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Santos v. Columbus-Cuneo-Cabrini Medical Center

decided: August 10, 1982.

M. JULIA DOS SANTOS, M.D., PLAINTIFF-APPELLEE,
v.
COLUMBUS-CUNEO-CABRINI MEDICAL CENTER, ANESTHESIA ASSOCIATES OF LAKESHORE, LTD., AND ALPHONSE DEL PIZZO, DEFENDANTS-APPELLANTS



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 81-C-4296 -- Prentice H. Marshall, Judge.

Bauer, Wood, and Cudahy, Circuit Judges.

Author: Cudahy

CUDAHY, Circuit Judge.

In this case the plaintiff, an anesthesiologist, challenges under the antitrust laws an exclusive dealing contract for the provision of anesthesia services at a hospital. The district court granted a preliminary injunction against the enforcement of the exclusive contract. We now vacate and remand for further proceedings.

I.

The facts are largely undisputed. The plaintiff, M. Julia Dos Santos, M.D., is an anesthesiologist licensed to practice medicine in Illinois and certified in her specialty by the American Board of Anesthesiology. Defendant Columbus-Cuneo-Cabrini Medical Center ("Medical Center") is an Illinois not-for-profit corporation which operates Columbus, Cuneo and Cabrini Hospitals, all located in the City of Chicago. Defendant Anesthesia Associates of Lakeshore, Ltd. ("Associates") is an Illinois corporation engaged in the business of providing anesthesia services. Defendant Alphonse Del Pizzo is the president and sole shareholder of Associates and he is also chairman of the Department of Anesthesiology at Columbus Hospital.

In May 1977, the Medical Center awarded Associates an exclusive contract for the performance of all anesthesia services at the Medical Center. The one-year contract provided for automatic renewal so long as neither party objected and it could be terminated for "cause" by either party upon 90 days' written notice. A schedule attached to the contract specified the fees to be charged by Associates for services rendered under the contract; these rates were subject to periodic modification if approved by the Medical Center. The Medical Center adopted this exclusive arrangement in the belief that a closed system, in contrast to an open-staff arrangement, would improve the overall quality of patient care and assure the availability of a sufficient number of anesthesiologists around the clock at the three hospitals. Most but not all hospitals in the Chicago area similarly provide for anesthesia services by means of exclusive contracts.

Plaintiff became a salaried employee of Associates on January 29, 1979, under an oral contract terminable at will. She was assigned to work at Columbus Hospital. On January 1, 1981, the Medical Center's Board of Directors appointed plaintiff to a one-year position on the courtesy staff of the Department of Anesthesiology at Columbus Hospital.*fn1 By letter dated July 1, 1981, Del Pizzo advised plaintiff that her employment with Associates would be terminated on July 31, 1981. The letter did not specify the grounds for this decision.

Following her discharge by Associates, plaintiff was informed by the Medical Center that she could no longer be permitted to offer anesthesia services at Columbus Hospital because she had ceased to be an employee of Associates. Plaintiff was given no other reason for her exclusion from the hospital and she remains a member of the hospital staff. The district court found that plaintiff's exclusion was solely the result of the exclusive contract between Associates and the Medical Center.

Plaintiff filed her complaint in the instant case on July 29, 1981, two days before her termination became effective. She alleged a violation of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2 (1976), a violation of the Illinois Antitrust Act, ILL. REV. STAT. ch. 38, §§ 60-3(1), 60-3(2) (1977), breach of contract and tortious interference with a business relationship.

On July 30, 1981, plaintiff filed a motion for a preliminary injunction. The district court granted the motion at the conclusion of a hearing on September 2, 1981. On October 14, 1981, the district court issued a written decision embodying its findings of fact, conclusions of law and preliminary injunction order. Resting its decision solely on the Sherman Act section 1 claim, the district court preliminarily enjoined the enforcement of the exclusive contract, ordered the defendants to "abolish and dismantle all vestiges" of the exclusive dealing arrangement, and required each individual member of the Department of Anesthesiology to compete to provide anesthesia services at the Medical Center.*fn2 The defendants appeal from the issuance of this preliminary injunction.

II.

Of course, we will not disturb the grant of a preliminary injunction unless the district court has abused its discretion. Doran v. Salem Inn, Inc., 422 U.S. 922, 931-32, 45 L. Ed. 2d 648, 95 S. Ct. 2561 (1975); Machlett Laboratories, Inc. v. Techny Industries, Inc., 665 F.2d 795, 797 (7th Cir. 1981). For its part, the district court in ruling on a motion for a preliminary injunction must consider each of four factors: (1) whether the plaintiff will have an adequate remedy at law or will otherwise be irreparably harmed if the injunction does not issue; (2) whether the threatened injury to the plaintiff outweighs the threatened harm that the injunction may inflict on the defendant; (3) whether the plaintiff has at least a reasonable likelihood of success on the merits; and (4) whether the granting of a preliminary injunction will disserve the public interest. Atari, Inc. v. North American Philips Consumer Electronics Corp., 672 F.2d 607, 613 (7th Cir. 1982); Reinders Brothers, Inc. v. Rain Bird Eastern Sales Corp., 627 F.2d 44, 48-49 (7th Cir. 1980). The plaintiff bears the burden of persuasion with respect to each of these factors. Fox Valley Harvestore, Inc. v. A. O. Smith Harvestore Products, Inc., 545 F.2d 1096, 1097 (7th Cir. 1976). For the following reasons, we conclude that the granting of the preliminary injunction in the present case was an abuse of discretion.

The first prerequisite to the granting of temporary relief is a showing that the plaintiff is threatened with irreparable injury for which there is no adequate remedy at law. The district court in the instant case found that plaintiff had indeed been threatened with irreparable injury as a result of her exclusion from the practice of anesthesiology at Columbus Hospital. The court further found that unless plaintiff obtained a preliminary injunction invalidating the exclusive contract, she would be injured in her profession "in that she will be stigmatized in the medical community, her professional competence will be questioned, her prospects for future employment will be diminished, and she will be ...


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