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Reed v. Advocate Health Care

September 28, 2009

LISA REED AND CINDY DIGIANNANTONIO, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
ADVOCATE HEALTH CARE, ET AL., DEFENDANTS.



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

MEMORANDUM OPINION

Before the court are several motions: (1) plaintiffs' motion for class certification; (2) defendants' motion to strike the impact analyses in plaintiff's expert's declarations; (3) the motion of defendant University of Chicago Hospitals ("UCH") to strike the testimony of plaintiffs' expert, as applied to UCH's nurses; and (4) plaintiffs' motion to strike the report of UCH's expert. For the reasons explained below, all of the motions are denied.

BACKGROUND

Plaintiffs Lisa Reed and Cindy Digiannantonio are registered nurses ("RNs") who allege that defendants UCH, Advocate Health Care ("Advocate"), NorthShore University HealthSystem (formerly known as Evanston Northwestern Healthcare) ("ENH"), Children's Memorial Hospital, and Resurrection Health Care, who operate several hospitals in the Chicago area, have for a number of years conspired to suppress the wages of their RN employees and, in furtherance of the conspiracy, agreed to regularly exchange detailed and non-public information about the compensation each is paying or will pay to its RNs. Plaintiffs allege that defendants shared information about RN wages both directly and by obtaining and participating in compensation surveys disseminated by the Metropolitan Chicago Healthcare Council (the "MCHC") and that the exchange of information violates guidelines issued by the United States Department of Justice and the Federal Trade Commission for the lawful sharing of compensation data within the health care industry. According to plaintiffs, defendants' conspiracy has had the effect of suppressing compensation for hospital RNs in the Chicago area despite a national nursing shortage.

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, 15 U.S.C. § 1. 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. Plaintiffs now seek to certify a class of "[a]ll persons employed by any defendant to work in a hospital in the Chicago area as a Staff RN at any time from June 20, 2002 until the present."*fn1 (Pls.' Mot. for Class Certification at 1.)

DISCUSSION

Federal Rule of Civil Procedure 23 allows a member of a class to sue as a representative of the class only if (1) joinder of all members is impractical because the class is so numerous, (2) questions of law or fact are common to the class, (3) the representative's claims are typical of those of the class, and (4) the representative will fairly and adequately protect the interests of the class. Fed. R. Civ. P. 23(a). "All of these elements are prerequisites to certification; failure to meet any one of them precludes certification as a class." Retired Chicago Police Ass'n v. City of Chicago, 7 F.3d 584, 596 (7th Cir. 1993).*fn2

Plaintiffs also must show that the action is maintainable under one of the three categories of Rule 23(b). Here, class certification is sought under Rule 23(b)(3), which requires that common questions of law or fact predominate over questions affecting only individual members and that a class action is the best method for fairly and efficiently adjudicating the controversy. The party seeking certification bears the burden of proving that all of Rule 23's requirements are satisfied. Trotter v. Klincar, 748 F.2d 1177, 1184 (7th Cir. 1984). "Class certification requires a rigorous investigation into the propriety of proceeding as a class." Livingston v. Associates Fin., Inc., 339 F.3d 553, 558 (7th Cir. 2003).

"[A] court may not refuse to certify a class on the ground that it thinks the class will eventually lose on the merits," Loeb Industries, Inc. v. Sumitomo Corp., 306 F.3d 469, 480 (7th Cir. 2002), but where a question of suitability for class treatment overlaps with a merits question, we must "make a preliminary inquiry into the merits." Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 676 (7th Cir. 2001); see also In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 307 (3d Cir. 2008) ("[T]he court must resolve all factual or legal disputes relevant to class certification, even if they overlap with the merits--including disputes touching on elements of the cause of action."). "Factual determinations supporting Rule 23 findings must be made by a preponderance of the evidence." Hydrogen Peroxide, 552 F.3d at 307.

A. Rule 23(a) Requirements

1. Numerosity

The proposed class must be so numerous that joinder of all members is impractical. Fed. R. Civ. P. 23(a)(1). Plaintiffs are not required to specify the exact number of persons in the class; a properly-supported estimate is sufficient, see Marcial v. Coronet Insurance Co., 880 F.2d 954, 957 (7th Cir. 1989), and the court may rely on common sense in order to determine numerosity, Grossman v. Waste Management, Inc., 100 F.R.D. 781, 785 (N.D. Ill. 1984).

