Sidibe v. Sutter Health

Nature of the Order

The court issued this pretrial order under Federal Rule of Civil Procedure 16(e). It governs the retrial and resolves several motions in limine, which are pretrial requests to admit or exclude evidence. The order does not enter judgment on the claims or decide liability.

Claims and Earlier Rulings

The claims are: (1) unlawful tying and an unlawful course of conduct under Section 1 of the Sherman Antitrust Act and California’s Cartwright Act; and (2) a violation of California’s Unfair Competition Law. Sutter denies the claims. The court incorporated the claims, defenses, and requested relief from the parties’ joint proposed pretrial order and an earlier summary-judgment order.

The court said that, except for an earlier order excluding pre-2006 evidence and rulings on two California Civil Jury Instructions that the Ninth Circuit reversed, the earlier orders and rulings remain in effect as law of the case. That doctrine generally means that a ruling on a legal issue continues to govern later stages of the same case. The court also said that the evidentiary rulings made during daily hearings are law of the case.

Plaintiffs’ Motions in Limine

Motion 10: Legislation, Regulations, and Related Material — Denied

The plaintiffs sought to exclude nineteen exhibits involving statutes, regulations, and legislative materials. The court held that regulatory context may be relevant to Sutter’s motives and decisions about its contracts, but generally may not be admitted to prove the truth of the materials themselves. Sutter must establish a foundation showing that the relevant witnesses knew about and considered the regulatory context. If that foundation is established, objections generally go to the evidence’s weight rather than its admissibility.

The court distinguished this evidence from evidence about other investigations of Sutter. It reaffirmed that evidence about the California Attorney General’s investigation and certain related cases remained excluded because the matters did not reach a verdict and could cause unfair prejudice. Anonymized admissions from those proceedings might be relevant.

Motion 11: Arbitrations and Legal Proceedings — Denied

The plaintiffs sought to exclude evidence of arbitrations and other litigation, including consent decrees and material from earlier legal proceedings. The court held that the earlier ruling addressed only litigation against Sutter and did not categorically resolve all evidence covered by Motion 11.

The court said potentially admissible evidence about the Summit merger litigation could be offered if properly anonymized, with admissibility addressed at trial. It allowed evidence about arbitrations because the court had allowed that evidence at the first trial and the plaintiffs had not appealed that ruling. The court could take notice of the existence of arbitration awards, but not accept their contents as true. The court also held that a settlement agreement between Health Net and Sutter was not automatically excluded under Federal Rule of Evidence 408 because it was offered for a purpose other than proving or disproving the validity or amount of a disputed claim. The court did not reopen the exclusion of evidence about the California Attorney General and related cases.

Motion 12: Nonparty Legal Proceedings — Denied

The plaintiffs sought to exclude evidence involving nonparty health plans, investigations, enforcement actions, settlements, and related documents. The court held that the evidence could provide context for Sutter’s contract negotiations and could support Sutter’s defenses, including its explanation for the rates and contract provisions at issue.

The court identified examples involving out-of-network rates, insurers’ obligations under the Knox-Keene Act, notice of rate changes, narrow networks, and provider-directory problems. The evidence was not being admitted wholesale or necessarily for its truth. Sutter must show that a witness considered the documents and must establish the required foundation. The court also held that settlement agreements were not categorically excluded under Rules 408 or 403.

Motion 13: Alleged Mischaracterization of the Claims — Denied

The plaintiffs sought to prevent Sutter from referring to the operative complaint in a way the plaintiffs believed mischaracterized their tying claims. The court held that the plaintiffs could argue the two tying conditions identified by the Ninth Circuit: network participation by tied hospitals and payment of allegedly excessive out-of-network rates at tied hospitals. But the Ninth Circuit had not resolved every disagreement about the theory, including the significance of network participation, the non-par rate, or the plaintiffs’ damages model.

The court declined to categorically bar references to the complaint. The complaint could have limited relevance in evaluating consistency or understanding expert damages testimony, although Sutter could not present the complaint’s allegations as the operative claim in a way that conflicted with the Ninth Circuit’s decision. The jury would be instructed on the law, and the court could address particular issues at trial.

