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Reed v. Advocate Health Care

March 28, 2007

LISA REED AND CINDY DIGIANNANTONIO, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
ADVOCATE HEALTH CARE, ET AL., DEFENDANTS.
CYNTHIA DIGIANNANTONIO, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
EVANSTON NORTHWESTERN HEALTHCARE, ET AL., DEFENDANTS.



The opinion of the court was delivered by: John F. Grady, United States District Judge

MEMORANDUM OPINION

Before the court is the motion of defendant University of Chicago Hospitals for summary judgment based on the nonstatutory labor exemption. For the reasons explained below, the motion is denied.

BACKGROUND

These two antitrust cases were consolidated for all purposes in October 2006. Plaintiffs are registered nurses ("RNs") who allege that defendants, who operate several hospitals in the Chicago area,*fn1 have for a number of years conspired to depress the wages of their RN employees and that in furtherance of their conspiracy, agreed to regularly exchange detailed and non-public information about the compensation each is paying or will pay to its RN employees. According to plaintiffs, this conspiracy has had the effect of depressing compensation for hospital RNs in the Chicago area despite a national nursing shortage. Plaintiffs seek to represent a class of "[a]ll persons employed by any defendant or co-conspirator to work in a hospital in the Chicago area as an RN at any time from June 20, 2002 until the present." (Third Amended Complaint, 06 C 3337, at 6 ¶ 17.)

The Third Amended Complaint contains two claims: Count I alleges a conspiracy to depress wages, and Count II alleges a conspiracy to exchange compensation information, both in violation of § 1 of the Sherman Act. The relief sought by plaintiffs consists of compensatory damages, treble damages pursuant to 15 U.S.C. § 15(a), interest, reasonable attorney's fees, and costs.

The University of Chicago Hospitals ("UCH") now moves for summary judgment.

DISCUSSION

Summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). In considering such a motion, the court construes the evidence and all inferences that reasonably can be drawn therefrom in the light most favorable to the nonmoving party. See Pitasi v. Gartner Group, Inc., 184 F.3d 709, 714 (7th Cir. 1999). "Summary judgment should be denied if the dispute is 'genuine': 'if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Talanda v. KFC Nat'l Mgmt. Co., 140 F.3d 1090, 1095 (7th Cir. 1998) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The court will enter summary judgment against a party who does not "come forward with evidence that would reasonably permit the finder of fact to find in [its] favor on a material question." McGrath v. Gillis, 44 F.3d 567, 569 (7th Cir. 1995).

UCH argues that it is entitled to summary judgment on plaintiffs' claims because since 1969, the wages, benefits, and all other terms and conditions of employment of its RNs have been determined by a series of collective bargaining agreements between UCH and the Illinois Nurses Association (the "INA"), and therefore the nonstatutory labor exemption to the federal antitrust laws bars plaintiffs' claims against UCH.

A brief history of the labor exemptions is as follows:

Following passage of the Sherman Act in 1890, the courts found labor to be a commodity or article of commerce under the Sherman Act, and applied the Act to invalidate the collective bargaining agreements achieved by labor unions. In response, Congress sought to specifically exempt labor union activity by enacting sections 6 and 20 of the Clayton Act. Passage of the Clayton Act, however, failed to achieve this end, for the courts continued to apply the Sherman Act to union activities. Congress, therefore, enacted the Norris-LaGuardia Act, which sought to exempt labor activities from the application of various statutes. The Clayton and Norris-LaGuardia Acts combined to provide a comprehensive exemption from antitrust liability for union activity.

In cases decided since the enactment of the Norris-LaGuardia Act, courts have defined the parameters of the labor antitrust exemption. As noted by the Supreme Court in Connell Construction Co. v. Plumbers & Steamfitters Local 100, 421 U.S. 616, 621-22, 95 S.Ct. 1830, 1834-35, 44 L.Ed. 2d 418 (1975), this has resulted in two distinct exemptions to the antitrust laws-a statutory exemption based on various sections of the Clayton and Norris-LaGuardia Acts, and a nonstatutory exemption based on an "accommodation between the congressional policy favoring collective bargaining under the [National Labor Relations Act] and the congressional policy favoring free competition in business markets." Id. at 622, 95 S.Ct. at 1835.

Mid-America Reg'l Bargaining Ass'n v. Will County Carpenters Dist. Council, 675 F.2d 881, 884 (7th Cir. 1982) (most citations omitted). Because the statutory exemption applies only to certain activities of employees and labor unions, see Connell, 421 U.S. at 621-22, UCH is relying on the nonstatutory exemption, which applies to certain concerted activity among and between unions and employers, see Clarett v. National Football League, 369 F.3d 124, 130 (2d Cir. 2004). The nonstatutory exemption "exists not only to prevent the courts from usurping the [National Labor Relations Board ("NLRB")]'s function of determining, in the area of industrial conflict, what is or is not a 'reasonable practice,' but also to allow meaningful collective bargaining to take place by protecting some restraints on competition imposed through the bargaining process from antitrust scrutiny." Clarett, 369 F.3d at 131 (internal quotation marks omitted).

UCH maintains that because the wages its pays its RNs are the result of a collective bargaining agreement ("CBA"), the nonstatutory exemption makes the labor laws exclusive and antitrust-related determinations "inappropriate." (UCH's Mem. in Supp. of Mot. at 5.) UCH cites a handful of cases applying the exemption in a different factual context, where all of the employees of all of the conspiring employers were represented by a union for purposes of collective bargaining, but argues that this is a "distinction without a difference." (Id. at 7.) UCH further contends that the question of the legitimacy of its actions is one that is squarely within the province of the NLRB. In UCH's view, if it is not immune from antitrust scrutiny "on the issue of how it gathers and evaluates its competitors' ...


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