Seventh Circuit Boosts Antitrust Class Actions by Reversing Dismissal of Chicago Hospital Suit


By Jan Wolfe

The plaintiffs-side class action bar had a lousy 2011, with the U.S. Supreme Court reining in class actions in two high-profile decisions, Wal-Mart v. Dukes and AT&T Mobility v.Concepcion. But plaintiffs attorneys have started 2012 on a more positive note, thanks to ruling on Friday from the U.S. Court of Appeals for the Seventh Circuit that will help antitrust class actions get past the crucial certification stage.

In a unanimous 45-page opinion, a three-judge panel of the Seventh Circuit vacated a 2010 federal district court ruling that dismissed an antitrust class action against Northhore University Health System, a Chicago-area hospital group represented by Winston & Strawn. The ruling allows the plaintiffs, represented by Wolf Haldenstein Adler Freeman & Herz, to press forward with allegations that Northshore illegally inflated the price of inpatient services.

Northshore is the result of a merger of three hospitals in suburban Chicago. A Federal Trade Commission judge ruled in 2005 that the merger created a monopoly, resulting in anticompetitive prices for hospital services in the region. Wolf Haldenstein piggybacked on the FTC investigation in this 2007 complaint. The firm's expert witness also adopted the FTC's methodology for calculating the merger's impact on pricing.

But even with the FTC case in its pocket, Wolf Haldenstein couldn't get past Chicago federal district court judge Joan Humphrey Lefkow. She ruled that, because the merger did not have a uniform impact on the proposed class of patients and health insurance companies, the case failed to meet the requirement in Rule 23(b)(3) of the Federal Rules of Civil Procedure that "questions of law or fact common to class members predominate over any questions affecting individual members."

The Seventh Circuit panel bristled at Lefkow's approach. "It is important not to let a quest for perfect evidence become the enemy of good evidence," Judge David Hamilton wrote. "The degree of uniformity the district court demanded simply is not required for class certification under Rule 23(b)(3)."

"We had very good evidence of significant class-wide impact," said Wolf Haldenstein partner Mary Jane Fait. "But that evidence doesn't have to be perfect. Just because there may not be completely uniformity with regard to pricing doesn't mean a class shouldn't be certified."

Fait added that the decision's impact will be felt nationwide because the Seventh Circuit is a leading voice on antitrust matters.

Winston & Strawn partner Gene Schaerr, who represented NorthShore, did not immediately return a call seeking comment.