based on the total revenues of each of these hospital Defendants, it is reasonable to infer that they too receive sufficient out-of-state revenues to meet the requirements of Section 302(a)(3).
. A motion to dismiss for improper venue is considered dispositive, as opposed to a motion to transfer, which a magistrate judge has the authority to hear and determine pursuant to a referral under 28 U.S.C. § 636(b)(1)(A).
See Mi-chelli v. City of Hope,
. Defendants Forsyth Memorial Hospital, Kettering Medical Center, Lincoln Medical & Mental Health Center, Ohio State University Hospital, Riverside Methodist Hospitals, Saint Francis Medical Center, Tri-City Medical Center and Stony Brook University Hospital waived the defense of improper venue. Forsyth Memorial Hospital, Ohio State University Hospital, and Riverside Methodists Hospitals subsequently moved to add this affirmative defense, however, these motions have been denied. Decision and Order, dated January 16, 1996.
The University of California Medical Centers also moved to dismiss for improper venue under 28 U.S.C. § 1406(a), as discussed in the next section.
. Under the Sherman Act, prior to enactment of the Clayton Act, an antitrust plaintiff was required to sue in a defendant corporation's state of inhabitance, i.e., place of incorporation. 3 Kintner, Legislative History of the Federal Antitrust Laws and Related Statutes, at 2770-73 (1978).
. In a state with multiple judicial districts and in which a corporate defendant is subject to personal jurisdiction at the time the action is commenced, the corporation “shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it-to personal jurisdiction if that district were a separate State, and, if there is no such district, the corporation shall be deemed to reside in the district within which it has the most significant contacts.” 28 U.S.C. § 1391(c).
. Defendants rely on this case for the proposition that, as stated by the court, the test for transacting business for venue purposes under Section 12 is "co-extensive with the test for personal jurisdiction under New York CPLR § 302.” Defendants, Joint Reply Memorandum of Law at p. 86. However, the court in Agra did not cite any authority to support this proposition, nor did it review the legislative history of Section 12 of the Clayton Act in coming to this determination. Thus, to the extent that this statement purports to be prevailing law, this court finds it inconsistent with the criteria for finding venue under Section 12 as enunciated in both Eastman, supra, and Scophony, supra.
. Even if the MATCH could be considered a contact with this district, some Defendants do not participate in the MATCH, Discussion Section 11(b)(1), supra, and, with respect to the hospital Defendants that do participate in the MATCH, some Defendants have had no matches with persons in this district from 1992 - 1994, and no program had more than nine matches during this three year period. Plaintiffs’ Memorandum of Law, Appendix Volume 1, Exhibit 2, pp. 3-23.
. The court notes that the addition of multiple plaintiffs to this lawsuits has not altered the nature of the action.
Cf. Owen Equipment & Erection Co. v. Kroger,
. Although the court disagrees with ABEM's assumption that the number of plaintiffs varies the nature of the action, see 28 U.S.C. § 1391(b) (in a civil action not founded solely on diversity, suit "may be brought only in the judicial district where all defendants reside, or in which the claim arose, except as otherwise provided by laws”), nevertheless, as ABEM had no apparent reason to challenge venue, since Dr. Daniel's Human Rights Law claim was part of the action, this court gives ABEM the benefit of the doubt and will allow ABEM to assert its defense of improper venue.
. The factual statements set forth and discussed in Discussion Section 111(a)(1) - III(a)(15) are based on the affidavits of representatives of ABEM, CORD and the hospital Defendants. The Plaintiffs have not challenged these representations, and they are accepted by the court.
See King v. Johnson Wax Associates, Inc.,
. Of the 12,935 certified Diplomates of Emergency Medicine, approximately 643 have mailing addresses in New York. Munger Affidavit at ¶ 8.
.The Michigan long arm statute provides that if a corporation transacts any business within the state, that shall constitute a sufficient basis for personal jurisdiction over the corporation. Mich.Comp.Laws § 600.715(1) (1981) (emphasis added). Similarly, Section 302(a)(1) of the New York CPLR provides that "[a]s to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over a non-domiciliary ... who in person or through an agent ... transacts any business within the state....” N.Y.Civ.Prac.L. & R. § 302(a)(1) (McKinney 1990) (emphasis added). If the facts in this case were presented to a New York court, by applying Section 302(a)(1), it would reach the same result as did the court in Lanier. Thus, ABEM would be subject to personal jurisdiction for transacting business in New York under Section 302. Regardless, as this court has already indicated, in its Report and Recommendation dated February 25, 1992, that ABEM was transacting business for purposes of personal jurisdiction, and the District Judge has accepted such Report and Recommendation, this finding is the law of the case.
. Telephone and mail contacts alone may form a basis for jurisdiction when a defendant has "projected himself into New York in such a manner that he 'purposefully availed himself *** of the benefits and protections of its laws.' ”
United States Theatre Corp., supra,
at 595 (quoting
Parke-Bernet Galleries v. Franklyn,
. Neither side has provided any information regarding the actual number of ABEM certified physicians residing in New York as of the date the action was filed or the number of physicians who, while residing in New York, applied for certification, or related application fees. However, as noted, 643 ABEM certified physicians presently reside in New York.
