Sidibe v. Sutter Health

Background

The parties submitted proposed preliminary, trial, substantive, and concluding jury instructions. They also briefed four legal issues concerning the plaintiffs’ antitrust claims involving Sutter’s inpatient hospital services. The court addressed which instructions would govern the trial; it did not determine liability in this order.

Purchasers of inpatient hospital services

The plaintiffs argued that health plans were the relevant direct purchasers as a matter of law and that the relevant markets therefore had to be evaluated based on alternatives available to the plans. Sutter argued that patients, rather than health plans, could be the relevant purchasers and that the issue presented a factual question for the jury.

The court held that the identity of the purchasers was not settled as a matter of law. It explained that its earlier summary-judgment order had not decided who the purchasers were and had referred to both health plans’ and patients’ responses to market changes. The court therefore would not instruct the jury that health plans were the purchasers as a matter of law or otherwise prevent the jury from making its own finding.

Business justification and the tying claim

The plaintiffs argued that the alleged tying arrangement was illegal under the per se rule and that the jury therefore could not consider Sutter’s procompetitive business justifications. Sutter argued that business justification should be available as an affirmative defense, relying on federal tying decisions.

The court concluded that California courts generally follow federal precedent when defining Cartwright Act tying claims, but it found no California authority applying a business-justification defense to the type of per se tying claim asserted here. Relying on California decisions characterizing such tying arrangements as illegal per se when the seller has sufficient economic power, the court held that business justifications were relevant only to the rule-of-reason claim, not the tying claim.

Market power

The plaintiffs proposed an instruction allowing them to prove the rule-of-reason claim through either market power or other anticompetitive effects, such as higher prices, reduced output, or reduced consumer choice. Sutter argued that market power was a required element of both the tying and rule-of-reason claims.

The court held that market power was an element of both claims and could be proven in different ways. It rejected the plaintiffs’ proposed alternative approach and ruled that the jury would receive the standard California Civil Instruction on market power for both claims.

Proposed burden-shifting instruction

The plaintiffs asked for an instruction stating that, after they showed anticompetitive effects, Sutter would bear the burden of establishing beneficial effects that could not have been achieved through less restrictive conduct. Sutter argued that this concerned its burden of producing evidence, which should be decided by the court rather than explained to the jury.

The court agreed that the issue concerned Sutter’s burden of production—the obligation to come forward with enough evidence to raise an issue for the jury—rather than its burden of proof. The court ruled that it would not give the proposed burden-shifting instruction. If Sutter produced sufficient evidence of beneficial effects, the jury would evaluate the competing effects under the standard instructions; otherwise, the jury would not receive an instruction on procompetitive effects.

Disposition

The court stated four conclusions: health insurers were not direct purchasers of inpatient hospital services as a matter of law; procompetitive justifications were relevant only to the rule-of-reason claim; market power was required for both the tying and rule-of-reason claims; and the court would use the standard California Civil Instructions rather than the proposed burden-shifting instruction. The court said it would separately issue proposed jury instructions and a proposed verdict form consistent with those conclusions.