As noted supra, plaintiffs seek to certify a class of all Staff RNs employed by any of the defendants at a hospital in the Chicago area at any time from June 20, 2002 until the present. Based on payroll and job-classification data they obtained from defendants through discovery, plaintiffs have estimated that the class consists of approximately 19,000 members. (Pls.' Updated Proposed Findings of Fact and Conclusions of Law ¶ 18, citing Supplementary Decl. of Gordon Rausser ¶ 104A.)*fn3 Moreover, defendants do not dispute plaintiffs' ability to establish the requisite numerosity. Thus, we find that plaintiffs have established that the proposed class is so numerous that joinder is impracticable.

2. Commonality

A named class representative may sue on behalf of a class only if there are questions of law or fact common to the class. Fed. R. Civ. P. 23(a)(2). "The commonality requirement is not difficult to meet." Smith v. Aon Corp., 238 F.R.D. 609, 614 (N.D. Ill. 2006). "The fact that there is some factual variation among the class grievances will not defeat a class action. A common nucleus of operative fact is usually enough to satisfy the commonality requirement . . . ." Rosario v. Livaditis, 963 F.2d 1013, 1017-18 (7th Cir. 1992) (citation omitted). A common nucleus of fact is said to exist where a defendant has "engaged in standardized conduct towards members of the proposed class." Keele v. Wexler, 149 F.3d 589, 594 (7th Cir. 1998).

The standardized conduct alleged here is defendants' conspiracy to suppress the base wages*fn4 paid to their Staff RNs. In addition to the existence and scope of a conspiracy, plaintiffs have identified a number of other common questions, such as whether the conspiracy was effective in suppressing wages and whether plaintiffs were damaged by the conspiracy. Defendants do not challenge plaintiffs' assertion that the commonality requirement has been met. We find that plaintiffs have satisfied this requirement.

3. Typicality

The proposed class representatives' claims must be typical of the putative class. Fed. R. Civ. P. 23(a)(3). The typicality requirement is closely related to the commonality requirement, Rosario, 963 F.2d at 1018, and "is meant to ensure that the named representative's claims have the same essential characteristics as the claims of the class at large," Oshana v. Coca-Cola Co., 472 F.3d 506, 514 (7th Cir. 2006) (internal quotation marks omitted). A claim is typical if it arises from the same event or practice or course of conduct that gives rise to the claims of other class members and is based on the same legal theory. Id. Typicality is a "low hurdle" that "requires neither complete coextensivity nor even substantial identity of claims." Owner-Operator Indep. Drivers' Ass'n v. Allied Van Lines, Inc., 231 F.R.D. 280, 282 (N.D. Ill. 2005).

It is undisputed that plaintiffs, Reed and Digiannantonio, worked as Staff RNs at one of defendants' hospitals during the Class Period. Reed was employed by Advocate during the Class Period, although as a Staff RN only during certain portions of the period. (Defs.' App., Tab 100, at 6.) Digiannantonio was employed by ENH from 1991 through September 2005. (Third Am. Compl. ¶ 8.) But defendants contend that neither plaintiff is typical of the putative class because neither was a Staff RN during the entire Class Period and because, according to defendants, the "markets" of the named plaintiffs are "inconsistent" with the three-county hospital-only market plaintiffs have identified for the purpose of demonstrating defendants' market power, due to plaintiffs' unwillingness to commute throughout that entire region. (Defs.' Final Br. § 2 ¶ 52.) Defendants also argue that Digiannantonio is atypical because her wages fluctuated during the Class Period in accordance with her participation in a program as a "preceptor," or mentor, nurse.

In evaluating typicality, we are mindful that it is not a demanding standard. The claims of Reed and Digiannantonio and the claims of the unnamed class members all arise from the same course of conduct (the alleged conspiracy to suppress Staff RN base wages) and are based on the same legal theories that the conspiracy violated antitrust law. That the specific details of their employment situations--their particular lengths of employment, wages, and willingness to commute--may vary from those of other nurses poses no problem as to typicality because the essential characteristics of their claims are identical. See In re Playmobil Antitrust Litig., 35 F. Supp. 2d 231, 242 (E.D.N.Y. 1998) ("Typicality refers to the nature of the claims of the representative, not the individual characteristics of the plaintiff.") Defendants cite no case law that persuades us otherwise.