. Plaintiffs did not assert that any of the contacts alleged in the personal jurisdiction section of their brief should be discussed for purposes of finding venue as to any of the Defendants. Plaintiffs' Memorandum of Law, Section II.
. Dr. Bock testified that during his six years on the RRC-EM, the RRC-EM probably reviewed each of the New York emergency medicine residency programs, including those of the hospital Defendants, at least once. Plaintiffs' Memorandum of Law, Appendix Volume 10, Exhibit 5, pp. 24-25.
. In 1993, Johns Hopkins raised over $10 million from corporations, foundations, and organizational donors located in New York. Johns Hopkins' Memorandum of Law in Support of Motion to Dismiss, filed January 30, 1995, Exhibit D.
. Mercy Catholic medical Center — Misc.icor-dia Division does not have an emergency medicine residency program, rather, the medical center allows residents from the Medical College of Pennsylvania’s emergency medicine residency program to rotate through its medical center.
. Dr. Strange was employed by Mercy Hospital and Medical Center as the, director pf the department of emergency medicine from 1981— 1986. Plaintiffs’ Memorandum of Law, Appendix Volume 11, Exhibit 68, p. 9. From 1986-1990, Dr. Strange was the head of the emergency department at the University of Illinois in Chicago, but practiced at Mercy Hospital in relation to the residency program. Id. at p. 11. However, after February of 1993, Dr. Strange no longer participated in the residency program. Id. at p. 12'.
. Although the medical center also has one insurance contract with an insurer located in New York, obtains supplies from suppliers and vendors located in New York, and has issued a bond offering which may have required the use of New York based firms, the Plaintiffs have not alleged that these contacts are relevant to the determination of whether venue is proper under Section 12.
. Before the December 1, 1990 amendments to Section 1391(b), the statute provided that "[a] civil action wherein jurisdiction is not founded solely on diversity of citizenship may be brought only in the judicial district where all defendants reside, or in which the claim arose, except as otherwise provided by law.” 28 U.S.C. § 1391(b) (1988).
.Defendants Frank A. Disney, M.D., Heniy A. Thiede, M.D., Lincoln Medical & Mental Health Center, Our Lady of Mercy Medical Center, and State University of New York at Stony Brook University Hospital all reside in New York state.
. Defendants rely on
Grosser v. Commodity Exchange, Inc.,
The question whether the nationwide service of process clause in Section 12 was conditioned upon satisfying the venue provision was addressed in
Michelson v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Defendants also contend that the Plaintiffs' application of Section 12 "makes nonsense of the statute” and "strips venue of the protection it affords non-resident defendants.” Defendants' Joint Reply at 93. Defendants' argument begs the question of what the statute actually says and what "protection” Congress intended to provide defendants, particularly domestic corporations, through its venue requirements and overlooks precedent that the general venue statute, 28 U.S.C. § 1391, is supplementary to Section 12.
Grosser, supra,
at 1313.
King,
. As Oregon Health Sciences University Hospital is a public benefit corporation, Section 12 provides for personal jurisdiction over this Defendant, thus, it is also subject to venue pursuant to Sections 1391(c) and 1391(b)(1).
. Defendants Ohio State University Hospital and Tri-City Medical Center have both waived the improper venue defense, therefore, venue over these defendants is proper in this district.
. The court notes that Dr. Daniel has abandoned his New York State Human Rights Law claim, i.e. that he was denied the opportunity to take the emergency medicine certification examination on the basis of his race, Amended Complaint, filed Februaiy 7, 1991, at ¶¶ 29, 101-108, as it was not reasserted in the Second Amended Complaint, filed January 13, 1994.
. Although no conspiracy was established for purposes of personal jurisdiction, see Discussion Section 11(b)(3), supra, ABEM would remain as a defendant with respect to Plaintiffs’ antitrust claims, as this court has not addressed the merits of Plaintiffs’ Sherman claims. Notwithstanding that this court has not ruled on the pending Rule 12(b)(6) motions, for purposes of determining whether venue exists át this preliminary stage, the court must assume that the Plaintiffs have stated an antitrust claim. Whether the Plaintiffs can establish their Sherman Act claims is another question.
. If the district court accepts this court’s findings regarding Eleventh Amendment immunity, the state action doctrine, or lack of personal jurisdiction, the University of California Medical Centers’ Motions to Dismiss pursuant to 28 U.S.C. § 1406(a) are moot.
. Section 1407(a) provides that when civil actions involving common questions of fact are pending in different districts, the judicial panel on multidislrict litigation is authorized to transfer the actions for consolidated pretrial proceedings. 28 U.S.C. § 1407(a) (1988);
Menowitz v. Brown,
. Should the District Court not find, as recommended, see Discussion Sections 1(a)(2) and • 1(b)(3), that Oregon Health Sciences University Hospital is immune from suit under the Eleventh Amendment or the state action doctrine, then it is subject to personal jurisdiction pursuant to Section 12 of the Clayton Act.