Motion 14: Evidence of Sutter’s Purpose for Systemwide Contracting — Denied

The plaintiffs sought to exclude two documents offered by Sutter to show why it adopted systemwide contracting. The court held that Sutter was offering the documents to show its purpose, not as a competitive justification for the alleged tying or restraint of trade. The court said Sutter could present evidence about its purpose because the plaintiffs had placed that issue at issue and intended to present evidence from the same period.

The court reiterated that business justification is not an affirmative defense to the tying claim, but that evidence of purpose may still be relevant. The court also noted that systemwide contracting itself had been held lawful. Any argument about competitive benefits or the balancing of competitive effects would be controlled by the jury instructions and any limiting instruction.

Sutter’s Motions in Limine

Motion 7: Strategy-Advantage Documents — Denied in Part

Sutter previously obtained exclusion of a 2006 memorandum summarizing interviews with Sutter executives. The Ninth Circuit later held that an interview statement by Sarah Krevens—then the chief executive officer of two Sutter hospitals—was highly relevant to the plaintiffs’ theory. The court therefore held that the statement could be an opposing-party statement if authenticated and could be admitted if the plaintiffs established the required foundation.

The court did not decide that the entire memorandum was automatically admissible. The plaintiffs would need to identify any other qualifying statements and establish a foundation. To admit the memorandum as a business record, the plaintiffs would need to satisfy the requirements of Federal Rule of Evidence 803(6), including showing that it was made and kept as part of a regularly conducted business activity and was trustworthy. Sutter could object at trial to authentication, foundation, hearsay, and whether particular statements qualified as opposing-party statements.

Motion 8: Late-Disclosed Witness — Denied

Sutter sought to exclude Kristin Owens, a current CalPERS employee designated as CalPERS’s organizational witness under Rule 30(b)(6). The plaintiffs designated her after learning that the previously designated witness, Kathleen Donneson, had retired and could no longer serve in that role.

The court held that the late disclosure was substantially justified and harmless under Rule 37(c)(1). The plaintiffs had disclosed CalPERS in their 2016 initial disclosures and named Owens two business days after learning of Donneson’s retirement. Sutter had prior discovery concerning CalPERS and could depose Owens. The court limited Owens’s testimony to the subjects addressed by Donneson’s deposition: what CalPERS is and covers, the types of insurance it provided during the damages period, and premiums paid for fully insured products.

Motion 9: Dr. Tenn’s Study — Denied

Sutter sought to exclude a study by Dr. Steven Tenn concerning the price effects of the Sutter-Summit merger. Sutter argued that the study was hearsay and that the plaintiffs’ expert, Dr. Tasneem Chipty, could not rely on it under Rule 703. The court held that Chipty could rely on the study and disclose its findings to the jury as a basis for her expert opinions about market definition and competitive effects.

Rule 703 permits an expert to rely on otherwise inadmissible facts or data when experts in the field reasonably rely on that type of information. The court found that an antitrust economist could reasonably rely on retrospective studies and that Chipty independently analyzed the study along with market data, documents, and econometric models. The study would not be admitted as substantive evidence—that is, as independent proof that its findings were true. Instead, Chipty could explain the study and her reliance on it, subject to a possible limiting instruction.

The court found the study’s reported post-merger price increases of 29 to 72 percent probative of market definition and competitive effects, including whether Kaiser and Sutter competed in the same market. The court concluded that the Ninth Circuit’s prior ruling required this result and that the study’s relevance was not outweighed by the risks of confusion or unfair prejudice.

Trial Procedures and Disposition

Jury selection was scheduled for February 27, 2025, and trial was scheduled to begin March 3, 2025. Each side received thirty hours for opening statements, direct examination, and cross-examination, plus one additional hour for closing argument. The order also established procedures for witness examinations, exhibit disputes, joint witnesses, daily notices of the order of proof, and expedited joint-letter briefing.

The court denied Plaintiffs’ Motions in Limine 10, 11, 12, 13, and 14. It denied in part Sutter’s Motion in Limine 7 and denied Sutter’s Motions in Limine 8 and 9. The order also set trial-management procedures and reaffirmed limits on the use of particular evidence.