Defendants also challenge plaintiffs' typicality as representatives of UCH's nurses. UCH's RNs are members of a union, and their wages and conditions of employment are determined by a collective bargaining agreement. According to defendants, because the wages of UCH's nurses were "determined through collective bargaining," "the course of conduct that allegedly caused them to be paid suppressed wages is not the same." (Defs.' Final Br. § 2 ¶ 54.) We disagree. Plaintiffs allege that UCH participated in the same single conspiracy to suppress Staff RN wages as did UCH's co-defendants and thereby violated antitrust law. Although UCH's defense throughout this litigation has been that it is distinguishable from its co-defendants because of the collective bargaining process, plaintiffs' claims against UCH nonetheless arise from the same alleged conduct that gives rise to the claims of UCH's nurses and are based on the same legal theories.*fn5 See Playmobil, 35 F. Supp. 2d at 241-42 (for typicality purposes, "[i]f a central conspiracy is established, differences in the way in which the plan was manifested are unimportant").

We find that Reed and Digiannantonio satisfy the typicality requirement of Rule 23(a)(3).

4. Adequacy of Representation

The named plaintiffs must fairly and adequately protect the interests of the class. Fed. R. Civ. P. 23(a)(4). "[A]dequacy of representation is composed of two parts: the adequacy of the named plaintiff's counsel, and the adequacy of representation provided in protecting the different, separate, and distinct interest of the class members. Therefore, a class is not fairly and adequately represented if class members have antagonistic or conflicting claims." Retired Chicago Police Ass'n, 7 F.3d at 598 (internal quotation marks, brackets, and citation omitted).

Plaintiffs' counsel is competent and experienced in antitrust litigation. Moreover, it appears that Reed and Digiannantonio have a sufficient interest in the outcome to ensure zealous advocacy, and there are no indications that their claims conflict with those of other class members. Defendants do not challenge plaintiffs' showing of adequacy. Accordingly, we find that plaintiffs have demonstrated that they will fairly and adequately protect the interests of the class.

B. Rule 23(b) Requirements

Under Rule 23(b)(3), questions of law or fact common to class members must predominate over questions affecting only individual members, and a class action must be superior to other available methods for the fair and efficient adjudication of the controversy. These "twin requirements" are known as predominance and superiority. Hydrogen Peroxide, 552 F.3d at 310. When considering these factors, we examine the substantive elements of plaintiffs' claims, the proof necessary for those elements, and the manageability of trial on those issues. See Simer v. Rios, 661 F.2d 655, 672-73 (7th Cir. 1981).

1. Predominance

Predominance, which "tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation," Amchem Products, Inc. v. Windsor, 521 U.S. 591, 623 (1997), is "a standard far more demanding than the commonality requirement of Rule 23(a)," Hydrogen Peroxide, 552 F.3d at 311 (internal quotation marks omitted). "Because the nature of the evidence that will suffice to resolve a question determines whether the question is common or individual, a district court must formulate some prediction as to how specific issues will play out in order to determine whether common or individual issues predominate in a given case." Hydrogen Peroxide, 552 F.3d at 311 (internal quotation marks omitted) (citing Blades v. Monsanto Co., 400 F.3d 562, 566 (8th Cir. 2005) and In re New Motor Vehicles Canadian Exp. Antitrust Litig., 522 F.3d 6, 20 (1st Cir. 2008)). "If proof of the essential elements of the cause of action requires individual treatment, then class certification is unsuitable." Hydrogen Peroxide, 552 F.3d at 311 (citing Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 172 (3d Cir. 2001)).

Plaintiffs have two antitrust claims, both for violation of § 1 of the Sherman Act. In Count I, plaintiffs allege a "per se" violation based on defendants' alleged agreement to suppress wages by "keep[ing] their respective mean and median base wages for Staff RNs close to the median and mean reported by [the] MCHC at various times throughout the year." (Pls.' Final Br. ¶ 6.) In Count II, plaintiffs allege a "Rule of Reason" violation based on defendants' alleged agreement to regularly exchange detailed and non-public information about RN compensation.*fn6 To prevail on their claims, plaintiffs must prove (1) a violation of antitrust law (here, ยง 1); (2) individual injury, or impact, caused by that violation; and (3) measurable damages. Hydrogen Peroxide, 552 F.3d at 311; Cordes & Co. Fin. Servs., Inc. v. A.G. Edwards & Sons, Inc., 502 F.3d 91, 105 ...


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