Sandcrest Outpatient Services, P.A. v. Cumberland County Hospital System, Inc.

853 F.2d 1139, 1988 WL 82194
CourtCourt of Appeals for the Fourth Circuit
DecidedAugust 10, 1988
DocketNo. 87-1713
StatusPublished
Cited by7 cases

This text of 853 F.2d 1139 (Sandcrest Outpatient Services, P.A. v. Cumberland County Hospital System, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sandcrest Outpatient Services, P.A. v. Cumberland County Hospital System, Inc., 853 F.2d 1139, 1988 WL 82194 (4th Cir. 1988).

Opinion

POWELL, Associate Justice:

The issue presented is whether the district court erred in granting summary judgment in favor of appellees on the question whether they were entitled to immunity from damages pursuant to the Local Government Antitrust Act of 1984. We also consider whether it was improper for the district court to have stayed all discovery, and whether the district court abused its discretion in denying appellant leave to amend its complaint to seek injunc-tive relief. We affirm the district court in all respects.

[1141]*1141I

Appellant, Sandcrest Outpatient Services, P.A. (“Sandcrest”), is a professional association of emergency room physicians that, from march 1,1981 until February 28, 1986, provided physician services for the emergency room at Cape Fear Valley Medical Center (the “Medical Center”), a county hospital owned and operated by appellee Cumberland County Hospital System, Inc. (“Hospital System”).1 The Hospital System is a nonprofit corporation that was created, pursuant to North Carolina law, to act as an agency and instrumentality of Cumberland County in operating county-owned hospitals. See N.C.Gen.Stat. § 131-90, et seq. (1981 ed.) (currently codified, as amended, N.C.Gen.Stat. § 131E-1, et seq. (1986)). On December 11, 1985, John Plyler, the director of the Medical Center and the representative of Sun-Health Management Corporation (“Sun-Health”) — a corporation that had managed the Medical Center since the fall of 1985— announced at an executive session of the hospital’s Board of Trustees that the Sand-crest contract would not be renewed when it expired on February 28, 1986. A discussion followed, and the next day Plyler informed Sandcrest that its contract would not be renewed. On January 20, 1986, in response to the presentation of a petition signed by 25% of the active medical staff, Dr. Briggs, the Chief of Staff of the Medical Center and a member of the Board of Trustees of the Hospital System, called a special meeting of the medical staff as required by the Medical Staff Bylaws. At the meeting, Briggs explained that the Sandcrest contract would not be renewed and that several emergency room groups had submitted proposals. He advised that an ad hoc committee of staff physicians had been appointed to examine the various bids that had been submitted.

On January 22, 1986, two days after the staff meeting, the hospital executed an agreement with Coastal Emergency Services, Inc. for the provision of emergency room services for three years, commencing March 1, 1986. On November 10, 1986, Sandcrest filed this action alleging that ap-pellees — the Hospital System, SunHealth, Dr. Briggs and the members of the ad hoc committee — had violated Section 1 of the Sherman Act and Section 75-1 of the North Carolina Unfair And Deceptive Trade Practices Act by engaging in a conspiracy to restrain trade. Specifically, appellant alleged that appellees engaged in a group boycott against it, and that they refused to deal with it as part of a conspiracy to prevent the renewal of its contract to provide physician services to the emergency room at the Medical Center. Sandcrest’s complaint sought damages and reasonable attorney’s fees and costs.

Appellees filed motions to dismiss under Rule 12(b)(1) and (6), asserting that the complaint failed to allege a sufficient nexus between the alleged conspiracy and its impact on interstate commerce. Sandcrest filed a motion to amend the complaint to add additional allegations regarding a nexus with, and effect on, interstate commerce. Appellees subsequently filed a joint motion for summary judgment asserting, inter alia, immunity from suit pursuant to the Local Government Antitrust Act of 1984. On May 6, 1987, in response to a motion by appellees, the district court ordered a stay of all discovery. On July 10, 1987, the court denied appellant’s request for limited relief from the stay order. On July 24, 1987, appellant filed a second motion to amend the complaint, seeking to add claims for injunctive relief against all ap-pellees.

On September 3, 1987, the district court allowed appellant’s first motion to amend the complaint, granted summary judgment in favor of all defendants on the ground that the appellees were entitled to immunity under the Local Government Antitrust Act, denied appellant’s second motion to amend the complaint, and dismissed appellant’s pendent state claim. This appeal followed.

[1142]*1142II

Congress enacted the Local Government Antitrust Act of 1984, 15 U.S.C. § 34, et seq., (“LGAA” or the “Act”) in order to broaden the scope of antitrust immunity applicable to local governments. This was a response to the filing of “an increasing number of antitrust suits, and threatened suits, that could undermine a local government’s ability to govern in the public interest.” H.R.Rep. No. 965, 98th Cong., 2d Sess. 2, reprinted in 1984 U.S.Code Cong. & Admin.News 4602, 4603.2 The Report of the Senate Committee on the Judiciary, in considering the problem of antitrust suits facing local governments, noted that:

More than one hundred Federal antitrust suits seeking treble damages are now pending against cities, counties, townships and virtually every other type of local government. Dozens of local government activities are being challenged, ranging from zoning decisions to the regulation of garbage collection, airport concessions, and parking lots.

S.Rep. No. 593, 98th Cong., 2d Sess. 2 (1984). The Senate Report concluded that it was necessary to enact a statute that would “allow local governments to go about their daily functions without the paralyzing fear of antitrust lawsuits.... ” Id. at 3. Both the House and the Senate, however, were careful to observe that the immunity being provided to local governments was immunity from suits for damages, and not immunity from suits seeking injunctive relief. See id. at 5-6; H.R.Rep. No. 965, 98th Cong., 2d Sess. 2, reprinted in 1984 U.S.Code Cong. & Admin.News 4602, 4603.

It was in the light of the above purpose that, in 1984, Congress enacted 15 U.S.C. §§ 34-36. Section 35(a) provides, in relevant part, that “[n]o damages ...may be recovered ...from any local government, or official or employee thereof acting in an official capacity.” Section 36(a) provides immunity from damages for any person when the claim is “based on any official action directed by a local government, or official or employee thereof acting in an official capacity.” Appellant has not appealed the district court’s determination that the Hospital System is a local government unit. Therefore, on the antitrust question, we assume that the Hospital System is a government unit and address, in this light, only whether the district court correctly concluded that the other appellees also were entitled to immunity under the Act.3

A

Article Six, Section One of the Hospital System’s by-laws provides that the Board of Trustees will employ a “Director” with the “concurrence” of the Board of Commissioners of Cumberland County, and that the Director will be the executive officer of the Board and its official spokesman. (App. at 103).

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853 F.2d 1139, 1988 WL 82194, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sandcrest-outpatient-services-pa-v-cumberland-county-hospital-system-ca4-1988.