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Furlong v. Long Island College Hospital

June 14, 1983

MONICA FURLONG, M.D., PLAINTIFF-APPELLANT,
v.
THE LONG ISLAND COLLEGE HOSPITAL, ET AL., DEFENDANTS-APPELLEES.



Appeal from a judgment of the District Court for the Eastern District of New York (Charles P. Sifton, Judge), dismissing with leave to amend an antitrust complaint brought by a physician against a physician, a hospital, and an organization of anesthesiologists. Affirmed.

Author: Newman

Before: FEINBERG, Chief Judge, TIMBERS and NEWMAN, Circuit Judges.

NEWMAN, Circuit Judge:

This is an appeal from a judgment of the United States District Court for the Eastern District of New York (Charles P. Sifton, Judge) entered upon an order dismissing, with leave to amend, a Sherman Act complaint for failure to allege adequately the required connection to interstate commerce. Though we do not agree with all of the District Court's analysis of the relevant standards for assessing the sufficiency of an allegation of interstate commerce effects, we agree that the complaint, in its present form, was properly dismissed.

I.

The following facts were alleged in the complaint and subsequently filed affidavits. Plaintiff-appellant Monica Furlong is a licensed physician and surgeon and a National Board certified anesthesiologist. Dr. Furlong began work at the Long Island College Hospital (LICH) in 1968. In 1974, Dr. Stewart Owre, chief of the Department of Anesthesiology at LICH, appointed Dr. Furlong to the position of Assistant Director of Anesthesiology. By 1977, appellant had become a fully privileged staff member of LICH with senior privileges in anesthesiology.

In May 1978, Dr. Owre established a professional corporation, Long Island Anesthesiology Associates (LIAA). Although the other anesthesiologists associated with LICH joined LIAA, Dr. Furlong was not asked to become a member. On May 10, 1978, LIAA executed a contract with LICH, which granted LIAA the exclusive right to provide anesthesiological services to LICH, and which obliged LIAA to provide such services on a 24-hour, seven-days-per-week basis.

Notwithstanding the exclusivity provision of its contract with LIAA, LICH did not dismiss Dr. Furlong from her staff position. Dr. Owre, however, deprived Dr. Furlong of certain economic benefits that she had consistently received prior to the formation of LIAA. In addition, Dr. Owre removed Dr. Furlong from her position as Assistant Director of Anesthesiology and sought to prevent her assignment to surgical cases.

On April 15, 1979, Dr. Furlong requested and received a leave of absence from LICH. Some time during her leave, Dr. Furlong found alternative employment as an anesthesiologist. On August 14, 1981, Dr. Furlong instituted this action, alleging, among other things, that LICH, LIAA, and Dr. Owre acted together to restrain trade and fix prices in violation of section 1 of the Sherman Act, 15 U.S.C. ยง 1 (1976).

To establish that her claim was cognizable under federal antitrust law, Dr. Furlong alleged several connections between the parties' business activities and interstate commerce. The connections specified were Dr. Furlong's receipt of third-party payments from out-of-state, LIAA's receipt of such payments, LIAA's practice of purchasing goods and services in interstate commerce, and LICH's receipt of federal subsidies. It was not alleged that any of these connections to interstate commerce were or would be affected by the claimed antitrust violation.

Defendants filed motions to dismiss the complaint, pursuant to Rule 12(b)(6) Fed. R. Civ. P., for failure to allege adequately the effect on interstate commerce required to permit application of the Sherman Act. In the supporting affidavits, defendants asserted that neither the amount of out-of-state payments received nor the amount of goods and services purchased had been or would be altered by their alleged conduct.

On June 16, 1982, the District Court filed a memorandum opinion and order dismissing the claim.*fn1 In its opinion, the Court held that "'[a]s a matter of logic,' the extent of defendants' activities in interstate commerce, in and of itself, 'is irrelevant in a denial of hospital staff privileges... [since] their denial of staff privileges to [plaintiff] has no possible effect on their own activities in interstate commerce; the only potential effect relates to plaintiff['s] practice of medicine,'" quoting Cardio-Medical Associates, Ltd. v. Crozer-Chester Medical Center, 536 F. Supp. 1065 (E.D. Pa. 1982). Focusing solely on plaintiff's professional activities, Judge Sifton concluded that plaintiff's receipt of third-party payments from out of state did not provide a cognizable relation to interstate commerce within the scope of the Sherman Act.*fn2 He therefore dismissed the complaint "without prejudice to the filing of an amended complaint that would state a claim within the Court's jurisdiction." Declining the District Court's invitation to amend, plaintiff appealed from the judgment entered upon the order of dismissal.

II.

The interstate commerce component of an antitrust cause of action may be established in two ways. First, plaintiff may allege and prove that defendant's conduct is "within" the stream of interstate commerce. Goldfarb v. Virginia State Bar, 421 U.S. 773, 44 L. Ed. 2d 572, 95 S. Ct. 2004 (1975). Alternatively, plaintiff may allege and prove that defendant's conduct, although entirely local or confined to one state, nonetheless "affects" interstate commerce. United States v. Employing Plasterers Association, 347 U.S. 186, 189, 98 L. Ed. 618, 74 S. Ct. 452 (1954). Both sides in this case agree that the complaint seeks to plead antitrust jurisdiction under the "affecting commerce" approach. What divides the parties on the substantive aspect of the commerce issue is a dispute concerning the scope of business activities relevant in determining the requisite relationship to interstate commerce. This dispute concerns two issues: (1) whether, in any antitrust case, a court may examine all of the business activities of a defendant or only the ...


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